Case study – performance management for an internal consulting team

I was once called into a team meeting from the Internal Audit department. They felt the performance management policies from our company did not fit their needs and needed help in deciding how to approach their specific case.

Background

The company was organised and working in a traditional hierarchy and process approach : one Director – a few managers in charge of specific areas within the department – multiple employees working within these areas.

But within the organisation, the structure and ways of working of the Audit team were pretty much unique.

They were structured, on paper, like the other departments. Yet their ways of working were fundamentally different as they mimicked those of consulting organisations (where most of our auditors were coming from).

So, while the employees reported to one manager, their work was organised in projects which were assigned based on the specific needs for that assignment. For example, an IT auditor could work with other auditors on a project related to one of the property development programs. During that assignment, she would report to the manager in charge of real estate audit.

Then when the audit was over, the IT auditor would move on to another assignment and so on.

The question

At the time, the performance management system in the organisation allowed for continuous feedback between manager and employee, but it was only possible to enter performance ratings (overall + on each objective) during the official year-end appraisal cycle.

Moreover, even though it was possible for a manager to assign evaluation responsibilities to another manager (for example when an employee transferred departments during the year and the new manager needed feedback on the first moonths of the year), the process was not suited for managing someone who had worked for multiple supervisors in the course of year.

The Director was facing methodology questions from his team and therefore asked for my help, because they wanted to see how their way of working could be accurately taken into account into the overall performance management system.

The solution

I first reinforced the performance management philosophy that was in place in the organisation, and especially the steps that were planned at year-end (after continuous feedback throughout the year and formal mid-year or quarterly review) :

  1. employee self-appraisal
  2. employee and manager meeting, provisional rating by manager
  3. calibration / moderation session between all managers of the department to compare ratings and ensure that the division was following the guided distribution curve
  4. amendments to the appraisal form if needed and communication of final rating by the manager to the employee.

I then explained how the HRIS process worked, and indicated to them a workaround in case they wanted to perform a self-appraisal and a manager rating at the end of each assignment. This was easy : it was enough to type in, alongside the comments, the self-rating and (project) supervisor rating. The official manager and employee simply needed to copy these again in the dedicated area at year-end when the appraisal system would open and access to the ratings section would be granted.

So there was a way to do what they wanted, if they wanted, in the system.

The conversation continued, and it turned out that this was not their actual struggle.

They all agreed they needed to have an immediate feedback session between the (temporary) supervisor and the employee at the end of each project.

However, their concern was around whether they should immediately communicate a performance rating for each project or not.

If they did, the employee would have a clear vision of where she was standing and knew whether to continue or change things for the next assignment.

But there was the risk of building expectations of a year-end overall rating, which was not guaranteed because the application of the guided curve means an emphasis on peer ranking, not absolute ranking. In short an employee may be reaching or even overachieving their objectives, but if their peers are all even higher achievers, then the overall, final rating may be lower than the simple average of the individual ratings on each project.

Both arguments, in favour of communicating explicit ratings or of sharing only feedback, are valid and there is clearly no right or wrong.

The company did not have a rule in place for handling such situations given the uniqueness of the approach in Internal Audit. So I could not force upon them a corporate approach as this would not be supported by any business reason.

When I told them, they were a bit disappointed as they were looking for guidance from me, the representative of corporate HR and the internal guru of Compensation & Benefits. Luckily, I had a proposal for them : they could make their own decision and as long as they informed me of the outcome, I would support it from a company standpoint.

I offered this option, and told them that the Director would have to decide how to come to the decision (would he decide alone, consult with his senior managers, or discuss with the whole team), and prepared to leave.

At that point, I was asked to stay. They were going to discuss the subject openly, ask each team member to vote and explain why they wanted solution A – don’t give the rating for each assignment or B – communicate that rating, and then the Director would make the final decision.

They wanted me to be there in case any question would arise, and also to witness the decision process and make sure that everyone had a full understanding of the outcome.

So – we did just that. Can you guess which approach they preferred ?

Yes, the vast majority preferred to receive a rating at the end of each assignment, even if it meant they might be disappointed with their overall final rating based on the peer ranking after calibration.

The lessons

There are 3 obvious learnings from this experience :

  1. the process and system you put in place for managing performance may be great, but will not always meet the needs of all parts of your employee population. Keep your mind open.
  2. there is no right and wrong in terms of performance management design, so you have to listen to the business input to get their buy-in.
  3. employees can accept calibration and the concept of peer ranking provided you give the proper explanations and rationale for using the approach. After all, as I already noted in another post, everyone understands and accepts peer ranking when it comes to sports

For me though, the most important lesson came from the very collaborative process that the Audit team and I followed in their decision journey.

They were open to ask for support, I was open to help them find a solution that would help them manage their day-to-day activities.

But the real point was that they had identified an incomplete need in the first place (can we do an appraisal at the end of each assignment ?). Through conversation and  exchange, they eventually understood that their need was more centered around agreeing and setting appropriate expectations around the way that the overall rating would be determined at year-end.

This is a situation that will occur on a regular basis with your clients, whether you are an internal advisor or an external consultant. So remember to keep your ears open and keep digging until you are sure you solved the real issue !

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Comments

  1. A masterstroke to wrap up a brilliant one year of Compensation Insider!

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