Performance Management Program

Performance Planning/Goal Setting July 2010

Objectives
This key objectives of this session are to:
 Understand the Performance Management process at Houghton  Understand the role of managers and employees in the process  Develop effective goal setting skills

Performance Management Overview

Why Performance Management?

The performance management system is designed to assist in building a performance culture at Houghton that supports:  Consistency in the management and development of employees  Employee understanding of their contribution to key Houghton business objectives  Measuring and assessing performance  Planning, measuring and providing feedback against realistic and agreed objectives

Performance Management Objectives

The Houghton performance management system is based on global best practices and has the following objectives:  Translate Company business objectives into individual goals for employees  Help managers and employees agree on goals  Encourage individuals to take accountability for the achievement of realistic, but challenging performance outcomes  Focus on clarity and ensure employees are clear on what is expected and how it will be measured  Provide continual communication and feedback on goals in relation to attained performance levels; and  Foster sincere discussions of opportunities for employee development

Performance Management Process

Our new process includes 3 key drivers of performance improvement

Planning and Goal Setting

Feedback and Coaching

Performance Review

Performance Management Process

 Planning & Goal Setting  Identify individual performance expectations and gain employee commitment to achieving those expectations  Typically occurs prior to start of financial year  Feedback & Coaching  Continual tracking and improvement of performance through constructive feedback and reinforcement of key results  Is ongoing throughout the year  Performance Review  Quarterly performance discussions regarding progress against performance objectives  A formal documented performance review after year-end to assess actual results/accomplishments against stated performance objectives

Employees Role in Performance Management

 Active participation, including honest self-assessments during performance discussions  Initiate conversations to discuss progress and raise awareness of performance blocks  Solicit, listen to and act on feedback  Identify own strengths and development needs and suggest appropriate action plans  Prepare performance review self-assessment

Managers Role in Performance Management

 Set objectives for employees that support Company objectives  Communicate objectives clearly  Encourage employees to participate in their performance management  Provide informal, frequent and candid feedback on how employees are progressing and how they can improve  Provide solutions and tools to assist in breaking performance barriers  Confront poor performance and reinforce good performance  Support employee development and possible career progression

Goal Setting

Todays Main Messages

 Goals should be aligned from the top of the organization down through the businesses to the individual
 Houghtons approach to alignment one conversation at a time

 Therefore, setting goals begins with a conversation

 Manager meets with the employee one-on-one or with the team  Manager reviews company, BU and Departmental goals

 Goals set direction for each of us  Goals should further be defined by employees job level and function  You are responsible for your own success  Coaching and Feedback is everyones job

Goal setting begins with a conversation between a manager and his/her employees

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Goal Setting - Performance Goals

 Goals cascaded from Houghtons strategic business objectives and/or Key Performance Indicators (KPIs) through the business unit and department to the individual level  Key Performance Indicators (KPIs) are quantifiable measurements that define and measure progress toward the Companys strategic business objectives
 Some examples for Houghton include profitable growth, working capital, supply chain effectiveness, innovation & continuous improvement, total expense efficiency, etc.

 Performance goals typically focus on financials, productivity, safety, process improvement, project management, etc.  Some goals can change during the cycle as warranted by business priorities and new opportunities  As a guideline, employees should set 3-5 performance goals

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Goal Setting - Development Goals

 Focus on the knowledge, skills and behaviors needed to accomplish the performance goals  May prepare you for another role at a higher level or a different area of expertise  Can be technical/job specific skills or interpersonal skills such as team building, peer relations, communications, developing others, etc.  As a guideline, employees should set 1-2 development goals

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Goal Setting SMART Goals

The key to writing effective goals is to ensure that they are SMART:
Specific Measurable Attainable
Clearly define what you are going to do. State how you are going to know youve achieved your goal. Goals should be challenging and require effort to achieve, but you must have the resources, will and control to achieve them. Why is the goal important? Goals should focus strictly on the important aspects of your job that support strategic business needs. When will your goal be completed? Including an end point on your goal focuses your time and attention and provides a clear target to work towards.

Relevant

Time Bound

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Writing Goals - Example

Goal 1 Reduce cost of goods sold

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Writing Goals - Example

Goal 1  Reduce cost of goods sold Better Goal 1  Reduce the cost of goods sold by 20% in the D&S segment by end of the fiscal year

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Writing Goals - Example

Goal 1  Reduce cost of goods sold Better Goal 1  Reduce the cost of goods sold by 20% in the D&S segment by end of the fiscal year Goal 2  Develop direct reports

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Writing Goals - Example

Goal 1  Reduce cost of goods sold Better Goal 1  Reduce the cost of goods sold by 20% in the D&S segment by end of the fiscal year Goal 2  Develop direct reports Better Goal 2  Develop direct reports by establishing SMART performance and development goals for each direct reports within 30 days of the start of the FY2009
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Performance Goals - Examples

Specify Business Objective or Key Performance Indicator (KPI) Increase overall monthly sales by introducing connector products into new markets. Manage the relocation of a local office in accordance with agreed upon standards and action plans. Develop, implement and communicate Company compensation structure. Develop an online system to track customer complaints. Expected Results - Metrics, Targets, Timelines Increase monthly sales by 15% in Mexico, Poland and Japan by the end of the 3rd quarter. Relocation must be complete and office fully operational by 7/1. Have structure fully implemented in US by 8/31. Develop system and reduce customer complaints by 50% by the end of the fiscal year. Results & Accomplishments - Actual results or status of progress

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Development Goals - Examples

Expected Results Observable behaviors/measures of progress Results & Accomplishments - Actual results or status of progress

Target Skills

Earn Certified Associate in Project Management through the Project Management Institute. Increase business acumen by working one day per quarter with regional sales manager, meeting a wide range of customers and prospects.

Pass certification exam by 12/31.

Successfully present analysis and action plan to regional sales team by end of 2nd quarter

Take advanced Excel class to enable efficient data analysis capabilities.

Attend class by 7/31 and demonstrate increased technical capability by completing more advanced data analysis requests by 9/30.

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Goal Writing Exercise

 Individually:
 Draft a Performance goal using the Performance Management Form  Determine if the SMART goal criteria are present:  Specific  Measurable  Attainable  Relevant  Time Bound

 In pairs share your results

 Write a better goal

 Prepare to discuss your options, challenges

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Performance Management Review

Performance Management Form

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Performance Management Form contd.

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Performance Management Approvals

 Goals set between managers and employees do not require approval of second level managers  Managers must complete year-end performance reviews for their employees and have these reviews approved by second level managers  Once managers have held year-end performance discussions with their employees and the employee has signed their review, it must be sent to HR for inclusion in the employees file  In order to be considered for a merit increase, managers must complete year-end performance reviews with their employees  Likewise, employees must have had a performance review completed for them to be considered for a merit increase

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Next Steps
 Work with each of your employees to develop goals as soon as possible  Additional training will be scheduled towards the end of the year on assessing employee performance, writing performance reviews and delivering performance feedback to employees

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