Appraising Auditor Performance: Strategies and Lessons Learned

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Appraising Auditor Performance Strategies and
Lessons Learned

• Susan Cohen, City Auditor
• City of Seattle
• May 12, 2004

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Agenda

• Reflecting on performance appraisal experiences
• Lessons learned about performance appraisals
• Dealing with performance appraisals and other
  difficult conversations

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Credit

• Wilson, Thomas B. Innovative Reward Systems For
  the Changing Workplace McGraw-Hill, New York 1994

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Definition

• A PERFORMANCE APPRAISAL IS
• One of those special human encounters where the
  manager gets no sleep the night before, and the
  employee gets no sleep the night after.
• --Thomas B. Wilson

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Appraising vs. Managing Performance

• Appraising
• Limited (annual) feedback
• Artificial rewards

• Managing
• Continuous management review
• Active and appropriate reinforcement

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What Do We Want?

• Managers Ability to recognize and reward
  superior performers.
• Employees Honest and timely feedback, specific
  development, and an opportunity to receive
  effective coaching.
• Compensation Managers To ensure that dollars
  are allocated according to performance levels.
• Human Resource Executives Ability to identify
  top performers, plan for their development and
  succession, and reward them adequately.

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What the Experts Say

• Quality management gurus (Deming, Juran) argue
  that appraisals should be eliminated because
  they
• Inaccurately portray individual performance as a
  major impact on results
• Inadequately address system-based issues.

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Did You Know?

• At least two dozen studies over the last three
  decades conclusively documented that people who
  expect a reward for completing a task, or for
  doing that task successfully, simply do not
  perform as well as those who expect no reward at
  all.
• --Harry Levinson

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Rewards or Punishment?

• Pay is not a motivator
• Rewards have a punitive effect because they are
  manipulative
• Not receiving an expected reward is also
  indistinguishable from being punished.
• Rewards rupture relationships
• Rewards undermine interest because artificial
  incentive cannot match intrinsic motivation

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Goals for Appraisal System 1

• Providing staff with information designed to
  maximize their individual potential and
  contributions to the agency
• Providing management with information needed to
  recognize and reward top performers
• Providing information and documentation needed
  to deal with poor performers

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Goals for Appraisal System 2

• Feedback to auditors
• How to improve skills and personal qualities
• Effective utilization of resources

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Goals for Appraisal System 3

• Provide employees with feedback to improve
  performance
• Provide basis for allocating pay
  increases/incentive awards
• Focus training and development activities
• Identify candidates for promotion
• Create an opportunity for employees to receive
  recognition
• Assure adequate documentation of performance
  that satisfies the requirements of the 1964 Civil
  Rights Act and EEO Commission guidelines
• Improve communication between managers and
  employees
• Establish performance goals and standards for
  the next performance period

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Goals for Appraisal System 4

• Reinforce collaboration, teamwork, and a focus
  on the priorities of the business

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Overarching Goal

• To create and promote a workforce that can
  achieve the organizations mission to provide the
  most value to its stakeholders

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Evaluation Criteria 1

• Planning
• Data Gathering and Documentation
• Data Analysis
• Written Communication
• Oral Communication
• Working Relations
• Supervision

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Evaluation Criteria 2

• Achieving Results
• Maintaining Client and Customer Focus
• Developing People
• Thinking Critically
• Improving Professional Competence
• Collaborating with Others
• Presenting Information Orally and in Writing
• Facilitating and Implementing Change
• Representing the Organization
• Investing Resources
• Leading Others

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Evaluation Criteria 3

• Amount of Work
• Quality of Work
• Auditor Knowledge
• Problem-Solving Ability
• Communications Effectiveness
• Ability to Follow Instructions
• Planning Skills
• Relationships

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Remember Myers-Briggs

• Anyone who supervises someone else should
• --Look carefully at the assumptions made about
  motivation.
• --Assess the degree to which carrot-and-stick
  assumptions influence own attitudes.
• --Harry Levinson

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Various Scales

• Scale 1
• Meets Expectations
• Exceeds Expectations
• Role Model
• Below Expectations
• Scale 2
• Pass
• Fail

• Scale 3
• Unacceptable
• Needs Improvements
• Fully Successful
• Exceeds Fully Successful
• Outstanding
• Scale 4
• No scale--qualitative information only

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Typical vs. Ideal System

• Highly subjective process
• Unilateral from bosss perspective
• Little focus on future capacity
• Uncertain link to business success drivers

• Explicitly defined process
• Mutually understood
• Strong development focus
• Grounded in business success drivers

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New Practices

• Pass/fail systems rather than individual
  performance ratings, or no ratings at all
• Peer review systems rather than manager-driven
  systems
• Using review periods as a means to counsel
  employees on career and promotional opportunities
  
• Minimizing the relationship between performance
  and pay raises

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Why Appraisal Systems Fail

• Managers lack sufficient information to judge
  performance accurately
• The goals and standards are unclear and
  subjective
• Employees become defensive
• The process is not taken seriously
• Managers do not prepare adequately

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SMART

• Specific
• Meaningful
• Achievable
• Reliable
• Timely

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Legal Considerations

• Personnel laws and court cases have established
  requirements for performance appraisals
• --Performance measures must relate directly to
  the job
• --Evaluations must be based solely on job
  criteria
• --Results of evaluations must serve as the basis
  for making decisions (e.g., salary, training,
  promoting, layoffs, and terminations)
• --Performance appraisals must be conducted at
  least once a year
• (Civil Rights Act, Bito v Zia Company, Griggs v
  Duke Power, Wade v Miss.)

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Employee Considerations

• Clear sense of direction
• Opportunity to participate in goal-setting
• Timely, honest, and meaningful feedback
• Immediate, meaningful, and sincere reinforcement
  of efforts
• Coaching and assistance to improve job
  performance
• Fair and respectful treatment
• Opportunity to understand and influence decisions

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Susans Favorite Quote

• If people do not participate in and own the
  solution to the problems or agree to the
  decision, implementation will be halfhearted at
  best, probably misunderstood, and more likely
  than not fail.
• --Michael Doyle in forward to Kaner, Sam
  Facilitators Guide to Participatory Decision
  Making New Society Publishers, Gabriola Island,
  BC 1996

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• Performance Management
• Instead of
• Performance Appraisals

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Performance Management

• Communicate the organizations mission,
  strategies, and performance goals
• Establish performance measures to reflect both
  quantitative and qualitative elements.
• Identify goals that balance short-term results
  with longer-term success indicators
• Ensure that employees throughout the audit
  function understand the organization's goals

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Performance Management (cont.)

• Foster employee involvement in goal-setting
  process
• Provide training to managers and employees on
  giving and receiving feedback
• Designate manager to serve as mentor and assist
  employees in using feedback for performance
  improvements
• Provide training for employees to strengthen
  performance and advance career

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Feedback

• Feedback should be related to meaningful
  consequence
• Quantitative assessments valued more than
  narrative or subjective assessments
• Public displays for group results and private
  meetings for individual feedback
• Daily, weekly or biweekly feedback is valued more
  than annual feedback
• Self-assessments have little value as an
  objective and meaningful source

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Five Stages of Difficult Conversations

• Prepare
• Imagine resolution
• Initiate conversation
• Explore their story, then yours
• Collaborate on resolution

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Stage 1 Prepare

• Consider your objectives and approach
• Coach yourself to accept multiple outcomes
• Focus on your purpose in initiating the
  conversation
• Adopt a positive mindset (see next slide)

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Choose a Positive Context

• When a conflict is framed in a negative context,
  the focus is on power, and will likely result in
  a winner and a loser.
• If a hammer is the only tool you have,
  everything looks like a nail.

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Stage 2 Imagine Resolution

• Relationship will improve as a result of
  conversation
• Remain open-minded rather than advocate for a
  specific solution
• Believe that a mutually acceptable solution can
  be achieved

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Stage 3 Initiate Conversation

• Invite conversation and share your purpose
• Key practice describe the issue/problem as a
  difference in perspective
• Avoid problem solving during initial stage of
  conversation
• Acknowledge feelings that are frequently core
  issues, before attempting to solve stated problems

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Stage 4 Explore Their Story-- Then Yours

• Start with their story
• Dont assume that you know their story
• Dont push backListening does not imply
  agreement
• Express your views and feelings after their story
  is finished

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Your Story

• Start with the most important points
• State what you mean clearly to avoid assumptions
• Share how you formed conclusions
• Avoid words like never or always or fault
• Present your story as your truth not the truth

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Stage 5 Collaborate on Resolution

• Invite the other person to help identify
  solutions
• Invite the other person to come back if attempted
  resolution is not successful
• Remain hopeful that mutually acceptable solution
  is possible