Performance Planning & Management Toolkit

Grameen Foundation
 This toolkit has been developed by Grameen Foundation
and made possible by the leadership support of Citi Foundation.

This toolkit should be used in conjunction with the corresponding supplemental materials.
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Table of Contents
Introduction ................................................................................................................... 1
Performance Planning and Management Overview ................................................... 2
Definition .............................................................................................................................. 2
Performance Planning and Management Approach .......................................................... 3
A Focus On Employee Strengths ........................................................................................ 3
Involving Employees............................................................................................................ 4
Plan................................................................................................................................. 5
Alignment Between Individual Goals and the Organization’s Goals ................................ 5
Action Step: Set Goals......................................................................................................... 6
Tips for Setting Goals .......................................................................................................... 6
Manage ......................................................................................................................... 10
Action Step: Observe Performance ...................................................................................10
Action Step: Deliver Timely Feedback ...............................................................................10
Tips for Delivering Feedback .............................................................................................13
Action Step: Discuss Performance with Employee at Least Once a Quarter .................12
Development Planning........................................................................................................12
Action Step: Support Employee Development..................................................................13
360 Degree Feedback..........................................................................................................14
Address Performance Gaps ...............................................................................................15
Identifying Performance Issues .........................................................................................16
Evaluate ....................................................................................................................... 16
Action Step: Conduct Annual Evaluation ..........................................................................16
Calibration for Assigning Performance Evaluations ........................................................17
Rewarding Performance .....................................................................................................18
Summary ...................................................................................................................... 19
References ................................................................................................................... 20
Introduction
One of Grameen Foundation’s areas of specialization involves helping microfinance institutions
(MFIs) and other poverty- and development-focused organizations strengthen their capacity to
attract, develop and retain talented employees.

Microfinance institutions, along with small and growing socially focused businesses, may face
human capital challenges that can adversely impact their growth, ability to innovate, access
capital, and manage risk. To address these challenges, we suggest you work to align your
human capital management practices to your unique business strategy. As an integral part of
this human capital system, a strong performance planning and management strategy is the
thread that ties together organizational objectives with the employee experience.

Performance planning and management is a process to align employee goals to the

organizational goals. The process allows for planning the alignment, providing management
support, monitoring progress and evaluating milestones. This allows the organization to get the
best performance results from all employees. Employees will be engaged and motivated to
achieve your organization’s goals when they know how what they do affect the company’s
overall performance. Performance management is critical for a organizational success.

This toolkit provides:

 An overview of performance planning and management
 A framework to define and implement a performance planning and management strategy
that will help your organization build employee engagement and reach organizational
objectives
 Tools and examples to enhance your implementation

This guide defines each component of performance planning and management, why it is
important, and things to consider as you implement. There is also a set of handouts to
correspond to the content within this guide. The handouts either offer more detail or can be
easily adapted for use in your organization.

Note: This toolkit is designed to guide you through the adoption and implementation of a holistic
performance planning and management process. We presume that the step of strategic human
resources (HR) planning is complete and that there is agreement to improve your organization’s
performance planning and management approach. Also, organizations must understand and
comply with local laws and regulations. In some cases, this may require some adjustment to the
steps outlined in this toolkit.

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Performance Planning and Management Overview
Definition

Performance planning and management (PPM) is a process of creating an organizational

environment conducive to high performing individuals that work together towards a common
goal. The planning process focuses on objective goal setting so that every employee receives
direction and communication about what they are expected to do. The management process
focuses on action plans, personal development and ongoing discussions about organizational
goals.

Effective staff management will propel both your employees’ performance and the performance
of your MFI and is essential to the success of the individual and the institution. Often the major
share of an MFI’s operating budget is spent on staff, so it is important that the organization and
the managers are focused on increased productivity and ROI (Return on investment) from their
human capital.

Performance planning and management is essential to building employee engagement and

commitment. It ensures employees know what is expected of them and how they are tracking
towards progress. It also eliminates surprises and misconceptions about an individual’s
performance and how it relates to the business. When employees know how their individual
contribution impacts the organization’s mission, it instills a sense of pride and purpose.

Think of this process like a road map for performance that is established at the beginning of the
year to guide the individual’s efforts (something he/she can follow, like a map), with course
corrections that may be necessary along the way, and then a review of what was accomplished
or where the individual ended up.

Performance planning and management sets the stage for differentiating levels of employee
performance and a pay-for-performance strategy. Performance-based pay is intended to
motivate employees to perform better and meet established goals, and rewards employees for
doing so. It requires that clear goals and measures be established at the start of a specified
period (e.g., start of the year). Evaluating against these goals and communicating the feedback
to employees fosters a climate of open communication and fairness to all employees. Additional
details can be found in the Total Rewards Toolkit.

Performance Planning & Management Is Not: Performance Planning and Management Is:

A broader approach to get the best out of all of your

A way to manage poorly performing employees
employees – even the top-performing ones

A process that inputs to the total rewards process

A process to be adhered to so that employees can
and ensures that employees are paid appropriately
be given salary or merit increases
for the value to bring to the organization
A continuous two-way process of planning,
Just an evaluation of performance at the end of the observation, conversation, and coaching that
year allows for improved performance that has a direct
impact on the goals of the organization
A robust approach that holds both the
A one-sided process
manager/supervisor and the employee accountable

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 Performance Planning and Management Approach

PLAN
 Set individual employee goals that
support team goals which in-turn
support the organization’s goals
 Set competency requirements

EVALUATE MANAGE
 Assess performance against goals  Observe performance on a day-to-
 Provide feedback day basis
 Make reward recommendations  Give feedback to coach and
develop

Focus On Employee Strengths

A discussion of planning for and assessing performance is not complete without addressing
employees’ strengths. Historically, performance management has focused on identifying
weaknesses and exhorting the individual to “work harder” to overcome these. We now know
that this focus on deficiencies does not result in improved performance. Rather it creates
defensiveness and makes it even less likely that positive change will occur. While a basic level
of competence in a particular area may be required, it’s when people are able to do what they’re
best at that great performance occurs.1

It’s not difficult to shift to a focus on strengths, but it requires a commitment from the top to help
the organization learn how to do this. First line supervisors and managers must know their
teams’ capabilities well enough to be able to identify strengths, and have the flexibility to adjust
responsibilities within the team in order to play to these. One tool that can help identify individual
strengths is the Gallup Strengths Finder.2

Here’s what it can look like in practice: consider a typical branch office with a branch manager,
teller, MIS officer and five field officers. While there are core responsibilities that must be met by
each field officer, there may be other aspects of the job that can be shifted between team
members so that everyone is able to contribute what they do best to the team. Depending on
an institution’s customer base, field officer responsibilities can be segmented between loan
types (group vs. individual) or between lines of business (agriculture lending vs. petty traders)
and field officers who demonstrate expertise in supporting one type of customer over another
can focus their client portfolio accordingly. Field officers with a particular interest in computers

1
Roberts, L. M. et al. How to Play to Your Strengths. Harvard Business Review, January 2005.
2
http://www.gallupstrengthscenter.com

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could be cross-trained to cover for the MIS officer. Senior field officers who have shown an
exceptional ability in mentoring their more junior counterparts could be tasked with training
responsibilities for new hires in the branch.

However, a critical component to any of the examples above is individualizing the performance
targets and performance evaluations for each role accordingly. A field officer tasked with
serving as a mentor for all new hires at the branch might not be expected to hold the same
number of group meetings each day as someone without that additional responsibility.
Similarly, a field officer responsible for individual loans might not be able to maintain the same
number of clients in his or her portfolio as someone dedicated to group loans. By managing to
each employee’s strengths, managers have an opportunity to allow each person to do what they
do best and subsequently provide added value to the team.

Involving Employees

Employees and managers both play an active role in the entire performance planning and
management cycle. A participatory approach helps build employee understanding and
commitment to the plan, ultimately motivating employees to work towards something they
believe in. It demonstrates respect towards the employee, providing a feeling of value when
contributing their opinions and ideas. This two-way conversation fosters open dialogue that
allows managers to better understand their employees’ strengths.

Involving employees in the planning process has many advantages. Given that the employee is
performing the tasks, he/she will have a better understanding of what is working and what is not.
Employees will often have ideas and solutions that may be implemented in a cost effective
manner. When asked for their opinion these ideas can be tabled for further discussion. High
performing teams and organizations are agile and are willing to be creative in offering solutions
to their customers. Involving employees in sourcing these ideas is a great way to stay
competitive in this changing business world. It also enhances employee self-esteem and
creates an environment of open communication in which employees are heard.

Finally since employees would have contributed to the performance planning process they will
have specific accountabilities to achieve them. The performance planning and management
process works most effectively when both, the employee and the manager / supervisor are
actively involved throughout the entire process.

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Plan
The first step is proactive planning. This includes setting goals and creating a plan with the
employee for the year. It gives the employee a sense of where he/she is heading, like a map of
the work for the year. Goal setting is really about helping employees know what is expected of
them, one of the most basic employee needs and a foundational element of creating employee
engagement.3

“A goal properly set is halfway achieved.” – Abraham Lincoln, 16th President of the United
States

This step involves

 Alignment between individual employee goals and the organization’s goals

o Gaining an understanding of the business goals for the year
o Creating team goals / departmental goals that align to the business goals
o Setting individual employee goals
 Re-accessing and setting competency requirements that will be required for optimum
performance of the job
o Job competencies are generally defined during the hiring process (refer to
Recruitment & Selection toolkit for a comprehensive list of competencies for MFIs.)
o Job competencies form part of job description

Alignment between individual employee goals and organizational goals

Another critical driver of employee engagement and commitment is to understand how one’s
individual efforts support organizational goals. Too often we’ve seen that even mid-career
managers can’t easily articulate the organization’s strategic objectives and are rather unclear
about the organization’s plans beyond the expectations for their own performance. Employees
want to make a difference and organizations need to enable and encourage this to ensure they
are maximizing the value of their people.5

Creating this line-of-sight starts with developing a robust planning process where broad
organizational goals and objectives cascade down to the various business units and functional
teams. These teams then translate their supporting goals and objectives to all team members,
where individual performance objectives support the team’s goals.

1a Goal cascade template

3
Harter, J. K. et al. “Q12® Meta-Analysis:
 The Relationship Between Engagement at Work and
Organizational Outcomes.” Gallup, Inc. 2009.
5
Knowledge@Wharton. (2010, February 17). “Putting a face to a name: The art of motivating employees”
http://knowledge.wharton.upenn.edu/article.cfm?articleid=2436 (accessed June 20, 2011).

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Action Step: Set Goals

Spotlight: Akash had served as a loan officer for a year and a half when his manager brought
his whole branch together to explain the performance planning process for the coming year. In
addition to a clear description of the process, Akash received a table to complete – there he
found the organization’s annual goals, which were subsequently broken down into the goals for
his individual branch. Next to the branch goals was a place for him to propose what he would
achieve individually in order to support the larger goals of the branch and in turn, the MFI as a
whole. Akash gave his individual goals a lot of thought and completed and provided them to his
manager as requested, in advance of their individual meeting.

When Akash and his manager came together for their individual meeting, Akash was pleased to
note that his manager had clearly taken some time to review the goals Akash had put forward
for himself. In the meeting, they discussed what was realistically achievable and what would be
important to prioritize, making some adjustments to Akash’s goals as they went along.

Askash left his performance planning discussion excited about the year to come. He knew what
was expected of him – and all his goals felt attainable. He felt supported in his role and eager to
continue to grow with the MFI into the future.

Tips for Setting Goals

S.M.A.R.T. Goals Use this simple acronym as a guide for setting good goals and metrics:
 Specific. You can describe the details.
 Measurable. You can measure the goal using either quantitative or
1b qualitative assessments.
 Achievable. You can achieve the goal.
 Relevant. The goal matters.
 Timely. You can achieve the goal within a specified time frame.
Goal Setting Guide

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Include both qualitative  Set expectations for both the end result and how that result will be
and quantitative achieved.
indicators  Qualitative measures should be based on the competencies required for
the specific job; not only technical capabilities but also the organizational
6
and personal competencies needed to excel in that role.

Personalize goals Consider the employee’s strengths and unique contribution when considering
goals and performance metrics. For positions with a large number of
incumbents (e.g., field officers), the goals may end up being similar, yet each
should be customized to ensure it is relevant to the individual.

Limit to 3-5 goals Limit the number of goals to 3-5 for each category (e.g., organization, team,
and individual). More than this will make it difficult to focus.

When thinking of goals, consider:

 What needs to be accomplished to ensure success?
 What will have the greatest impact in achieving the organization’s
mission?
 What standards are we striving for?
 What will the employee find most interesting or challenging?
 What will provide the most benefit to the clients?
 How is success measured? What are the key milestones that will be
measured?

Use a simple Clearly define the rating scale that goals will be evaluated on. For example:
performance rating  Exceeded goal / result
scale
 Met goal / result
 Did not meet goal / result

Clearly define the rating scale for competencies or the behaviors that will be
associated with a particular performance level. For example:

Exceptional Exceptional Outstanding

Very Strong Exceeds Expectations Above Expectations
Successful Meets Expectations Meets Expectations
Performance
Needs Improvement Inconsistent Below Expectations
Action Required Unacceptable Unacceptable

Involve employees Involve employees in the process of setting their goals. A participatory
approach builds ownership and commitment to the goals. Begin by sharing
with employees the organization’s goal and their team (refer to goals
alignment cascade template – handout 1a). Encourage employees to define
how their contribution can make a positive impact on their team goals.

6
Zacarias, Cecille & Sandra Togonon. “Building human resources capacity: developing competencies for
microfinance institutions.” Women’s World Banking, 2007.

7|Page
The main aim of a performance management process is to promote work quality, individual
growth and company growth. The core of a good performance management system is
communication and understanding not just forms and structure. The sample forms in this
toolkit have been designed to guide employee and managers / supervisors in the process. The
focus of the process is on results not activities. The process should be mutual, open and
participative and support the empowerment of both teams and team members to do their best.
Employees must be encouraged to take personal and proactive responsibility for their individual
growth.

It is recommended that the performance planning and management should be done at the least
on an annual basis. Many companies follow a semi-annual performance evaluation system so
employees can have a clearer more accurate view of how their performance affects team goals.
It is easier to make changes to operational tasks when evaluation feedback is given mid-year
and not just at the end of the year.

New hires, job changes, and promotions require a new or an updated performance plan. To
effectively improve performance, plans are completed at two stages:

1. New hire / job change / promotion

2. Annual planning and review

You may download a sample copy of the performance planning and management (PPM) forms
from this toolkit. The following is recommended:

1. New Hires / job change / promotion

 Who: Completed by the manager and reviewed by the new hire

 When: Within the first month of a new hire’s employment start-date
 What: The Performance Planning and Management form
 Why: Provide the new-hire clarification of what needs to be done, in what
manner and by when. This information is in addition to their job
description
 Where: The completed forms are submitted either to the human resources
department or kept with the manager with a copy to the employee

2. Annual Review `

 Who: Both the manager and the employee will complete the assessments.
employee will complete the self- assessment prior to meeting with the
manager. Manager will review the employee self-assessment prior to
meeting with the employee.
 When: On an annual basis or on designated evaluation dates
(example: 3, 6, 9 month reviews).
 What: Schedule a meeting with employee to review and discuss the manager’s
assessment and employee’s assessment. Combine the comments and
document on the performance planning and management form.
 Where: The employee and manager should keep a copy of the final document.
Human resources will receive a copy of the complete performance
planning and management form. All of these documents will be kept in
the employee’s personnel file.

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Example of an Annual Performance Management Cycle:

Good plans enhance the smoothness of day-to-day operations of an organization. Lack of

planning causes confusion, waste and duplication of effort. Once plans and standards are set,
employees must be held accountable for results. When employees are involved in planning
their work, they are more committed to its achievements.

2a Performance Planning and Management (PPM) form – goal section

Re-accessing and setting competency requirements

Job competencies are the knowledge; skills, abilities, and personal characteristics that work
together to produce outstanding performance.11 Competencies drive behaviors within the
organization. In order to enable employee behavior that is consistent with desired result, this
aspect of performance management cannot be ignored. In addition to planning short term (6
months – 1 year) goals for employees in the goals section of the Performance Planning and
Management form, competencies for each role should be planned and shared with the
employees before the start of the year.

In the next stage of the performance management process, goals and competencies are
reviewed and evaluated against actual performance for the period.

This toolkit offers sample performance planning and management templates for roles in MFIs.
You may download a copy of these forms and customize where necessary for your
organization.
------------------
11
Workforce Planning & Employment, Cert-Prep 2012 SPHR®, SHRM

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 3a PPM – Branch Manager

PPM – Field Officer

3b

3c PPM – Savings Officer

Manage
The next stage in the performance planning and management process after goals are set is to
manage employees’ work to achieve the goals. The proactive planning you’ve just completed is
best supported through structured, regular check-ins to confirm progress throughout the year
and identify any course corrections or additional support required. Both the manager and
employee play an active role in this process.

Action Step: Observe Performance

Once employees start working towards their goals, the manager is responsible for observing
that performance. This means being in a “position to notice” throughout the course of a normal
day when employees are doing things right and when they need assistance. Observing
performance may include attending a center meeting led by a credit officer or reviewing a report
produced by an employee. It might also include being receptive or observant of interactions the
employee has with other stakeholders within the organization. Data thus collected feeds into the
rest of the performance management process.

Action Step: Deliver Timely Feedback

Feedback is simply the sharing of observations about job performance or work-related

behaviors. The term feedback can conjure up different images for people, sometimes including
judgment, which can make it feel intimidating. Feedback should be used to recognize a behavior
or to make a suggestion for improvement. It is about learning and growing - both for the
employee and the organization.

Managers are primarily responsible for sharing performance feedback with their employees.
However, it is beneficial to your organization if employees feel comfortable recognizing and
sharing feedback with their peers. It shows that employees care enough to help others improve.
Peer feedback helps build accountability to the success of the team and creates an engaging
work environment.

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Spotlight: Priya, a dedicated loan officer in India, had been working at her MFI for about a year.
Recently the repayment rates had dropped slightly in her group loan portfolio. She was worried
that her clients were sometimes missing from their monthly repayment meetings. One day,
without notice, Priya’s branch manager showed up at one of her group meetings –he sat in the
back and took notes the entire time. Priya was nervous and didn’t know why the branch
manager had come. But, when they returned to the branch office, the manager didn’t even
mention the meeting to Priya.

Two months later, at her regular performance review, Priya’s manager brought out a list of
issues he had observed at the group meeting. Priya was stunned. Since then she has tried
some new tactics on her own, and attendance at her group meetings has begun to improve.
But, her manager never asked Priya her perspective on the matter. In fact, some of the issues
her manager brought up were issues Priya had already addressed, but only after a month or so
of trial and error.

Priya left the meeting feeling that she couldn’t count on her manager for support. If he knew
about issues at Priya’s group meetings, why didn’t he bring them up sooner? Why did he let
Priya struggle on her own?

Spotlight: Vivian is a new loan officer at an MFI in Kenya. After being on the job for five months,
she felt she understood what was expected of her but knew she still had much to learn. Her
group meetings always seemed to take more time than they should, making it hard for her to
hold as many meetings as she was supposed to each week.

Vivian’s branch manager informed her that he would be shadowing her at one of her group
meetings. Vivian was nervous at first, but her branch manager explained to her how he did this
with every loan officer, even the ones who had been there for years. So, Vivian held her
meeting as normal that morning and almost forgot that her branch manager was there
observing.

That afternoon, when they returned to the branch, Vivian’s manager asked that she set aside
some time to talk with him. When they sat down, he told her how pleased he was with the deep
connections she had clearly made with her clients. But he noticed that repayments at the
meeting took a long time. He showed Vivian the system he used for recording repayments when
he had been a loan officer. He also gave her some tips on how to get the meeting going quickly
so she could make the best use of her clients’ time.

With these recommendations, Vivian was able to improve the efficiency of her meetings before
her scheduled six month performance check-in. By that time she was feeling even more
confident in her work and was on track to meet her targets.

Tips for Delivering Feedback

When feedback is objective; impartial, not biased or opinionated, based on fact and not
subjective; biased, based on opinion not fact, it is easier to be delivered. When assessing
performance you can use positive language to structure your feedback and motivate your team
members. By ensuring that your employees are participating in the assessment and are being
heard, you can make a positive impact on your organization’s human capital and gain employee
commitment to improved performance. Remember the following when preparing to provide

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feedback. For further guidance on providing performance feedback refer to the handout titled
Manager’s guide to delivering feedback.

 Be specific and focus on behavior

 Cite examples of how the performance compares against the measures and goals
 Be direct
 Be timely; ignoring a problem and hoping it will go away will make things worse
 Focus corrective feedback on things that can be improved in the future
 Ask for the employee’s evaluation first before you give your evaluation of performance
 Identify what would help maintain or improve performance
 Ask employee to identify how improvement can be achieved. Ask employee to consider
what could have been done differently
 Agree on plan for the future
 Don’t forget to acknowledge good performance

There are many benefits of the performance feedback process. It allows satisfying the
employee’s desire for understanding how his/her performance has been in comparison to
manager expectation. The process allows for encouraging good performance and discourage
below standard performance.

Manager’s Guide to Delivering Feedback

4

Action Step: Discuss Performance with Employee at Least Once a Quarter

We suggest that the manager and employee discuss the employee’s performance at least one
time per quarter. This should be a two-way discussion based on the goals set at the beginning
of the year with input from both the employee and the manager.

Quarterly check-ins accomplish a number of things:

 Encourage open dialogue between the manager and the employee
 Help ensure there are “no surprises” at the year-end performance evaluation
 Opportunity to learn about how the employee’s strengths are contributing to the goals
 Opportunity to course correct, if needed, to ensure the goals will be met
 Reinforce performance expectations

Note: There may be a need to modify a goal midway through the year. This is acceptable but consider it
carefully; changing goals abruptly can create confusion. If the environment has changed and reaching the
goal will no longer create value, it is appropriate to modify. However, avoid doing so as a reaction to
obstacles (e.g., personnel changes). If a change is necessary, the manager, employee and team should
agree upon the new goals/measures.

Development Planning

Offering meaningful development and career advancement opportunities will enable you to
motivate and reward employees for their contributions, and help to keep them excited about
building a career with your organization. The performance planning and management process

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provides a rhythm for goal setting and planning, and provides a natural connection to employee
development.

Development activities can be focused on either improving performance in a current role or

developing towards a career aspiration. Regardless which approach is used, development must
be viewed more broadly than just technical skills-based training. Development is a set of
learning experiences designed to enhance an employee’s strengths and competencies - skill,
knowledge and behavior. It is about creating opportunities for learning and growth every day.

Action Step: Support Employee Development

A common guideline suggests that 70% of employee development efforts should be spent on
on-the-job development, 20% on feedback from managers, peers, etc., and 10% in formal
learning or education programs. Below are some examples of each.

On-the-job development Feedback Learning/Education Programs

70% of effort 20% of effort 10% of effort
 Stretch assignments  Ongoing Feedback  Leadership development
 Special projects  Coaching (internal and programs
 Job shadowing external)  Internal training sessions
 Job rotation  Formal or informal mentoring  University programs
 Onboarding a new team  Conferences and seminars
member  Books and articles
 Mentoring another team  Professional association
member memberships
 Cross-functional assignment
or project
 Participate on a special team
or committee

Development Planning Steps for Employees:

 Get to know yourself

 Decide what you want to do
 Create a plan and tell others
 Work the plan
 Review your progress

5 Individual Development Planning Guide12

Note: Strong managers see the development needed and look for ways to provide it for their employees
without waiting for formal training sessions to occur. They use more experienced individuals as informal
teachers and give employees stretch assignments to help develop new capabilities. For example,
experienced field officers can be chosen to participate on a new branch opening team, deployed as
needed on a temporary basis to establish new branches and train staff.
----------------------------
12 THE INDIVIDUAL DEVELOPMENT PLAN GUIDE, Wildland Fire Leadership Development Program, April 2010,
http://www.fireleadership.gov/toolbox/self_development/Individual_Development_Plan.pdf (accessed December 2012)

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Spotlight: Maria is an administrative assistant in the branch office of an MFI in Bolivia. At the
end of her regular quarterly performance planning check-in, her manager asked her what her
career aspirations were – where did she see herself growing within the MFI in the next few
years? Maria had always admired the work of the MIS officers. She told her manager how she
would like to grow into a position that allowed her to learn about data management at the MFI.
Maria’s manager, who knew the organization was hoping to train more MIS officers, said this
was great – and proposed including an additional goal in Maria’s development plan to include
gaining a basic mastery of the MIS system over the next six months. Her manager committed to
provide opportunities throughout the coming year for Maria to shadow the MIS officer in their
branch, and to set aside some time from Maria’s schedule to work on mastering basic data
management.

Maria left the meeting with her manager excited about the new path she saw for herself within
the MFI. She looked forward to demonstrating her capacity and meeting her performance and
development goals.

360 Degree Feedback

Some organizations gather feedback through a 360-degree feedback process, which collects
input from those around an employee at all levels (e.g., supervisor, direct reports, peers). The
approach is based on the belief that a deeper understanding of the differences between how
you see yourself compared to how others see you brings a greater level of self-awareness that
is needed for personal development.

A 360-degree feedback program should be used to support personal development and should
not serve as a performance review. In this process, both the manager and the employee should
be involved in selecting colleagues to provide feedback. Because a 360-degree feedback
process is for development purposes, it may be beneficial for the employee him or herself to
request participation from the identified feedback providers. If the request comes from a
manager, participants may see the process as more performance-focused rather than
developmental.

The request for feedback should be very clear: ask feedback providers to consider an
employee’s strengths and opportunities for improvement, along with the behaviors the employee
has displayed over the feedback period. Ask for trends, direct observable examples, as well as
the business impact of the employee’s contribution.

360-degree feedback programs can be useful, but are not right for every organization or
situation. Consider the following risks:
 Not all people giving feedback will have the best understanding of the employee’s goals,
strengths or development plan and subsequently, the feedback may not be useful to the
employee
 Aligning it to the performance evaluation process shifts the focus from a useful
development tool to one that could have an impact on the performance rating and pay.
When organizations use a 360-degree process to evaluate performance, individual
reviewers tend to soften their feedback
 Administratively time consuming
 Not sufficient on its own

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Tips for effective 360-degree feedback:
 Align the process to the individual development planning, not performance evaluations
 Seek feedback related to an individual’s development plan
 Follow up with feedback providers on any inconsistent trends to obtain full context and
additional details on observations – consider the frequency, project reach, audience and
business impacts linked to comments from feedback providers
 Support employees in understanding and interpreting the feedback
 Inform all participating employees – both those giving and receiving feedback – about
the intent of the process and how it works
 Managers should lead with their own observations and supplement/support this
information confidentially, and as needed, with input gathered from feedback providers.
 Carefully consider whether to make feedback anonymous or not

Note: There are a number of MFIs who have implemented a 360 degree feedback process. Unfortunately,
they are not using this tool for individual development, which is the original purpose of this tool and its use
for development planning is a global best practice. Instead, they are using it to gather feedback for the
performance evaluation process. This is not the purpose of this tool.

Address Performance Gaps

Inevitably, you will have an employee who does not perform at the level required. You must
address this performance issue as soon as you become aware of it; not doing so causes a drain
on his/her colleagues and the organization, and doesn’t give the employee an opportunity to
work to improve. You owe it to the employee to ensure goals are clear and that you have done
all you can to support his/her success.

When identifying performance gaps to be addressed, it is important to take into account the
context under which these gaps occurred. People often learn from making mistakes sometimes
this is when the best development occurs. It may be useful to identify whether the gap in
performance appeared during a stretch assignment or within the scope of regular performance
expectations.

Identifying Performance Issues

Consider the following questions to determine the cause of an employee performance issue:7
 Motivation
o Is the employee engaged or committed?
o Is the work important to the employee?
 Process
o Is the job scoped properly?
o Is the job description current and relevant?
 Knowledge:
o Are expectations clear?
o Does the employee have access to the necessary information and tools to do
his/her job?
 Skill:
o Does the employee know how to do the job?

7
“Performance Issue Root Cause Diagnostic” 2011. The Corporate Executive Board Company.

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 o Has the employee received proper training?
o Can he/she meet the expectations of the job?
 Environment:
o Are there challenges external to the employee that might be impeding his/her
performance?

If a performance issue is identified, it is imperative that you address it with the employee to
actively improve performance. Based on the identified cause of the performance issue, it may
be helpful to work with the employee to develop a clear performance improvement plan. This
plan can supplement the larger, annual performance plan and provide a more detailed, short-
term guide to bringing the employee back on track with his/her performance goals.

If after taking the above actions your employee's performance continues to be an issue, you
may need to follow your organization’s disciplinary steps.

Evaluate

Annual performance evaluations involve reviewing the plan set forth at the beginning of the year
and assessing the progress the employee has made. At this point a formal rating, based on
observations, feedback and results, is given to the employee. In a pay-for-performance system,
this rating often impacts an annual merit increase or other financial rewards.

Action Step: Conduct Annual Evaluation

Ideally, annual performance evaluations are simply a summary of all the discussions held during
the performance period, with no surprises for the manager or the employee. The most effective
process ensures the employee knows where he/she stands and feels empowered to move
forward, rather than disgruntled or confused. It is also important to make sure performance is
reviewed consistently across the organization; this is often called an internal review or
calibration process. Adding this step to your performance evaluation process corrects for the
differences in how individual managers may view performance.

The annual performance evaluation includes a number of steps:

1. Employee completes a performance self-assessment and submits to manager
2. Manager gathers data/results on the goals set at the beginning of the year
3. Manager assigns performance ratings and documents performance feedback
4. Calibration discussion: an internal review to compare performance ratings from region to
region, department to department, to ensure the same rating standards are applied
across the organization; this may result in revised individual ratings
5. Manager and employee meet to discuss the evaluation; allow the employee the
opportunity to review the assessment, provide written comments or express concerns.
6. Manager assigns corresponding rewards (e.g., merit increase)

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Tips for conducting the evaluation8
 Consider both specific, quantifiable accomplishments and qualitative feedback on
competencies exhibited when assigning a performance rating
 Acknowledge not just the results generated but also the behaviors that made those
results possible
 Tie positive feedback to previous opportunities to help show progress and motivate the
employee to acknowledge and work on current opportunities for improvement

Avoid these common evaluation faults:

 First impressions: ratings based on initial observations only
 Recency effect: most recent performance is given more weight than performance
throughout the evaluation period
 Central tendency: most individuals are given a medium rating
 “Long-timer” over “short-timer”—expecting the same performance from employees new
to their roles as you do from employees who should be fully experienced

Calibration for Assigning Performance Evaluations

The most effective organizations ensure that performance ratings are applied consistently
among all employees. A rating of “Exceptional” should mean the same from one team to
another, as should “Needs Improvement” – calibration helps insure a consistent application of
the performance ratings. One way to help align managers is to hold training sessions or
calibration discussions. In a facilitated calibration discussion, managers share their observations
and ratings of particular employee performance and the group of managers comes to
agreement on the ratings. Calibration serves several purposes: 9
 Consistent performance ratings across teams and locations
 More objective assessments by preventing performance rating decisions based on
biases, opinions, and impressions
 Increased awareness and sharing of talent

Included in a calibration process should be a consideration of the difficulty of the employee’s

original goals, along with his/her overall performance against those goals. Just as the calibration
process helps to level the ratings from varying managers, it will also help to level the ratings for
varying difficulty in original goals. Employees and their managers who set lofty goals for
themselves should not be penalized in comparison to those who set more conservative
expectations.

Note: When using a calibration process, guard against forcing a quota or certain number of employees
placed in each performance classification. The purpose is not to fit within a quota, but to align
understanding and better equip managers to evaluate performance consistently.

8
Ballaro, Beverly “Making Performance Reviews Less Stressful—for Everyone.” Harvard Management Update.
January 2008. http://hbr.org/product/making-performance-reviews-less-stressful-for-ever/an/U0801A-PDF-ENG.
9
“Ensuring Consistent Performance Ratings through Calibration Meetings.” Corporate Executive Board. April
2003. Catalog No.: CLC1Y2Q70. Corporate Executive Board.

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Rewarding Performance

Connecting rewards to performance, or performance-based pay, is intended to motivate

employees to perform better and meet established goals. As we’ve discussed, it requires that
clear goals and measures be established at the start of a specified period (e.g., start of the year)
and that employees work towards those goals throughout the year.

Note: Pay-for-performance often replaces the historic approach that compensates employees based
solely on seniority (the length of time in a position or the organization). Pay based on seniority tends to
encourage employees to stay but does not necessarily support the accomplishment of the organization’s
strategic goals. Consider the saying “you get what you pay for.” If you reward for mediocrity, you will get
more mediocrity. If you reward seniority over performance, you will get more seniority. If you reward
10
results – not simply effort or attendance – you will get more results.

Refer to the Total Rewards Toolkit for more details about rewarding and motivating employees.

10
"Beyond Pay for Performance” [webinar]. Human Capital Institute, February 2012.
http://www.hci.org/node/1353301 (accessed February 2012).

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Summary

High-performing organizations demand a workforce with the talents and skills to accomplish
strategic goals – a workforce engaged and actively contributing to the organization’s mission
and strategic objectives. The performance planning and management process is key to building
this aligned and committed workforce. It provides each employee with a ‘road map’ for
personally contributing to the success of the organization.

A strong performance planning and management process starts with setting broad
organizational goals and objectives and cascading these down to the various business units and
functional teams. These teams then translate their supporting goals and objectives to all team
members, where individual performance objectives are developed to support the team’s goals.

This process results in proactive planning, which is then supported through structured, regular
check-ins to confirm progress and identify any course corrections or additional support required.
The annual performance evaluations are then simply a summary of all the discussions during
the performance period, with no surprises.

By involving employees throughout the process, employees know what is expected, feel
connected to the strategic goals of the organization, and receive feedback and praise for their
work. In this way organizations can begin to maximize the contributions of all their employees.

This toolkit has outlined a simple approach to performance planning and management that can
be implemented together with the human resources team and managers throughout the
organization. The tools and examples are here to support you in maximizing the contribution of
your employees to achieve your mission and strategic objectives.

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References
Ballaro, Beverly “Making Performance Reviews Less Stressful—for Everyone.” Harvard
Management Update. January 2008. http://hbr.org/product/making-performance-reviews-less-
stressful-for-ever/an/U0801A-PDF-ENG.

"Beyond Pay for Performance” [webinar]. Human Capital Institute, February 2012.
http://www.hci.org/node/1353301 (accessed February 2012).

“Ensuring Consistent Performance Ratings through Calibration Meetings.” Corporate Executive

Board. April 2003. Catalog No.: CLC1Y2Q70. Corporate Executive Board.

Harter, J. K. et al. “Q12® Meta-Analysis:
The Relationship Between Engagement at Work and

Organizational Outcomes.” Gallup, Inc. 2009.

Knowledge@Wharton. (2010, February 17). “Putting a face to a name: The art of motivating
employees” http://knowledge.wharton.upenn.edu/article.cfm?articleid=2436 (accessed June 20,
2011).

“Performance Issue Root Cause Diagnotic” 2011. The Corporate Executive Board Company.

Roberts, L. M. et al. How to Play to Your Strengths. Harvard Business Review, January 2005.

THE INDIVIDUAL DEVELOPMENT PLAN GUIDE; General Guidelines for Charting Your Career
Path, Wildland Fire Leadership Development Program, April 2010,
http://www.fireleadership.gov/toolbox/self_development/Individual_Development_Plan.pdf
accessed December 2012)

Workforce Planning & Employment, Cert-Prep 2012 SPHR®, SHRM

Zacarias, Cecille & Sandra Togonon. “Building human resources capacity: developing
competencies for microfinance institutions.” Women’s World Banking, 2007

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