What you need to know about: Performance Management

Performance Management

Who should read this?

Employers with full-time, part-time, casual or fixed-term employees.

Why is it important?

To ensure employees have clear targets and perform to agreed standards, both in terms of what is expected and how the results are achieved.
Ensuring employees understand what is expected of them and deliver to agreed targets will enhance their contribution to your business, helping you to achieve your business targets. It is also more likely to result in higher productivity and motivation through increased job satisfaction.
Managing performance in a fair and clearly defined manner can also help avoid problems later if an employee important to ensure is not meeting agreed standards.

What you need to do

Performance management is an ongoing process, with a formal review at agreed intervals during the year. The degree of formality will vary depending on your workplace, but it’s important to ensure employees clearly understand what is expected of them. This is best done through regular discussion about their performance.

There are four main steps involved:

planning
monitoring and coaching
reviewing performance
managing outcomes of performance review, either:
- managing poor performance, or
- rewarding and recognising good performance

This brochure provides checklists of the key tasks involved with each step. The Employment Relations Act 2000 requires employers to act in good faith and follow fair and reasonable processes.

This brochure cannot be viewed as a definitive set of rules. However, it provides a guide to good practice behaviour in performance management that will help you establish strong employment relationships.

More information on performance management can be found in An Employer’s Guide to Employment Relationships. You can contact us with specific queries on 0800 20 90 20 or visit our website

Key Steps to Effective Performance Management

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1. Planning checklist

If you answer no to any of the questions you may need more information

Link to business performance	Yes	No	n/a
Are you clear on what your business is trying to achieve?
Do you have a clear view on how your employees can contribute to your overall business objectives?
Can you describe the culture of your business and how your employees need to behave to fit this culture and help achieve your business goals?
Have you determined how you will acknowledge performance achievements? For example: will you offer monetary rewards will you acknowledge success in non-monetary ways, e.g. gift vouchers, dinners or trips away?
Are your managers and supervisors clear on their role in managing staff performance?

When a new employee starts	Yes	No	n/a
Have you discussed performance expectations?
Have you discussed expectations relating to the employee’s work and how they behave?
Does the employee have all the required competencies for the role or do they need coaching in some areas? For example: relevant technical skills relevant people skills, e.g. teamwork.
Have you ensured that the employee knows who will be assessing their performance?
Is the employee clear about the process that will be followed to review their performance and the timing? (For example, a formal review might be held twice a year, with regular informal feedback during the year.)

Set performance expectations for all staff	Yes	No	n/a
Have you agreed 4-6* performance objectives that are clear, specific and measurable so that performance can be measured fairly and objectively? Consider: job specification business plan company targets and budgets. [*guideline only – more or less may be appropriate]
Have you ensured that each employee’s objectives link back to your business goals so that they help you achieve them, and the employee understands how their role helps the business succeed?
Have you considered having team as well as individual objectives?
Have you written down the agreed objectives and given a copy to your employee?
Have you got a process in place to update objectives if circumstances change?

FURTHER INFORMATION: www.business.govt.nz, www.ird.govt.nz & www.dol.govt.nz /er/starting/relationships/Employment Relationships.pdf

2. Coaching and monitoring performance checklist

If you answer no to any of the questions you may need more information

Informal review	Yes	No	n/a
Are you observing your employees’ performance regularly and not just when the formal review is due to take place?

Informal feedback	Yes	No	n/a
Are you giving your employees regular feedback on their performance to ensure there are no surprises when the formal review takes place? (Try to give specific examples of what your employee did well and where they could improve)

Acknowledge good performance	Yes	No	n/a
Are you acknowledging good performance so your employees know they are doing well and meeting performance expectations?

Coaching poor performance	Yes	No	n/a
Are you supporting employees who are not performing well and making sure they know what they need to do to improve their performance?
Are you providing training where this is necessary to help them improve their performance?

Updating objectives	Yes	No	n/a
If circumstances change, are you updating objectives with your employees?

FURTHER INFORMATION: www.business.govt.nz & www.dol.govt.nz/er/starting/relationships/Employment Relationships.pdf

3. Reviewing performance checklist

If you answer no to any of the questions you may need more information

Set review process and time	Yes	No	n/a
Have you advised your employees that their review is due to take place and what it will involve?
Have you: sought input from all relevant parties, e.g. customers, peers, other managers etc ensured the employee knows this feedback will be sought?
Have you given the employee sufficient time to prepare and submit a self-assessment of their performance? (This encourages participation and enables them to give their views on their performance. It also forewarns you of potential issues that may arise in the performance discussion.)

Preparation	Yes	No	n/a
Have you taken time to prepare for the employee’s review meeting?
If you disagree with the employee’s self-assessment, have you thought of examples to illustrate your point of view?
Have you put personal views aside so you can be objective and fair to all employees?
Have you anticipated likely questions in advance and considered your response?

Review meeting	Yes	No	n/a
An open and honest discussion is an important part of the review meeting.
Have you discussed each objective in turn with the employee, listening to their point of view and clearly communicating your own views?
Have you discussed the employee’s behaviour against the required competencies, listening to their point of view and clearly communicating your own views?
Have you discussed factors that may be impacting the employee’s performance (e.g. skills, resources, issues outside of work) and how they can be resolved?
Have you discussed areas for improvement and how this can be achieved?

Discuss and finalise assessment	Yes	No	n/a
Do you and the employees reporting directly to you agree on their overall assessment? (If not, is there an independent person you could ask for an opinion, if this is appropriate?)
Do you agree on the assessments given by your managers and supervisors for their staff? you need to ensure fairness for employees across the business if you don’t agree, you will ultimately make a decision but the aim is to ensure all parties understand your rationale.
Have all employees and their manager or supervisor signed the review document?
Has one copy been given to the employee and one copy placed on their personal file?

FURTHER INFORMATION: www.business.govt.nz & www.dol.govt.nz/er/starting/relationships/Employment Relationships.pdf

Once you have completed the steps above, move to 4A if your employee is not performing to expectations and 4B if the employee has met/exceeded targets.

4A. managing poor performance checklist

If the employee’s performance has not improved with coaching and regular performance discussions, you may need to implement a formal performance management process.

The following is a guide only and is indicative of the steps to follow in dealing with problems relating to poor performance. Individual cases may need further specialist advice from your employment or legal advisor. For specific issues relating to misconduct, refer to the Guide to Ending Employment Relationships.

If you answer no to any of the questions you may need more information

Before considering the problem	Yes	No	n/a
Have you checked: your legal requirements including obligations and definitions in the Employment Relations Act (including the ‘test of justification’) the employment agreement for the problem solving process the job description, performance indicators and company standards to ensure that it is clear where performance is falling short?

Fact finding	Yes	No	n/a
Have you carried out a thorough investigation of the facts and identified the problem? For example, identified where standards are not being met and checked that training and induction occurred? It is important to keep an open mind and consider all relevant information throughout the process.
Have you interviewed the appropriate people?

Trial periods	Yes	No	n/a
Have you checked whether your employee is on a trial period?
If they are and you give notice within the trial period, do you know that: you need to give notice in accordance with your employee’s employment agreement you do not need to provide a reason for the dismissal or follow all of the dismissal processes in this guide?

Arrange meeting with employee	Yes	No	n/a
Have you arranged a meeting with the employee and advised: the reason for the meeting that a support person/representative can attend?
Have you recorded that a meeting has been arranged?
Have you arranged for a witness to attend the meeting?

Meeting with employee	Yes	No	n/a
Have you held the meeting and covered the following: outlined concerns listened to employee agreed on standards expected in the future set training schedule set next review meeting discussed/outlined warning, if appropriate recorded actions/meeting on file?

If improvements are not made	Yes	No	n/a
Have you checked the employment agreement to confirm the problem solving process?
Have you arranged a further meeting and advised: them of your concerns and that disciplinary action and/or dismissal is a potential outcome prior to the meeting that a support person/representative can attend?
Have you recorded that a meeting has been arranged, and arranged for your witness to attend?

Follow up meeting	Yes	No	n/a
Have you held the next meeting and: formally warned the employee (in writing unless verbal in employment agreement) recorded the warning and actions on file set next review date?

If performance is still an issue by review date	Yes	No	n/a
Have you checked: the employment agreement and notice provisions redeployment possibilities?
Have you arranged a final meeting, if appropriate?

Final meeting	Yes	No	n/a
If still no resolution to the problem, have you: held the final meeting with the employee (including any support person/representative for the employee and/or witness for yourself) and confirmed outcome, e.g. termination of employment ensured the termination is under the terms covered by the employment agreement?

Calculate final pay	Yes	No	n/a
For employees whose employment has been terminated, have you calculated their final pay to the end of their notice period, including all holiday pay and any final entitlements, e.g. superannuation?

Collect company property	Yes	No	n/a
Have you collected all company property including keys, access cards, credit cards, uniforms, computers, passwords, security codes, cell phones etc before the employee leaves?

Managing problems and disputes	Yes	No	n/a
If the problems above lead to a dispute, such as a personal grievance, do you know where to go to for help and advice?

FURTHER INFORMATION: www.business.govt.nz, www.dol.govt.nz/er/starting/relationships/Employment Relationships.pdf , www.dol.govt.nz/er/starting/relationships/agreements/trialperiod.asp, & www.dol.govt.nz/er/solvingproblems/

4B. Reward and recognition checklist

If you answer no to any of the questions you may need more information

Acknowledge achivements	Yes	No	n/a
Have you acknowledged employees who have met or exceeded objectives?
Have you acknowledged employees who are meeting agreed competencies?

Rewarding achievements	Yes	No	n/a
If you have remuneration or other benefits linked to the achievement of performance objectives, have you ensured the employee gets what they are entitled to?
Have you discussed development and/or training needs and opportunities identified in the review discussion? (Opportunities might include things like projects, promotions and mentoring.)

Update objectives	Yes	No	n/a
Have you agreed new objectives for the next review period?

FURTHER INFORMATION: www.business.govt.nz, & www.dol.govt.nz/er/starting/relationships/Employment Relationships.pdf

How to resolve employment relationship problems

You can help preserve employment relationships and save time by solving problems yourself in good faith as far as possible:

be clear about the facts
talk to your employee
deal with issues promptly but allow sufficient time for both parties to seek advice and think through the issues
if a problem is a personal grievance, the employee must raise it with the employer within 90 days of the action complained of, or after they became aware of it, unless you consent to the personal grievance being raised after the expiration of that period (if consent is not given, the employee can apply to the Employment Relations Authority)
ensure you follow the process for issue resolution outlined in the employee’s employment agreement
you can call the Department of Labour to clarify your obligations (0800 20 90 20)
if the matter is about minimum legal requirements, a labour inspector can assist to resolve the matter.

If you can’t resolve the problem yourself, you can participate in mediation, either through the Department of Labour’s mediation services or through independent mediators.

If this does not resolve the problem, you or the employee can go to the Employment Relations Authority for a determination.

If either you or the employee is dissatisfied with the determination of the Employment Relations Authority, the issue can be taken to the Employment Court.

For more detailed information about problem resolution check: www.dol.govt.nz/er/solvingproblems/

For More information

If you need more information about the topics covered in this brochure:

Call us free on 0800 20 90 20
Or visit our website at www.dol.govt.nz

The Department of Labour’s website contains detailed information relating to health and safety, recruiting, pay, holidays and leave, performance management, and ending employment relationships. Our website also has answers to frequently asked questions and case studies.

Our free online tools – to improve your business:

In addition to The Big 6, we also provide tools and services that are designed to make management simpler and free up time for small business owners to concentrate on the bigger picture. These tools help you implement good health and safety, and employment relations practice.

The tools are:

You can find these online tools at www.dol.govt.nz/onlinetools/

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Performance Management