Performance Evaluation Report. for. Florida Housing Finance Corporation
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1 Performance Evaluation Report for Florida Housing Finance Corporation Submitted by Gabrielle K. Gabrielli, Ph.D. Gabrielle Consulting, Inc. 20 June 2018
2 Florida Housing Finance Corporation Performance Evaluation Report Table of Contents INTRODUCTION... 2 BACKGROUND... 2 FHFC DISTRIBUTION OF PERFORMANCE EVALUATION SCORES... 3 Table 1: FHFC Scoring Distribution... 4 Table 2: FHFC 2017 Scoring Distribution by Supervisor... 5 Table 3: FHFC Salary Increase Data... 6 INDUSTRY AND BENCHMARK DATA... 7 Table 4: Suggested Performance Distribution and Merit Increases - Boston University... 7 Table 5: Suggested Performance Distribution - Grote... 8 RECOMMENDED REVISIONS TO FHFC S EXISTING PERFORMANCE EVALUATION FORM... 8 Table 6: Suggested Revisions to FHFC Rating Categories... 9 Suggested Revisions to Scoring Descriptions... 9 Examples of FHFC Ratings Table 7: Suggested Performance Distribution - FHFC Suggested Revisions to Self-Evaluations Conclusions and Next Steps References Florida Housing Finance Corporation Performance Evaluation Report Page 1 of 14
3 Florida Housing Finance Corporation Performance Evaluation Report INTRODUCTION Florida Housing Finance Corporation (FHFC) has made positive changes in the performance evaluation process including revising the rating scale from three to five. In an effort to ensure equity and sustainability, FHFC requested Gabrielle Consulting conduct a performance evaluation study. The objectives were: Examine FHFC s current distribution of performance evaluation scores. Research current industry and benchmark data on performance evaluation score distributions. Examine and suggest revisions to FHFC s existing performance evaluation form. Analyze data, draw conclusions, and make recommendations. BACKGROUND In the field of human resources, there is much controversy over performance evaluations. While some argue that performance evaluations should be abolished entirely, organizations that have attempted to do so have faced challenges. Despite much discussion of abolishment, in Performance Management that Makes a Difference: An Evidence-Based Approach (December 2017), it is reported that only 1% of organizations have actually done away with performance evaluations. Most organizations continue to provide a formal performance management process with annual reviews that are tied to decisions about talent including compensation, raises, and bonuses. Unfortunately, there is much evidence that the performance evaluation process is inadequate, causing employees to believe the system does not reward excellent performance nor effectively motivate poor performers to improve. This causes supervisors to feel the process is too time-consuming and cumbersome, and it causes many to believe that performance ratings are not accurate assessments of actual performance, especially when discrepancies exist among supervisors with scoring. Over 75 percent of managers, employees, and human resource leaders believe performance management results are ineffective or inaccurate (CEB Corporate Leadership Council, 2012). Florida Housing Finance Corporation Performance Evaluation Report Page 2 of 14
4 A 2017 study (Mercer) found: 89 percent of employers have employee performance ratings that are linked to employee pay. 57 percent use a traditional 5-point rating scale. 95 percent of managers are not satisfied with their organization's performance management system. 90 percent of human resource leaders believe their performance management system does not yield accurate data about employee performance. Only 3 percent of employers believe their performance management system delivers "exceptional value." When used effectively, however, performance evaluations can be extremely beneficial to employees and to organizations. For example, employees may benefit from merit-based pay increases tied to performance expectations, goals, and achievements. Organizations benefit when rating scales are clearly defined and when supervisors are informed on how to fairly and effectively administer performance evaluations. FHFC DISTRIBUTION OF PERFORMANCE EVALUATION SCORES The current distribution of performance evaluation scores at FHFC is higher than comparable industry benchmarks. This inflated scoring has led to greater distribution of bonuses and increases in salaries, costing the organization money and ultimately impacting its ability to be sustainable. Under the current performance evaluation definitions, a 5 on a 1-5 scale is defined as: Employee s performance in this expectation is outstanding and produces strong results. The employee consistently surpasses expectations for this responsibility in all facets including completeness, timeliness, quality, and quantity of work. The employee works independently, requires very little or no supervision, and demonstrates mastery of skills and tasks involved. A 4 on a 1-5 scale is defined as: The employee regularly surpasses this expectation and results are well above average. Employee s work is timely, with a high degree of skill and accuracy, and errors are rare and seldom repeated. The employee works independently and requires minimal supervision. Florida Housing Finance Corporation Performance Evaluation Report Page 3 of 14
5 A 3 on a 1-5 scale is defined as: The employee meets all (or most) of the job requirements for this expectation and is reliable in attaining expected results. Employee is generally knowledgeable of the work, capable, and efficient. Minor deviations in performance may occur and may require training. A reasonable amount of supervision is required. A 2 on a 1-5 scale is defined as: The employee is not satisfactorily performing one or more of the requirements of this expectation. Work results are inconsistent and the employee requires close supervision. Supervisor discussion with Human Resources is required. A 1 on a 1-5 scale is defined as: The employee is not satisfactorily performing one or more of the requirements of this expectation. Work results are inconsistent and the employee requires close supervision. Supervisor discussion with Human Resources is required. Table 1: FHFC Scoring Distribution point scale point scale Number Evaluated Median Mean Range As shown in Table 1, the rating scale changed from a 3-point scale in 2016 to 5- point scale in In 2016, there were 100 employees who were evaluated. Newer employees were not included in this process. The median score on a 3- point scale was 2.55 and the mean (average) was The range was In 2017, there were 106 employees who were evaluated. The median score on a 5-point scale was 4.04 and the mean (average) was The range was Senior managers at FHFC were given 4% of their overall salary budget to allocate to their specific business units. Some senior managers heavily involved Florida Housing Finance Corporation Performance Evaluation Report Page 4 of 14
6 each supervisor in discussions of how much of a raise each employee received, but others did not. Human resources relied on senior managers to ensure raises were distributed equitably in their business units, and the executive director had final oversight and approval on the increase amounts. Employees who were hired or given raises less than six months before the evaluation date were not considered for an increase. Table 2: FHFC 2017 Scoring Distribution by Supervisor Supervisor Number Evaluated Mean Median Range Aldinger Brown Button Cherry Cox Dearduff Derrickson Evans Fowler Frison Gibson Goltz Hearn Helms Henderson Hines Hirst Jugenheimer Kennedy Knight Levy Marshall Maxey Monzingo Muller Florida Housing Finance Corporation Performance Evaluation Report Page 5 of 14
7 Supervisor Number Evaluated Mean Median Range Peters Polzer Price Rommel Scott Sellers Sinclair Taylor Wallace Weathers Westcott White As evidenced in Table 2, scores are generally high compared to industry recommendations, and there are differences among supervisors. While this could be due to performance variances, it s more likely due to different interpretations of scores by supervisors. Specific examples and training would provide clarity and help unsure equity in scoring. Table 3: FHFC Salary Increase Data Number Evaluated Number Given Raises Median 3.00% 4.43% Mean 2.98% 4.50% Range % % As shown in Table 3, in 2016, the median salary increase was 3.00%, the mean was 2.98%, and the range was %. In 2017, the median salary increase was 4.43%, the mean was 4.50%, and the range was %. It should be noted that employees who were hired or given raises less than six months before the evaluation date were not considered for an increase. Florida Housing Finance Corporation Performance Evaluation Report Page 6 of 14
8 INDUSTRY AND BENCHMARK DATA In the study Performance appraisal and performance management: 100 years of progress? (2017), researchers conducted a survey of performance management practices with 101 human resource leaders in various industries. The study identified critical gaps in how processes are used and what the research has revealed as best practices. For example, 87% of human resource leaders reported that performance appraisal reviews usually occur one to two times per year, and 39% stated they do not provide informal feedback between reviews. This contradicts general consensus amongst researchers and practitioners that successful performance management requires frequent and informal feedback including coaching. Also, despite the growing trend to use multiple sources of performance data including through 360 evaluations, only 8% of organizations reported collecting performance data from customers, and only 20% stated they used 360-degree feedback. Despite these challenges, the study concluded that the most effective performance management systems: 1. Develop clear expectations and goals, and allow revisions as needed. 2. Provide frequent feedback on performance, both informal and formal. 3. Identify and reward specific behaviors. 4. Motivate employees to improve performance. With regard to expected performance by rating, there is limited existing data about industry benchmarks, and some of the information is contradictory. For example, Boston University provides the following recommendations (shown in Table 4) for staff of 10 or more including suggested merit increases. Table 4: Suggested Performance Distribution and Merit Increases - Boston University Performance Rating Expected % of Staff in Performance Category Suggested Merit Increase Range Outstanding (5) 10% 4%-5%+ Excellent (4) 20-25% 3.25%-4.25% Successful (3) 40-45% 2-3% Needs Improvement (2) 5-10% 0-1% Unacceptable (1) 0-5% 0% Florida Housing Finance Corporation Performance Evaluation Report Page 7 of 14
9 At the 2014 WorldatWork Total Rewards Conference, Dick Grote presented the information in Table 5 as reasonable distributions of performance ratings. Table 5: Suggested Performance Distribution - Grote Performance Rating Distinguished (5) 5-10% Superior (4) 20-30% Good Solid Performer (3) 50-60% Needs Improvement (2) 10-15% Unsatisfactory (1) 2-5% Expected % of Staff in Performance Category To help prevent typically high and low scorers, Grote further suggested calibration sessions to ensure equitable scoring amongst supervisors. RECOMMENDED REVISIONS TO FHFC S EXISTING PERFORMANCE EVALUATION FORM The existing form is very good, though it would be helpful to make some slight modifications to the description of each rating (1-5) plus provide an example of what specific behavior should be defined as a 1, 2, 3, 4, or 5 score. A spreadsheet with suggested revisions including corrections of typos is provided. Florida Housing Finance Corporation Performance Evaluation Report Page 8 of 14
10 One recommendation, provided in Table 6, is to slightly revise the descriptions of each rating. Table 6: Suggested Revisions to FHFC Rating Categories Current Recommended Revision 5 Exceptional Exemplary Performance of Expectation 4 Exceeds Expectations Exceeds Expectation 3 Achieves Expectations Achieves Expectation 2 Needs Improvement Needs Improvement 1 Unsatisfactory Fails to Meet Expectation Suggested Revisions to Scoring Descriptions To help with clarity around scoring and to incorporate FHFC s core values, it is recommended that performance evaluation definitions be revised as follows. A 5 on a 1-5 scale would be defined as: Performance in this expectation is outstanding, and the employee is highly reliable in exceeding expected results. The employee produces very strong outcomes, not only achieving critical goals, but also setting and achieving new goals. The employee consistently surpasses expectations for this responsibility in all facets including completeness, timeliness, quality, and quantity of work. The employee works tremendously well independently or in teams, is respectful to others, is innovative, requires very little or no supervision, and demonstrates exemplary mastery of skills and tasks. The employee is a role model in this expectation, not only in terms of performance, but also often teaching and positively influencing others. A 4 on a 1-5 scale would be defined as: The employee regularly surpasses the requirements for this expectation and is very reliable in exceeding expected results. The employee produces very strong outcomes in achieving critical goals. The employee s work is timely, with a high degree of skill and accuracy, and errors are rare and seldom repeated. The employee works very well independently or in teams, is respectful to others, requires minimal supervision, and demonstrates mastery of skills and tasks. The employee performs this expectation very well and also often positively influences others. Florida Housing Finance Corporation Performance Evaluation Report Page 9 of 14
11 A 3 on a 1-5 scale would be defined as: The employee meets the requirements for this expectation and is reliable in achieving expected results. Critical goals were achieved. The employee is knowledgeable, capable, and efficient. Minor deviations in performance may occur and may require training. The employee works well independently or in teams, is respectful to others, and requires a reasonable amount of supervision. A 2 on a 1-5 scale would be defined as: The employee does not satisfactorily perform one or more of the requirements of this expectation, and improvement is needed. One or more critical goals were not met. The employee could use improvement working independently or in teams, work results are inconsistent, and the employee requires close supervision. The quality of work needs improvement. Documentation is required. A 1 on a 1-5 scale would be defined as: The employee does not satisfactorily perform one or more of the requirements of this expectation, and significant improvement is needed. Reasonable progress was not made toward critical goals, and one or more goals were not met. The employee needs improvement working independently or in teams, work results are of poor quality and inconsistent, and the employee requires close supervision. An action plan to correct performance, including timelines, must be outlined and monitored to measure progress. Documentation and supervisor discussion with human resources is required. Examples of FHFC Ratings In order to be more clear and specific about expectations, it is recommended that examples be provided to supervisors. For instance, let s clearly define ratings for the Florida Housing's Universal Expectation (which must be completed for all employees) - Demonstrates and reinforces the values of fairness, cooperation, respect, commitment, excellence, honesty, and teamwork. The employee demonstrates this competency in their interactions with coworkers, supervisors, Florida Housing Finance Corporation Performance Evaluation Report Page 10 of 14
12 and service recipients; in their personal contributions to work assignments; and when representing Florida Housing. Let s also slightly revise the universal expectation to Demonstrates and reinforces the values of fairness, cooperation, respect, commitment, excellence, honesty, and teamwork. The employee demonstrates this competency in interactions with coworkers, supervisors, and service recipients; in personal contributions to work assignments; and when representing Florida Housing. 5. Exemplary Performance of Expectation - The employee is a role model in demonstrating, reinforcing, and teaching the values of fairness, cooperation, respect, commitment, excellence, honesty, and teamwork. The employee is exemplary in demonstrating this competency in interactions with coworkers, supervisors, and service recipients; in personal contributions to work assignments; and when representing Florida Housing. The employee goes above and beyond the expectation to make a significant contribution to the organization. 4. Exceeds Expectation - The employee demonstrates, reinforces, and often teaches the values of fairness, cooperation, respect, commitment, excellence, honesty, and teamwork. The employee exceeds the expectation in demonstrating this competency in interactions with coworkers, supervisors, and service recipients; in personal contributions to work assignments; and when representing Florida Housing. 3. Achieves Expectation - The employee demonstrates and reinforces the values of fairness, cooperation, respect, commitment, excellence, honesty, and teamwork. The employee demonstrates this competency in interactions with coworkers, supervisors, and service recipients; in personal contributions to work assignments; and when representing Florida Housing. 2 - Needs Improvement - The employee sometimes demonstrates the values of fairness, cooperation, respect, commitment, excellence, honesty, and teamwork, but does not reinforce those values and often fails to achieve them. Discussions have occurred with the employee, and those discussions have been documented. 1 - Fails to Meet Expectation - The employee does not demonstrate the values of fairness, cooperation, respect, commitment, excellence, honesty, and teamwork. Discussions have occurred with the employee, and those discussions have been documented and shared with human resources. Further, while it is not suggested that supervisors must distribute employee ratings in a specific manner, the following suggestion of approximate distribution of ratings is provided in Table 7. Florida Housing Finance Corporation Performance Evaluation Report Page 11 of 14
13 Table 7: Suggested Performance Distribution - FHFC Performance Rating Exemplary Performance of Expectation (5) 5-10% Exceeds Expectation (4) 20-30% Achieves Expectation (3) 40-60% Needs Improvement (2) 5-15% Fails to Meet Expectation (1) 0-5% Expected % of Staff in Performance Category Suggested Revisions to Self-Evaluations The FHFC self-evaluation component of the performance evaluation form is excellent, though there is room for improvement. In addition to making the items parallel (i.e. in question format) and correcting numbering and other minor issues, it is suggested that the following questions be added: What are skills that I would like to improve? What new goals, responsibilities, or added challenges have I taken on since my last performance evaluation? What components of my job would I like to change or eliminate. Why? It is also suggested that the following question be altered: Current: In what ways can my supervisor help me do my job better? Revised: In what ways can my supervisor better support me or help me improve performance? Current: List your Achievements, Accomplishments, and Responsibilities. Revised: What are my most significant accomplishments and contributions since my last performance evaluation? Florida Housing Finance Corporation Performance Evaluation Report Page 12 of 14
14 Conclusions and Next Steps Florida Housing Finance Corporation is to be commended for working to continually improve the performance evaluation process. Recommendations have been provided to make changes to the evaluation form including more clearly defining ratings, providing examples, and altering the self-evaluation component. In order to ensure equity and fairness, it is recommended that training be developed and delivered to all supervisors before the next performance evaluation cycle. In addition, it is recommended that pay increases be tied to performance, and that the process be implemented in a phased approach with training in early October focused on writing measurable and observable performance expectations. This will not only help the process be more valued and understood in FHFC, but it will also help ensure sustainability of the organization. Florida Housing Finance Corporation Performance Evaluation Report Page 13 of 14
15 References Boston University (2015). Human resources merit distribution. CEB Corporate Leadership Council. (2012). Driving breakthrough performance in the new work environment. (Catalog No. CLC SYN). Arlington, VA: Author. DeNisi, A. S., & Murphy, K. R. (2017). Performance appraisal and performance management: 100 years of progress? Journal of Applied Psychology, 102(3), Dorsey, D. and Mueller-Hanson, R. Performance Management that Makes a Difference: An Evidence-Based Approach (December 2017), Society for Human Resource Management. Management.pdf Gorman, C. A., Meriac, J. P., Roch, S. G., Ray, J. L., & Gamble, J. S. (2017). An exploratory study of current performance management practices: Human resource executives perspectives. International Journal of Selection and Assessment, 25(2), Mercer (2017). Compensation planning and performance management talent-compensation-planning-performance-management-mercer.pdf Miller, S. Improving Performance Evaluations Using Calibration (May 23, 2014). Mueller-Hanson, R. A., & Pulakos, E. D. (2015). Putting the performance back in performance management. Society for Human Resource Management and Society for Industrial and Organizational Psychology. Pulakos, E. D., Hanson, R. M., Arad, S., & Moye, N. (2015). Performance management can be fixed: An on-the-job experiential learning approach for complex behavior change. Industrial and Organizational Psychology, 8(1), Florida Housing Finance Corporation Performance Evaluation Report Page 14 of 14
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