ROMANIA Reimbursable Advisory Services Agreement on Developing a Unitary Human Resources Management System Within the Public Administration (P165191) Deliverable 5.1 Analysis of the performance management system August 2020 This report has been delivered under the Reimbursable Advisory Services Agreement on Developing a Unitary Human Resources Management System Within the Public Administration (P165191) signed between the General Secretariat of the Government and the International Bank for Reconstruction and Development on January 31, 2018. This report represents Deliverable 5.1 – Analysis of the performance management system, part of Output 5 – Performance Management System under the above-mentioned agreement. Disclaimer This report is a product of the International Bank for Reconstruction and Development / the World Bank. The findings, interpretation, and conclusions expressed in this paper do not necessarily reflect the views of the Executive Directors of the World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. This report does not necessarily represent the position of the European Union or the Romanian Government. Copyright Statement The material in this publication is copyrighted. Copying and/or transmitting portions of this work without permission may be a violation of applicable laws. For permission to photocopy or reprint any part of this work, please send a request with the complete information to either: (i) General Secretariat of the Government (Piaţa Victoriei nr. 1, Sector 1, Bucharest, Romania) or (ii) the World Bank Group Romania (Vasile Lascăr Street, No 31, Et 6, Sector 2, Bucharest, Romania). AC Administrative Code CC Romanian Competition Council CHCO Chief Human Capital Officer CNCISCAP National Committee for Coordinating the Implementation of the Strategy on Strengthening Public Administration CoG Center of Government DMICIR Directorate for Managerial Internal Control and Interinstitutional Relations EC European Commission EU European Union FoR Frame-of-reference GD Government Decision GEO Government Emergency Ordinance GOR Government of Romania GSG General Secretariat of the Government HLCS High-level civil servant HRM Human Resources Management HRMIS Human Resources Management Information System HCOP Human Capital Operating Plan IBRD International Bank for Reconstruction and Development IMC Internal managerial control ISP Institutional Strategic Plan KPI Key Performance Indicators L&D Learning and Development LI Labor Inspection MIS Management Information System MLSP Ministry of Labor and Social Protection MPF Ministry of Public Finance/ Ministry of Finance MPWDA Ministry of Public Works, Development and Administration NACS National Agency for Civil Servants NAFA National Agency for Fiscal Administration NIA National Institute of Administration NPM New Public Management OECD Organization for Economic Cooperation and Development OPM Office for Personnel Management PRP Performance-related pay RAS Reimbursable Advisory Services RIA Regulatory Impact Assessment ROF Rules of Internal Organization and Functions SCPA Strategy for the Consolidation of the Public Administration SCSD Strategy for Civil Service Development TRS Total Reward Strategy UPL Unitary Pay Law WB World Bank YPS Young Professionals Scheme The analysis of the performance management system in the Romanian public administration is part of a Reimbursable Advisory Services Agreement on Developing a Unitary Human Resources Management System within the Public Administration, between the General Secretariat of the Government of Romania and the World Bank. The report was prepared by a World Bank team led by Carolina Rendon (Task Team Leader of the RAS) and Zahid Hasnain (Co-Task Team Leader of the RAS) consisting of Sabina Schnell and Dimitrie Miheș, with substantial contributions from Anita Sobjak, Zahid Hasnain, Miguel Rodrigues, and Anca Butnaru. Special gratitude goes to the World Bank’s Embed team for the behavioral analysis that informed the report, and in particular to Iman Kalyan Sen, and to the Bureaucracy Lab for support with the survey data on Romanian public sector staff. The team also benefited from valuable insights from Ramona Moldovan and Ronald Myers. Magdalena Popescu, Mălina Gonț and Anastasia Gadja provided valuable logistical and editing support. The team would like to thank Roby Senderowitsch (Practice Manager, Governance Global Practice, Europe and Central Asia), Tatiana Proskuryakova (Country Manager), May Olalia and the Governance ECA Ops Team, and the Romania Portfolio Team for their overall advice, guidance, and support throughout the development of this report. We also want to thank the peer reviewers, Gael Raballand, Bernard Myers, and Victor Giosan, for their very helpful comments and suggestions. The team would like to express its gratitude to government officials of the General Secretariat of the Government (GSG) and the National Agency for Civil Servants (NACS) as well as officials of various government agencies who took the time to meet with them. The team would particularly like to thank Dragoș Negoiță (Director, GSG), Anca Lupu (Counsellor, GSG), Lavinia Niculescu (Director, NACS), Cristina Panțâru (Public manager, NACS) and Paula Vitriuc (Public manager, NACS). Glossary of terms ........................................................................................................................ 9 Executive Summary................................................................................................................... 11 1 Introduction ...................................................................................................................... 16 1.1 Background................................................................................................................. 16 1.2 Scope and methodology of the report ....................................................................... 18 2 International trends and success factors for effective performance management systems in a public sector setting ............................................................................................. 20 2.1 Performance management objectives and philosophies .......................................... 20 2.2 Success factors in international experience............................................................... 24 3 Analysis of the Romanian performance management system......................................... 46 Overview ............................................................................................................................... 46 3.1 Performance management must start from the top ................................................. 48 3.2 Ensure a clear line of sight (goal alignment) .............................................................. 52 3.3 Differentiate performance assessments across institutions, job types, and levels of performance ......................................................................................................................... 56 3.4 For objectivity and fairness, improve judgment and diversify the source of information for the evaluation ............................................................................................. 59 3.5 Motivate performance through both intrinsic and extrinsic incentives .................... 62 3.6 Enable staff performance through adequate opportunities for growth and development ......................................................................................................................... 69 3.7 Embed performance management in the organizational culture and practice ........ 72 4 Recommendations ............................................................................................................ 75 4.1 Putting principles into practice: adapting international success factors to the Romanian context ................................................................................................................. 76 4.2 Conclusion and next steps........................................................................................ 103 5 Annexes ........................................................................................................................... 109 Annex 1: Proposed forms for key performance management elements ........................... 109 Annex 2: Selected performance management tools .......................................................... 150 Annex 3: Additional tables and figures ............................................................................... 157 Annex 4: Recommendations on career management reform from the Baseline Diagnostic 163 Annex 5: Interviews and focus groups ................................................................................ 166 Annex 6: eMBeD report on “Performance Management in the Romanian Civil Service: A Study of Behaviors and Biases” .......................................................................................... 167 6 Figure 1: HRM functions and objectives ................................................................................... 17 Figure 2: The conceptual framework of performance management ....................................... 21 Figure 3: Principles for setting up successful individual performance management systems. 25 Figure 4: Career system for permanent officials in the European Commission ....................... 38 Figure 5: Effectiveness of learning channels for public sector staff ......................................... 43 Figure 6: Length of temporary appointments to HLCS positions ............................................. 51 Figure 7: Length of temporary appointments to management positions ................................ 52 Figure 8: Linking organizational and individual objectives ....................................................... 55 Figure 9: Framework for the proposed roadmap for implementing the performance management reform ............................................................................................................... 107 Figure 10: Example of process to address underperformance (Australia) ............................. 157 Table 1: Typical tools of the administrative and developmental philosophies to performance management ............................................................................................................................. 22 Table 2: Examples of possible managerial biases in performance appraisals .......................... 33 Table 3: Linking generic goals from a job description to specific organizational and individual objectives: example of an IT Specialist in the Tax Authority .................................................... 81 Table 4: Selecting competencies: Example - IT Specialist......................................................... 93 Table 5: Possible KPIs to assess and track over time the effectiveness of the performance management system................................................................................................................. 98 Table 6: Proposed mapping of institutional roles for the performance management system in the central public administration ........................................................................................... 101 Table 7: Performance management success principles, tools, and connected policy areas . 158 Box 1: Why performance management matters ...................................................................... 20 Box 2: Performance management of senior civil servants in the UK Civil Service ................... 26 Box 3: Measuring performance for production-type jobs: the case of P-Direkt in the Netherlands............................................................................................................................... 29 Box 4: Total Reward Strategies ................................................................................................. 34 Box 5: Performance-related pay in the Canadian public administration ................................. 35 Box 6: Promoting internal mobility in the public administration ............................................. 38 Box 7: Competency-based career development programs in the UK Civil Service .................. 42 Box 8: Integrating HRM in agency strategic planning process in the U.S. federal government ................................................................................................................................................... 44 Box 9: Temporary appointments to top management positions in the civil service .............. 51 Box 10: Institutional Strategic Planning in the Romanian public administration ..................... 53 Box 11: Target-setting in a deconcentrated agency in the Romanian public administration .. 54 7 Box 12: Evaluation of HLCS – challenges of information asymmetry ....................................... 61 Box 13: Performance-related pay (PRP) scheme in the Romanian Penitentiary Administration ................................................................................................................................................... 63 Box 14: Performance-related pay (PRP) scheme in the Romanian Competition Council ........ 65 Box 15: Best practice at the Competition Council in Romania in linking individual and departmental performance ...................................................................................................... 73 Box 16: Mobilizing and rewarding organizational commitment among staff in the Romanian public administration ................................................................................................................ 90 Box 17: A holistic approach to reducing the prevalence of temporary appointments into management positions ........................................................................................................... 105 8 Glossary of terms Behavior- Observable way of acting of people in certain situations. Calibration of grades- A performance management instrument which requires that managers within an organization jointly discuss the performance of their employees and reach an agreement on their performance ratings, in order to ensure that employees are evaluated against similar standards of performance. Coaching- Understood in the context of HRM as an employee development intervention, characterized by multiple one-to-one conversations between a coach and the respective employee which focuses on supporting the latter to define and accomplish specific development objectives which enable improved performance in the workplace1. Competency- A set of demonstrable and measurable personal characteristics, which includes: knowledge, attitudes and skills, which support the effective implementation of activities (ability to perform).The concept of “competency” will be used in this document only with the above meaning and it should be differentiated from the other common interpretation as: an authority and responsibility given from outside (by someone else or by an institution), being entitled to perform certain activities or having a jurisdiction. Competency Framework- Is a model where competencies are identified and defined in terms of expected behaviors, in order to achieve excellent individual and organizational performance. It is also a management tool that potentially integrates all HR systems (recruitment and selection, performance management, training and development, career progression, pay, etc.) into one coordinated strategic approach.2 Coping jobs- A type of job for which neither the results, nor the process/activities can be adequately observed, measured and assessed (e.g. policymaking and coordination). Forced distribution- A performance management instrument which requires managers to rank their employees into several categories of performance, based on pre-defined and mandatory quotas, usually set along a normal distribution curve (i.e. a small fraction of the entire workforce, representing the high performers and poor performers, is placed at the extremes and a relatively large section falls in the middle of the distribution) Frame-of-reference training- A type of performance appraisal training aimed at improving rating accuracy and consistency within an organization by helping evaluators define common performance standards for different performance levels, across different types of jobs. Goal alignment- Defined as the strategic management process of linking organizational objectives with departmental objectives and, ultimately, with individual objectives of employees, in order to direct staff efforts towards organizational priorities. 1 Jones, Rebecca J., Woods, Stephen, A. and Guillaume, Yves R. F. (2015) “The effectiveness of workplace coaching: A meta-analysis of learning and performance outcomes from coaching”, Journal of Occupational and Organizational Psychology (2016), 89, 249–277 2 Op de Beeck, Sophie & Hondeghem, Annie (2010b) “Competency Management in the Public Sector: Three Dimensions of Integration”, Paper for the IRSPM Conference 2010, Berne, Switzerland 9 High-level civil servants- Civil servants having the highest level of responsibility in the administrative system, charged with the management of organizations or organizational units. High-level civil servants are the interface between the political and administrative levels, responsible for the implementation of legal provisions and political strategies, as well as the coherence, efficiency and effectiveness of government activities. Input- In the context of performance management, defined as the material resources (financial, full- time equivalent, etc.) and competencies staff use to produce the expected results. Outcome- In the context of performance management, defined as the (direct or indirect) effect of an individual’s performance on departmental and/or organizational performance. Outcomes are generally difficult to quantify, and to be fully ascribed at the individual level. They can include, inter alia, changes in behavior, the degree to which expected standards of performance are reached (e.g. quality of service) and effective use of new competencies3. Output- Defined as the quantifiable and immediate products of performance. Outputs can include, inter alia, financial results, e.g. reduced costs and income generated; measures of production, e.g. units produced and units processed; and time measures, e.g. delivery times, timeliness of response. Performance management- an integrated framework of planning and defining, monitoring, enabling and developing, measuring and evaluating, and rewarding (or sanctioning) employee performance. Performance-related pay- Increases of base wage or bonuses based on performance4. Production jobs- A type of job where activities and/or results of these activities can be observed and standardized and thus measured with quantitative indicators (such as for example claims processing). Specific competency- Competencies that include the knowledge, skills and attitudes needed for positions that require a specific specialization. These competencies have job-specific features and are not part of the general competency framework. Spot bonus- A bonus granted flexibly throughout the year in relation to the fulfillment of specific conditions/performance Stretch assignments- A motivational and employee development instrument by which employees are required to achieve objectives or tasks which are considered to be more complex, more difficult or different than their regular objectives. Total Reward Strategies- A coherent and integrated employment package which defines the financial and non-financial benefits (such as medical insurance, dental insurance, leisure vouchers, etc.) that the organization can provide to its employees. 360- degree feedback- In the context of performance management, an instrument by which an employee’s peers, subordinates, superiors and other relevant stakeholders are required to provide information on his or her performance on the job. 3 Armstrong, Michael (2009) “Armstrong’s Handbook of Performance Management”, 4th edition, Kogan Page 4 Armstrong, Michael and Taylor, Stephen (2014) “Armstrong’s Handbook of Human Resources Management Practice”, 13th Edition, Kogan Page 10 Executive Summary The current report represents deliverable 5.1 Analysis of the performance management system of the Reimbursable Advisory Services (RAS) on “Developing a Unitary Human Resources Management (HRM) System within the Public Administration” in Romania (henceforth HRM RAS). The report first identifies the goals and success factors of effective performance management systems, and then uses these to guide an in-depth analysis of the performance management framework for civil servants5 in the Romanian public administration and to develop recommendations for reform. In doing so, it incorporates the findings of a behavioral diagnostic of performance management in the Romanian public administration6, the survey of staff in public institutions conducted in 2019/2020 and the connected report on “Performance-related pay in the Romanian public administration”. Deliverable 5.27 of the HRM RAS will develop a more detailed roadmap/ action-plan for the sequenced implementation of the reform, while deliverable 5.38 will offer guidelines for HR departments and managers on how to use the new performance management tools and approaches. The goals of performance management are to steer, motivate and enable staff to achieve organizational mandates. Globally, performance management systems differ in the degree to which they seek to steer employees through backward looking performance assessment tied to administrative rewards and sanctions, versus enabling them to perform better through emphasizing forward looking staff development and growth. Regardless of where the emphasis lies, successful performance management systems are those that align staff and organizational goals, differentiate fairly between types and levels of performance, motivate staff through the right mix of incentives, and ensure adequate opportunities for growth and development. They require strong and committed leadership, political and technical alike, and embeddedness in the organizational culture and practice. By design, the performance management system for Romanian civil servants emphasizes administrative purposes. However, in practice, its effectiveness is limited. In law, high performance ratings are required to be eligible for promotion in grade for execution-level civil servants and low ratings lead to automatic salary decreases and dismissals. However, in practice almost everybody gets the highest performance rating. Thus, ratings cannot be meaningfully used for administrative decisions, such as promotion, which then becomes based 5 Civil servants are staff employed based on the Civil Service Statute, as defined in the Administrative Code (GED 57/2019). The performance assessment of civil servants is regulated extensively through primary legislation (see Baseline Diagnostic). The other main category of staff in the Romanian public administration is contract-based staff, who are employed under the Labor Code (Law 53/2003). Their performance appraisal is less strictly regulated. This report focuses on the performance management framework for civil servants, in line with the overall focus of the RAS. It does, however, generate insights and recommendations that can be extrapolated to contract-based staff. 6 See attached report, titled “Performance Management in the Romanian Civil Service: A Study of Behaviours and Biases” 7 “Proposed roadmap for the planned introduction of alternative performance management tools” 8 “Proposed guideline on the use of performance management” 11 on seniority rather than performance. The inverted seniority pyramid at the execution level9 and the lack of opportunities for promotion to management positions, given the high rate of temporary appointments, further lessens the relevance of the performance assessment for promotion. The drastic and swift consequences for underperformance are more a hindrance than a help in addressing it, as managers rarely if ever use them, while staff can challenge them in court and often win. Such consequences leave no room for addressing underperformance in a more constructive manner, by identifying its causes and finding ways to address them. Individual training needs are also identified during the yearly performance appraisal, but these are not tied to competencies (currently “performance criteria”) and training or broader learning and development opportunities are inadequate. Thus, in practice, there are few rewards for high performance or sanctions for underperformance, and good managers succeed in motivating staff and helping them develop mostly independently of the formal performance management system. They do so by offering frequent feedback and on-the-job coaching to staff and by creating a friendly working climate – despite the absence of formal tools for this. In other words, despite the predominantly administrative philosophy of the Romanian performance management system, good managers are those that embrace a developmental one. However, even these managers face challenges in steering employees towards achieving organizational goals, as organizational strategic planning and performance management systems are weak and individual objectives mostly reflect routine activities and responsibilities, based on job descriptions10. Furthermore, good people management practices are neither encouraged, nor recognized. As noted, promotion opportunities to managerial levels are very limited, and not related to on-the-job performance as recorded through the annual performance appraisal. The performance management regime for managers differs little from that from execution- level civil servants. Only high-level civil servants (HLCS) and “public managers”11 undergo a different performance appraisal process, which includes evaluation by an external commission. However, despite the fact the public managers are execution-level staff, their performance appraisal is more rigorous/demanding than that of high-level civil servants, including more elaborate self-evaluation and appraisal forms, and mandatory interviews with supervisors and peers by the aforementioned evaluation commission. In contrast, the external evaluation commission for HLCS has little information at its disposal to actually judge performance, focusing mostly on verifying consistency between staff and supervisor reports. To improve performance management in the public administration, the performance assessment has to matter. However, performance has to be managed, not just assessed. As noted, any successful performance management system requires strong institutional leadership. To ensure this, a first step is to reform the performance management system of high-level civil servants and senior managers. In addition to limiting temporary promotions and appointments to these positions, this requires changing the recruitment and selection 9 More than 74% of execution-level staff are at the highest seniority grade, as discussed in Output 3, based on 2018-2019 data. 10 See also deliverables under Output 3 on the challenges with the current approach to developing job descriptions and related reform proposals. 11 Public managers are a category of specific civil servants which have been recruited through a (now suspended) series of Young Professional Programs into the public administration, with the goal of advancing the reform of the public administration. Despite their name, they are classified as execution-level staff. 12 procedure for the members of the external evaluation commission and expanding the range of information the commission uses to evaluate high-level civil servants. Additionally, the performance assessment of high-level civil servants and senior managers should include explicit objectives that reflect contributions to organizational goals, as well as people management competencies and results. Such objectives will help better align individual and organizational performance management systems, especially if accompanied also by strengthening the latter, and by consistently and clearly communicating organizational goals to staff. Adequate evaluation of managerial and leadership skills will help identify learning and development needs in this area that have to be addressed. Elements of performance-related pay for HLCS could be considered in the medium-term, after their performance assessment regime has been strengthened and the new recruitment model has been implemented, as argued in the connected report on performance-related pay. At the same time, more emphasis on managerial skills and performance is necessary throughout the system. An extensive or structured learning program for managers needs to be at the core of any performance management reform. This should include training on how to set objectives and performance standards, assess performance against these objectives, evaluate competencies and help staff develop them, and provide feedback and coaching to staff. It should also include recognition for high-performing managers and opportunities for peer-to-peer learning. Promotions to (higher) managerial levels should be conditional on proven performance, including in managing people. For performance appraisal ratings to adequately and fairly reflect actual performance , it will be necessary to: i. Tailor performance indicators to the specificities of the job and the function12, while also ensuring comparability of ratings across units (for example through ex-post calibration of ratings). In the long term, ideally, investments in developing Management Information Systems at the organizational level can facilitate the collection and analysis of data on which individual performance appraisals are based. In the short to medium term, the focus should be primarily on improving the information base for the performance appraisal for high-level civil servants and senior managers. This should include peer and staff feedback. For execution-level staff, self- evaluations and in-year check-ins with managers can help to not only address recall bias, but to also better emphasize the self-reflection and learning aspect of performance assessments and conversations. ii. Find ways to incentivize managers to more adequately distinguish between different levels of performance. Without a better differentiation in ratings, these cannot be used to inform administrative decisions. Ex-post calibration of ratings, where managers meet to discuss ratings and validate them – especially for top performers and for underperformers - would be a first such measure. Ex-ante frame-of-reference training on how to rate performance in an organization or for specific types of jobs can also help managers better differentiate between such levels of performance. Such measures should be piloted in selected organizations and their impact should be 12 See also recommendations on reclassification and clear definition of jobs developed under Output 3 of this RAS. 13 evaluated. If no change in distribution of grades is visible, as a last resort, more stringent measures, such as the introduction of quotas for the highest grades should be considered. Extrinsic tools to motivate staff, such as performance-related pay, should be used with care and only if adequate safeguards are in place. In the short- to medium-term, a transparent procedure for awarding in-year the “excellency award” foreseen by Unitary Pay Law13 could be piloted in a few selected institutions, as detailed in the connected report on “Performance- related pay in the Romanian public administration”. To increase the relevance of the yearly performance appraisal, only staff who obtained at least a satisfactory rating in the previous year should be eligible for such an award. However, as noted in the connected report on performance-related pay, tying the excellence award to the annual performance rating should only be considered after the other reform measures proposed above have been successfully implemented, and performance rating are distributed more evenly and more adequately reflect performance. Overall, to better manage – rather than just assess – performance, more attention needs to be paid to how to motivate staff and enable them to grow. In other words the developmental orientation of the Romanian performance management system needs to be strengthened. Good managers already invest heavily in providing frequent, informal feedback to staff and creating a constructive team and working climate. Such behaviors should be encouraged and rewarded, for example through recognizing outstanding managers and developing a structured program for learning and exchanging best practices in “people management”. At the same time, more formal opportunities for development and growth are also necessary. This includes not only training linked to competencies, but also more diversified and personalized opportunities for learning and development. These should include centrally coordinated horizontal mobility schemes and staff exchange programs. Reforming the career management system to ensure more paths and opportunities for promotion for talented and high-performing staff, especially to managerial positions, is also crucial. Limiting temporary promotions and appointments to management and high-level civil servant positions and making them conditional on demonstrated performance at the previous layer of the hierarchical ladder is one step in this direction. Other changes to career management are necessary in order to better address underperformance – by identifying it early on in an employee’s career (for example through introducing probationary periods for all new recruits, not just for “debutants”14) and by addressing it in a staggered and constructive manner (for example through requiring performance improvement plans with clear timelines and staggered sanctions for those who continue to underperform). In addition to strong institutional leadership, embedding performance management in the institutional culture and practice requires a more active involvement of HR departments and staff, at the organizational level, and central-level HRM agencies, at the policy level, in designing, monitoring and improving performance management systems. HR departments 13 Law 153/2017 14 Entry-level execution civil servants. 14 should become more involved in overseeing and collecting data on the implementation of the performance management system, as well as in supporting managers and staff and collecting their perceptions about how performance management works in their respective organization. Some of this data could be reported to the National Agency for Civil Servants (NACS), provided that it develops adequate capacity not only to collect, but also to analyze such data. The NACS can issue guidelines on best practices in performance management based on the principles outlined in this document, while the agencies responsible for internal managerial control and/or internal audit can update the relevant standards on performance management and assess their implementation in public institutions. Relevant information should be centralized and discussed in the Council for the Development of Human Resources in the Public Administration (HR Council). To ensure the success and sustainability of the reform, a sequenced approach and broad stakeholder consultations and communication efforts are essential. Like any successful performance management system, the reform itself requires strong leadership and should start from the top, by strengthening the performance management regime of high-level civil servants and senior managers. At the same time, the idea and the principles of performance management need to be understood and internalized across the public administration. Thus, training managers at all levels in setting objectives, in assessing performance and competencies, and in providing feedback and coaching to staff, among other aspects of performance management, is at the core of the proposed reform. This cannot be a one-off exercise - in the medium- to longer-term this should evolve into a structured program for learning and development on “people management”, accompanied by increased recognition and adequate rewards for high-performing managers. However, training alone is insufficient without strengthening incentives for performance (“making performance assessment matter”) and better integrating performance management with core organizational processes. Achieving this requires connected reforms in areas such as career management and organizational performance management. Ultimately, for performance assessment to matter – intrinsically and extrinsically - it will be crucial to ensure a better differentiation in performance ratings, to adequately reflect and reward performance. A sequenced approach, where certain elements of the proposed reform are piloted and evaluated first, before more stringent measures such as quotas are introduced, is recommended. The roadmap for implementation to be developed under deliverable 5.2 of this RAS and the guidelines on performance management for human resources departments and managers will provide further details on how to use the performance management tools adopted based on the recommendations of this document. 15 1 Introduction 1.1 Background 1. The present analytical report represents deliverable 5.115 of Output 516 of the Reimbursable Advisory Services (RAS) on Developing a Unitary Human Resources Management (HRM) System within the Public Administration in Romania (henceforth HRM RAS), signed between the Government of Romania (GoR) and the IBRD. Through this RAS, the World Bank- IBRD (WB) is providing technical support to the General Secretariat of the Government (GSG), the National Agency for Civil Servants (NACS) and the Ministry of Labor and Social Protection17 (MLSP) to implement the Strategy for Strengthening the Public Administration (SSPA 2014-2020)18 and the Strategy for Civil Service Development (SCSD 2016-2020) in Romania19. The components of the RAS are: i) Component 1 – Public Policy (Output 1); ii) Component 2 – HRM guidelines and procedures (Output 2); iii) Component 3 – Competency framework (Output 3); iv) Component 4 – Recruitment system (Output 4); v) Component 5 – Performance Management System (Output 5); and vi) Component 6 – Stakeholder Engagement (cross-cutting). 2. The GoR has set as a strategic priority through the Strategy for the Consolidation of Public Administration (SCPA) and the Strategy for Civil Service Development (SCSD) 2016-2020 an overhaul of the performance management framework and practices currently in use in the public administration. The GoR identified these elements as an integral part to its agenda of strengthening the human capital of the Romanian public administration and, consequently, improving the quality of governance. However, current performance management policies and practices were found to be overly bureaucratic, formalistic and ineffectual in driving and sustaining staff motivation and performance 20. The SCSD 2016-2020 outlined the need for a new performance management framework and tools. This redesigned system would enable people managers to assess staff performance accurately, comprehensively, and fairly, as well as reward or sanction staff proportionally, through both pecuniary and non-pecuniary incentives. 3. The current deliverable leverages and builds on previous analytical work undertaken through the HRM RAS, particularly the functional review of the HRM system (Output 1)21 15 “Analysis of the performance management system” 16 “Performance Management System” 17 Formerly named the Ministry of Labour and Social Justice at the time the HRM RAS was signed between the GSG and the IBRD 18 Government of Romania (2016) Strategia pentru consolidarea administrației publice 2014 -2020 (available at http://www.sgg.ro/docs/File/UPP/doc/proiecte_finale/strategie_adm_publica__1_.pdf) 19 Government of Romania (2016) Strategia privind dezvoltarea funcției publice 2016-2020 (available at http://www.anfp.gov.ro/R/Doc/2016/Strategii/strategia%20functiei%20publice.pdf) 20 As per the conclusions reached in the SCSD 2016-2020 21 Output 1, Deliverable 1.1 “Baseline diagnostic of the national framework for HRM and its institutionalization ”, developed under the HRM RAS, May 2019 16 and the competency framework (Output 3)22. The Baseline Diagnostic reviewed the legal and institutional performance management framework. It identified the core functions and objectives of a high-performing HRM system and offered recommendations on how to strengthen each of these functions and the overall institutional framework for HRM (see Figure 1 below, dark blue boxes are functions which are covered by the current RAS). Regarding performance management, the Baseline Diagnostic concluded that the focus of the current framework is on performance appraisal, and more specifically on complying with formal procedures rather than improving the performance of staff. It recommended the reorientation of the performance management framework from the former towards the latter. Additionally, the analytical work conducted when designing the competency framework found that formal job responsibilities across civil service grades and positions are inconsistent, unclear, and overlapping. Moreover, the competencies23 required to perform in a given civil service position are not well-defined, nor adapted to the different roles and functions available in the public administration. As such, job-specific performance standards cannot be set in a valid and reliable manner, while individual performance cannot be assessed comprehensively. The proposed competency framework and generic job descriptions developed under Output 3 offer a basis for such a holistic assessment and for a performance management system that aims to further develop key competencies of staff, on which the current report builds. Figure 1: HRM functions and objectives 22 Output 3, Deliverable 3.2 “Competency Framework for the Romanian public administration”, delivered under the HRM RAS, January 2020 23 Defined as “a set of demonstrable and measurable characteristics (knowledge, skills and attributes) that enable the performance of a job”, see Competency Framework for the Romanian public administration, delivered under Output 3 of the HRM RAS, January 2020 17 1.2 Scope and methodology of the report 4. The current report analyzes the performance management system currently in use in the Romanian civil service and develops broad recommendations for reform. In doing so, it first identifies the goals and success factors of effective performance management systems, based on academic literature, practitioner expertise and international experience. It then uses these success factor to guide an in-depth analysis of the performance management framework for civil servants24 in the Romanian public administration and assess how well the current system achieves the goals of managing staff performance. The report goes beyond the review of the overarching legal and institutional framework of the Baseline Diagnostic, to also assess also organizational-level performance management processes and relevant connected processes, as well as the actual behavior of staff, managers, and other stakeholders in managing performance within the current framework. For the latter, the report incorporates the findings of a behavioral diagnostic of performance management in the Romanian public administration (see attached report in Annex 6, titled “Performance Management in the Romanian Civil Service: A Study of Behaviors and Biases”). The main purpose of this diagnostic was to understand the beliefs, motivations, and behaviors of staff and managers and to identify possible behavioral and psychological barriers that can be addressed to improve the performance management in the Romanian public administration. 5. The analysis draws on a wealth of primary and secondary data. The success factors for effective performance management systems were identified based on an extensive desk review of policy and academic literature on performance management in EU and non- EU countries. The desk review on international experience was accompanied by on-site, primary research on best practices in performance management through study visits to the United Kingdom, Ireland, the Netherlands, and Lithuania. The analysis of the current Romanian performance management system is based on: I. In-person interviews and focus groups with execution-level civil servants and (technical) managers in central and territorial public administration institutions (see Annex 5); II. Operational documents and procedures, including, inter alia, internal organizational procedures pertaining to performance management, anonymized performance appraisal reports, job descriptions and written complaints pertaining to performance appraisals; III. Aggregated quantitative data on public functions/ civil service positions from the NACS database; and 24 Civil servants are staff employed based on the Civil Service Statute, as defined in the Administrative Code (GED 57/2019). The performance assessment of civil servants is regulated extensively through primary legislation (see Baseline Diagnostic). The other main category of staff in the Romanian public administration is contract-based staff, who are employed under the Labor Code (Law 53/2003). Their performance appraisal is less strictly regulated. This report focuses on the performance management framework for civil servants, in line with the overall focus of the RAS. It does however generate insights and recommendations that can be extrapolated to contract-based staff. 18 IV. Data collected through the survey of public administration staff conducted as part of this HRM RAS. 6. In developing recommendations, this analysis also draws on and builds upon the connected report on performance-related pay in the Romanian public administration (titled “Performance-related Pay in the Romanian Public Administration”). This report provides an in-depth analysis of international experience and previous Romanian experience with performance-related pay and provides detailed recommendations for awarding performance-related bonuses25 to civil servants and contractual staff in the public administration. These recommendations include also rough cost projections for the different options proposed. The report provides additional targeted recommendations for the introduction of new performance management tools and approaches and outlines how these would fit into two broad performance management system models. These models incorporate both elements of performance-related pay and other tools to assess and manage performance in the public administration. Deliverable 5.2 of this output26 will then develop a more detailed roadmap for the sequenced introduction of one of the models, while deliverable 5.3 will offer guidelines on the implementation of new performance management tools and approaches. 7. The remainder of this report is structured as follows: i. Chapter 2 lays the conceptual framework for an effective performance management system. It presents the main goals, tools, and types of performance management systems, and identifies seven key success factors which underpin an effective performance management system in a public sector setting; ii. Chapter 3 provides an in-depth analysis of the performance management framework and practices currently in use in the Romanian public administration, structured along the seven success factors defined in Chapter 2; and iii. Chapter 4 issues offers a set of recommendations on how the performance management framework can be re-designed and implemented to overcome the challenges identified in Chapter 3 and to integrate the success factors defined in Chapter 2. 25 As per the Pay Law 153/2017 on the remuneration of public sector employees, article 26 26 Output 5, Deliverable 5.2 “Proposed roadmap for the phased introduction of alternative performance assessment tools”, HRM RAS 19 2 International trends and success factors for effective performance management systems in a public sector setting 2.1 Performance management objectives and philosophies 8. Performance management serves the overall purpose of fostering high performance among an organization’s employees, to eventually improve organizational performance. Both international and Romanian empirical evidence shows that it has significant impact on staff motivation and productivity in the public sector. Setting objectives, communicating them to staff, assessing and rewarding goal achievement can increase both job satisfaction and performance (see Box 1 below). Box 1: Why performance management matters The quality of management is associated with higher productivity in firms, schools, hospitals, and public administrations. While the evidence is limited, there is an emerging empirical literature that uses a multi-dimensional measure of management quality—the World Management Survey (WMS)— which is assessed through a representative survey of managers in private or public sector organizations.27 The WMS includes measures of performance management—goal setting and how these are communicated to staff, the extent of monitoring of the achievement of these goals, and the regularity and robustness of performance evaluations—as well as other aspects of management to develop an overall index of management quality. The literature has largely focused on private sector firms and shows a significant impact of management quality on firm productivity. The small, but growing, empirical management literature on public sector organizations also shows similar linkages between management quality in schools and hospitals and student learning outcomes and quality of hospital care28; and in line ministries and project completion rates.29 Cross-national surveys of civil servants also underline the importance of performance management for staff satisfaction and motivation. One study, based on a survey of 23,000 civil servants across countries in Africa, Asia, Europe, and Latin America, found that higher levels of self-reported performance orientation in public administration (civil servants reporting that performance mattered for promotion and rewards) were correlated with higher levels of self-reported satisfaction and work motivation.30 Another study found that performance evaluations specifically had a similarly motivational effect. Staff who reported having managers that regularly evaluated their performance were more motivated and satisfied than staff whose managers did not evaluate performance.31 27 Bloom, N., and Reenen, John V. (2007) “Measuring and Explaining Management Practices across Firms and Countries”, Quarterly Journal of Economics 122 (4): 1351–1408. 28 Bloom, N., R Lemos, R Sadun, and John Van Reenen (2015) “Does Management Matter in Schools?”, The Economic Journal, Royal Economic Society, vol. 0(584), pages 647-674, 05 29 Rasul, I. and Rogger, D. (2017) “Management of Bureaucrats and Public Service Delivery: Evidence from the Nigerian Civil Service”, The Economic Journal, Volume 128, Issue 608, 1 February 2018, Pages 413–446 30 Meyer-Sahling, J, C. Schuster, and K. Mikkelsen. (2018) “Civil service management in developing countries: what works?”, London: UK Department for International Development 31 World Bank (2020) “Liberia Forestry Development Authority: An Institutional Capacity Assessment”, World Bank, Washington, DC 20 The Romania 2019-2020 public administration survey similarly shows that performance management matters for staff motivation. Respondents were asked a series of questions including if their institutions had a clear set of objectives and targets, if they had a good understanding of these, as well as if their individual objectives were sufficiently tied the institutional objectives. Respondents who reported a strong link between individual and organizational objectives also scored higher on self- reported levels of motivation. Discussion and feedback both through the formal appraisal process, as well as informal regular conversations between managers and staff, is also strongly correlated with higher staff satisfaction, motivation, and engagement. 9. In order to foster high performance, performance management systems aim at steering, motivating and enabling (developing) employees to achieve organizational, team, and individual goals. Steering requires setting clear and attainable objectives and performance targets, linked to organizational goals, and assessing progress on them. This is done through regular goal setting and performance appraisal exercises. While public sector motivation is a complex construct, performance management systems also aim at motivating personnel to perform at high levels, through opportunities for career progression, as well as other monetary and non-monetary rewards. To enable staff to perform at high levels, advanced performance management systems also aim at developing the skills and competencies of employees, for example through training and on-the-job coaching, so they can grow and to meet not only current, but also future demands of their jobs and of a changing public sector (see Figure 2 below). Figure 2: The conceptual framework of performance management 21 10. There are two broad philosophies to managing staff performance, which we can term “administrative” and a “developmental”.32 The administrative one emphasizes accountability and using performance ratings to inform administrative HR decisions like pay and career progression. The developmental one emphasizes professional and personal growth and focusing more consciously on enabling staff and increasing their capacity to perform. Recent trends suggest increased attention to the latter33. This responds in part to one of the most persistent lines of criticism of the conventional performance agenda (and more broadly the New Public Management agenda) namely that it overestimates the degree to which performance can be precisely measured and steered by means of standard goals and indicators. Moreover, it underplays the importance of “soft” factors and “capturing hearts and minds” in motivating and enabling performance. 11. While the two philosophies are not mutually exclusive, and most performance management systems combine both, they do entail some differences in terms of which approaches and tools are emphasized (see Table 1 below). Development-oriented systems focus less on precisely rating individual past performance alone and on tying this to monetary rewards and sanctions, and more on improving future performance by better understanding and addressing causes of poor performance. This happens in recognition of the fact that improving performance requires more than just assessing it34 and that regular check-ins between managers and staff to establish expectations and share feedback are more effective in increasing performance than one-off review meetings. Non-financial rewards such as new challenges, mobility, personal development complement or even supplant more traditional, pecuniary or disciplinary rewards and sanctions. Table 1: Typical tools of the administrative and developmental philosophies to performance management Objective Administrative Development Steering • Rigorous quantitative goal, indicator • Flexible qualitative goal setting, often and target setting, at individual level also at team level • Measurement of performance • Beyond focus on output measures, focuses on results, comparison and focus on intermediate variables differentiation related to cognitive, affective and • Formal one-off review meeting conative aspects in the work 32 Barbieri et al. (2017) “Comparative Analysis of the Performance Evaluation Systems of Public Sector Employees”, White Paper, No.1/2017, OCAP. The administrative vs. development typology also overlaps with what much of the literature defines as performance appraisal versus performance management. See for instance: Kloot, L., Martin, J. (2000) “Strategic performance management: A balanced approach to performance management issues in local government”, Management Accounting Research, 11, pp. 231-251; Aguinis, H. (2013) “Performance Management”, Edinburgh Business School; Armstrong, M. (2006) “Performance Management: Key Strategies and Practical Guidelines”, Kogan Page. 33 Barbieri et al. (2017) “Comparative Analysis of the Performance Evaluation Systems of Public Sector Employees”, White Paper, No.1/2017, OCAP. 34 DeNisi, Pritchard (2006) “Performance Appraisal, Performance Management and Improving Individual Performance: A Motivational Framework”, Management and Organization Review, Vol. 2, No. 2, pp. 253-277, p. 271. 22 focused of past problems environment, as important determinants of future performance35 • Measurement of performance focuses on values and competencies, support and development • Real-time and regular check-ins (coaching) providing real time feedback and focused on future development Motivation • Financial: bonuses, pay-scale • Non-financial: job enrichment/new increases, promotion challenges, mobility, personal development Development • Focus on correcting problems • Performance appraisal serves less • Feedback and evaluation provided for scoring performance and more only by the manager for identifying and developing existing potential, and/or understanding and addressing the causes of poor performance • Focus on developing competencies • Multi-source feedback can be perceived as more fair, credible and constructive 12. Some developmental tools require additional skills and involvement of managers36. Managers need to understand the purpose and the ways of using developmental tools, including competency-based management tools, as well as to have the skills to be able to have difficult conversations with their employees, provide constructive feedback, and help them shape and pursue a vision of their professional development path. In certain civil services such training is mandatory for evaluators. For instance, in Ireland managers need to undergo 30 hours of training specifically on performance appraisal. In Canada, managers receive special training on performance management from the Canada School of Public Service. Moreover, to go beyond yearly evaluations and provide ongoing support and feedback for employee development, managers need to have part of their time specifically allocated for this purpose. In Canada, for instance, through the Management Accountability Framework’s “people management” requirement, the annual performance assessment of managers includes their compliance with coaching responsibilities37. 35 Gruman, J. A., Saks, A. M. (2011) “Performance management and employee engagement”, Human Resource Management Review, 21(2), 123-136. 36 Gerrish, E. (2016) “The Impact of Performance Management on Performance in Public Organizations: A Meta‐ Analysis”, Public Administration Review, Volume 76, Issue 1, January/February 2016, p. 48-66. 37 See Directive on Performance Management (https://www.tbs-sct.gc.ca/pol/doc-eng.aspx?id=27146) 23 13. Which philosophy is better suited for an organization depends also on organizational culture. In general terms, the administrative one is associated with hierarchical organizational settings, where tasks are certain and static, management is directive, and staff autonomy, collaboration and professional independence are low. By contrast, the developmental one is more suitable for agile organizational environments, with high task uncertainty and dynamism, participative and supporting management, and high levels of autonomy, collaboration, and professional independence.38 14. Additionally, the suitability of each approach depends also on the nature of the job, especially on whether (i) activities (the “production process”) are easily observable and repetitive/can be standardized and whether the (ii) results of staff work (outputs or outcomes) are observable, measurable, and clearly/primarily attributable to individual effort. Where this is the case (so-called “production jobs”) standardized quantitative indicators tied to monetary rewards can be suitable. Where this is not the case (so called “coping jobs”), using a one size-fits-all quantitative measurement system, and tying rewards and sanctions strictly to these measures distorts the assessment of performance and precludes and more constructive engagement, focused on encouraging development, creativity, adaptability, and cooperation, which are needed for knowledge intensive jobs with uncertain outcomes39. However, while context adequacy is crucial, international experience and evidence so far suggests there are some common principles which effective performance management systems share. These are presented in the next sub- section. 2.2 Success factors in international experience 15. While there is no one size fits all performance management model, there are certain features which most successful systems have in common (see Figure 3 below). These success factors or principles have been distilled from a review of academic and professional/expert literature. This included secondary literature, and especially comparative studies on performance management systems which covered both EU and non-EU countries, as well as primary literature describing the performance management system and the tools used where available. The latter were available and accessible primarily from Anglo-Saxon/English speaking countries. These tend to be also the countries where NPM-type reforms, including performance management reforms, are the 38 Trost, Armin (2017) “The End of Performance Appraisal: A Practitioners’ Guide to Alternatives in Agile Organisations”, Springer. 39 Many core civil service jobs fall in the latter category (such as policy-making jobs). See Wilson, J.Q. (1989) “Bureaucracy. What Government Agencies Do and Why They Do It ”, Basic Books; Hasnain, Z., Manning, N., & Pierskalla, J. H. (2014) “The promise of performance pay? Reasons for caution in policy prescriptions in the core civil service”, The World Bank Research Observer, 29(2), 235-264. This literature distinguishes between types of jobs and organizations where activities and/or results of these activities outputs can be observed and standardized and thus measured with quantitative indicators (such as for example claims processing – called “production organizations”), jobs where the activities/process can be observed and measured, but results are harder to assess (“procedural organizations/jobs”, such as the military in peace-time), jobs where the results but not the process/activities can be observed and assessed, but not the process (such as teaching – “craft jobs/organizations”), and those where neither can be adequately observed and measures (“coping jobs” – such as for example policy-making, coordination, etc.). 24 most advanced. Hence, most of the examples we use come from these countries. However, the lessons learned about effective performance management draw on a broader set of experiences and countries. We focus intentionally on principles or success factors rather than tools or “best practices” because these are comm on across systems, while the specific tools and their use can vary depending on context. We used the success factors identified here to then assess, in the next chapter whether and how the Romanian performance management system reflects them. This chapter provides more details on each of the principles below, including examples of tools associated with each. Figure 3: Principles for setting up successful individual performance management systems 1. Performance management must start from the top 16. For performance management to be more than a procedure and succeed in steering and motivating staff, visible support and commitment from senior leadership is required. Having top management publicly endorse the performance management agenda and effectively communicate and demonstrate support for it helps to internalize the purposes of the system and build trust and acceptance of the system among both employees and managers. A study of 80 cases of reforms in government across 50 countries found that successful transformations were underpinned by a committed leadership, who assumed personal and collective responsibility for results and have generated buy-in among staff 25 through intensive, two-way communication, as well through leading by example40. Moreover, for the commitment to be credible, the leadership must also ensure adequate resources to implement and sustain the performance management system, for example through training for employees, managers, and HR units41. 17. Because of the key role high-level civil servants (HLCS) play in leading public organizations, many countries have special – more demanding and encompassing - performance management regimes for them.42 Often, this goes hand in hand with formally recognizing and managing HLCS as a distinct corps of civil servants. In 2015 this was the case in fifteen EU member states, out of which three had a central unit specifically dedicated to managing this corps43. As a rule, performance assessment of HLCS and senior managers looks not only at their performance in meeting their respective individual objectives, but also at their contribution to achieving their employing organization’s strategic goals and at their managerial and leadership competencies. The latter frequently involves obtaining feedback from peers, subordinates, and staff in their organizations, for example through 360-degree feedback (see principle 4). The appraisals serve both an accountability and a development purpose, by identifying which management skills need further strengthening. Often the evaluation is done through a centralized approach, i.e. by the lead HRM agency or similar body that oversees the civil service or the HLCS corps, where it exists (see Box 2 below). Box 2: Performance management of senior civil servants in the UK Civil Service In the UK Civil Service, performance management policies are only centralized for senior civil servants. Their day-to-day performance is managed by the political heads of departments and agencies within a central framework determined by the Cabinet Office. Senior civil servants must achieve four categories of objectives, as defined with their manager: business/delivery, finance/efficiency, people/capability, and corporate contribution. The yearly objectives of senior civil servants are linked to their employing institution’s corporate objectives (as reflected in the Single Departmental Plans), while the competencies they are required to display are set out in the Leadership Statement and in the UK Civil Service competency framework, called the “Success Profiles”. The Cabinet Office monitors the quality of objective setting among senior civil servants through random sampling of their performance agreements. The performance of senior civil servants is reviewed by their line manager against the aforementioned objectives and set of competencies during a mid-year discussion and during an end-of-year meeting. For the purpose of the yearly appraisal, senior civil servants must provide a self-evaluation of their performance, as well as input from peers, subordinates and superiors, collected through a 360-degree feedback system. Managers are encouraged to support their subordinated senior civil servants in identifying and achieving their 40 McKinsey Center for Government (2019) “Delivering for Citizens: How to Triple the Success Rate of Government Transformations”, available at https://www.mckinsey.com/industries/public-sector/our-insights/delivering-for- citizens-how-to-triple-the-success-rate-of-government-transformations 41 Pulakos, E.D., O’Leary R. S. (2011) “Why Is Performance Management Broken?”, Industrial and Organizational Psychology, 4 (2011), 146–164 42 Kuperus, H., Rode, A. (2016) “Top Public Managers in Europe. Management and Employment in Central Public Administrations”, The Hague: Ministry of the Interior and Kingdom Relations. 43 Ibidem 26 development needs and career aspirations. Moreover, employing institutions are required to provide the Cabinet Office with information on high-potential staff, as identified through the “Indicators of Potential”. Source: Civil Service Leadership statement of the Government of the United Kingdom: https://www.gov.uk/government/publications/civil-service-leadership-statement; For more details on the process, see the available materials on the website of the Cabinet Office: https://www.gov.uk/government/publications/senior-civil-service-performance-management 2. Ensure a clear line of sight (goal alignment) 18. Steering employees towards achieving organizational goals requires a clear vision of what these are, as well as a way of linking them to departmental and individual goals44. Thus, a prerequisite for an individual performance management is to have in place an organizational performance management system and some form of strategic planning. As a minimum, clarity is needed on the mission and objectives of the organization, and the relationship between these and each of its unit’s objectives. Sometimes, some organizational goals can be cascaded down from level to level until they ultimately reach individuals, based on the concept of “management by objectives”. For example, revenue collection goals in tax or customs agencies can in principle be broken down to the unit and even the individual level. This can provide transparent connections between what an employee does and the organization’s key goals and overall mission. However, public organizations have multiple and complex goals, so automatically linking individual goals with organizational ones is not always feasible or advisable. 19. Ensuring alignment between individual and organizational goals is possible also without automatically cascading the latter down to the individual level. One approach is to strengthen and/or clarify the link between the goals of high-level managers and organizational goals. For example, in the Belgian civil service, the system for assessing the performance of executives is the same as the one to evaluate organizational performance45. Frequent communication of organizational goals towards employees can also generate awareness and buy-in, allowing managers and staff to align their goals with the organizational mission without being overly rigid or prescriptive46. This is important not only for steering, but also motivation of performance. If public sector employees perceive their own work as important for accomplishing agency goals, that may provide significant intrinsic motivation for them to perform well.47 44 Smither, J. (2009) “The professional practice series. Performance management: Putting research into action ”, San Francisco, CA, US: Jossey-Bass, p. 46 45 Barbieri et al. (2017), “Comparative Analysis of the Performance Evaluation Systems of Public Sector Employees,” White Paper, No.1/2017, OCAP. Other examples of such an approach include South Korea, Chile, USA, UK 46 Pulakos, E., O’Leary, R.(2011) “Why Is Performance Management Broken?”, Industrial and Organizational Psychology, 4, pp. 146-164, p. 149 47 Wright, B. (2004) “The Role of Work Context in Work Motivation: A Public Sector Application of Goal and Social Cognitive Theories,” Journal of Public Administration Research and Theory, 14:1, pp. 59-78. p.73. 27 3. Differentiate performance assessments across institutions, job types, and levels of performance 20. Adapting the assessment framework to organizational needs is important, as irrelevant indicators can neither steer nor motivate employee performance. On the contrary, an inadequate measurement framework can easily compromise the perceived fairness of the system, which in turn hampers trust and user acceptance of the performance management system and makes it little more than an administrative procedure. Inadequate performance measures can shift attention from what matters and create perverse incentives48. As such, for the appraisal process to achieve its purposes, it is important that performance objectives, indicators and targets are contextualized to the specific activities of agencies, units and individuals. 21. Goal setting and measurement should reflect the nature of the job. Specific and detailed performance indicators may work for highly predictable and mechanical tasks, but they are less useful for more complex and less tangible types of outputs. For example, in units and organizations focused on policy making or coordination, measuring compliance with procedures in preparing policy proposals says little about the quality of the policies or their potential impact. Even where quantitative indicators can be used to assess fulfillment of discrete tasks, performance is more than just the sum of tasks completed. Assessing performance requires also making judgments about context – including task complexity and external challenges encountered in fulfilling tasks49. The use of decontextualized indicators may foster deviant behavior, goal-displacement effects or even gaming the system, e.g. ambulance drivers choosing short-distance calls to meet a response time target, teachers focusing on exams’ curricula because they are assessed by successful students’ quota, or police officers not reporting crimes to avoid increasing the area’s crime rate and thus guaranteeing their bonus50. 22. Depending on the type of job, different performance measures and ways of assessing performance are necessary. There are different ways to classify types of jobs and identify the most suitable indicators and performance appraisal procedures. For example, for front-line staff that interacts directly with citizens or the private sector, measures of client satisfaction (through direct or indirect feedback) can be particularly important for assessing performance. A similar case can be made for jobs which deliver services to internal clients (i.e. within the public administration itself – such as some HR services). Another classic distinction51 refers to whether jobs consist of observable, repetitive tasks and produce observable, discrete outputs (“production-type jobs”, e.g. verifying compliance with procedures, processing claims) or not. The former lend themselves more readily to quantitative standardized indicators. But even in these cases, capturing performance holistically, based solely on a few quantitative indicators can be challenging and, in the worst case, can distort incentives. Thus, it is crucial to find ways to capture all 48 Burgess, S., & Ratto, M. (2003) “The role of incentives in the public sector: Issues and evidence” Oxford review of economic policy, 19(2), 285-300; Holmstrom, B., & Milgrom, P. (1991) “Multitask principal-agent analyses: Incentive contracts, asset ownership, and job design ”, JL Econ. & Org., 7, 24. 49 Similar questions are for example included in the self-evaluation form for public managers 50 Osterloh, M., Frey, B. S., & Homberg, F. (2013) “Organizational control systems and pay for performance in the public service”, Organization Studies, 34(7), 949-972 51 Hasnain, Z., Manning, N., & Pierskalla, J. H. (2014) “The promise of performance pay? Reasons for caution in policy prescriptions in the core civil service”, The World Bank Research Observer, 29(2), 235-264. 28 relevant aspects of performance and use the information constructively, to identify areas for improvement, rather than purely for “punitive” administrative purposes (see Box 3 below for an example of a performance assessment system for internal service-delivery in the Dutch public administration). 23. For certain type of jobs, focusing on performance at the team level can better capture actual performance in achieving organizational objectives. This is particularly applicable in upstream jobs common in the public administration, where work involves substantial interdependencies between different individuals, sometimes across departmental or organizational boundaries. Given these interdependencies, improving individual performance will not necessarily lead to improved results for the organization. In these circumstances, objectives should be set at a level at which results can be adequately measured, i.e. at the team (where it can be defined) or unit level52. Nonetheless, caution should be had with placing too much emphasis on team-based objectives, as it might incentivize free-riding within the team, all the while disincentivizing managers to tackle individual underperformance. Indeed, a study in the UK Civil Service found these issues to undermine the expected benefits of team-based objectives, in the absence of competent managers to address them53. Limiting the scope of objectives to smaller, more established teams could help alleviate these issues and lead to improved team productivity54. Box 3: Measuring performance for production-type jobs: the case of P-Direkt in the Netherlands P-Direkt is the shared services center for HRM administrative services for institutions across the Dutch government. It is responsible for providing services to around 130,000 end-users, both employees and managers in the public administration. Its services focus on payroll, providing HR information to relevant stakeholders and processing HR transactions. To ensure high quality, reliable and efficient services, P-Direkt sets and digitally measures and reports on yearly targets for a number of KPIs pertaining to customer satisfaction, processing times for requests and availability of services. The targets are used by the institution to incentivize and improve performance by clarifying expectations and identifying areas of improvement, rather than for punitive purposes. These targets are integrated as performance standards into the performance appraisal of front-office and back-office staff. For instance, in 2019, front-office staff were expected to answer telephone calls within 10 seconds and to address 85% of telephone inquiries within 45 seconds. Back-office staff had to respond to 90% of queries and of complaints within 5 working days. Customer satisfaction is measured from 1 to 10 and assessed through electronic surveys of satisfaction following each operation and through follow-up telephone calls to a sample of clients (around 10%). 52 Farr, J.L. and Tippins, N.T. (2010) “Handbook of Employee Selection”, Routledge, Taylor & Francis Group, New York 53 Makinson, John (2000) “Incentives for Change Rewarding performance in national government networks” Public Services Productivity Panel 54 Burgess, S et al (2010) “Smarter Task Assignment or Greater Effort: The Impact of Incentives on Team Performance, The Economic Journal, Vol. 120, No. 547, pp. 968-989 29 Source: Presentation from P-Direkt held on November 8th, 2019 in the Hague, the Netherlands; Information retrieved from P-Direkt Annual Report presentation, consulted at https://magazines.p- direkt.nl/jaarverslag/2019/01/feiten-en-cijfers-2018 24. For jobs and tasks that consist of less easily observable and standardizable activities and more complex and unique outputs and outcomes (such as jobs with policymaking or coordination responsibilities), using standard quantitative indicators is impossible . Relying on standardized yearly objective indicators is even more difficult in volatile and/or dynamic and agile setting, where priorities and workload can shift rapidly.55 For such jobs, qualitative performance indicators that take into account contextual factors and shifting priorities throughout the year are crucial. Finally, assessing behavior and competencies, which is emphasized in more developmental approaches to performance management and recommended for assessing performance in complex jobs56, is even more difficult – even impossible – based on standardized quantitative indicators. All of these require careful managerial judgment, which can be guided and aided, but not replaced by standardized mandatory performance indicators. 25. Both for administrative and for developmental purposes, performance ratings should adequately reflect the variance in employee performance. Individual performance appraisal systems both in the public and private sectors face difficulties in differentiating between levels of staff performance through performance ratings57. However, if everyone receives the same grade, the system is failing to provide credible and valid assessments, and, implicitly, a basis on which to offer differentiated incentives for both high and low performers. In such circumstances, the system can be perceived as unfair, and/or appraisal can become a merely bureaucratic box-ticking exercise without realistic results or consequences. 26. Two ways to enable both comparability of subjective ratings across units and consistent and comparable differentiation among different levels of performance are (ex-ante) frame-of-reference training and (ex-post) calibration of grades (see Annex 2 for more background on both tools). Both tools introduce some degree of quality assurance to how performance is rated. The core idea of frame-of-reference (FOR) is that, before the annual performance assessment, managers within an organization are provided with guidelines and training for how to evaluate different aspects of performance (especially behavioral, qualitative, and other aspects of performance that are difficult to measure quantitatively based on administrative data) and to distinguish different levels of performance. After the individual appraisal, managers at each hierarchical level meet to calibrate grades given to staff – i.e. discuss and compare provisional grades and grade distribution across and within units. At the highest hierarchical level, discussions on the results of individual performance appraisals are linked to the performance of the respective departments in achieving their departmental objectives and contributing to the organizational mission. 55 Trost, Armin (2017) “The End of Performance Appraisal: A Practitioners’ Guide to Alternatives in Agile Organisations”, Springer. 56 Glifford, J. (2016) “Could do better? Assessing what works in performance management”, Chartered Institute of Personnel and Development (available at https://www.cipd.co.uk/Images/could-do-better_2016-assessing- what-works-in-performance-management_tcm18-16874.pdf) 57 Wigert, B. and Harther, J. (2019) “Re-Engineering Performance Management”, Gallup 30 27. While calibration adds an additional step to the process, and thus is somewhat resource- intensive, it generates a series of benefits. It improves accountability of managers for the appraisal (managers have to justify their initial ratings), increases total information used in decision-making (discussion with other managers and supervisors), diminishes the pressure on managers to inflate ratings, and ensures a shared frame of reference (increasing the accuracy of ratings). Discussing specific examples of performance also helps managers align their views of how to interpret and apply standards, which increases rating consistency across employees. As such, calibration diminishes bias and increases the fairness of the system. If also combined with well-defined performance standards and training of managers (e.g. FOR), calibration is uniformly well received and useful in practice.58 If tied to/integrated with the annual organizational performance planning/management processes it has the added benefit of strengthening the latter process and its link to individual performance management (principle 1). 28. Forced distribution is a more radical technique of performance differentiation, albeit one which can have detrimental side effects. A forced distribution obligates managers to rate their team members based on a fixed percentage of grades for each performance category (e.g. 25% low performance, 50% adequate performance, 25% above average performance). Some European public administrations use mandatory or optional forced distributions (see Annex 2 for more background on forced distribution), while others, such as the UK have eliminated them for all civil servants other than top level managers, citing negative effects on staff motivation. On the one hand, forced distribution can enable enough differentiation among ratings for the scores to be useful for administrative decisions such as promotion or pay-for-performance (bonuses or salary increases). However, such overall forced distributions have significant downsides, as they generally impose an artificial distribution of performance ratings and have been found to have a demoralizing effect on staff in the medium to long-term – especially if employees deem their scores unfair. It can also promote excessive individualism and competitiveness among co-workers at the detriment of teamwork and collaboration. This is especially true if the assessment is linked to substantial financial or career consequences. If absolutely necessary, quotas on top grades only can be used as an in-between solution, helping to differentiate and reward high performers, while not being excessively punitive by forcing managers to rate some of their employees as underperforming. 4. For objectivity and fairness, improve judgment and diversify the source of information for the evaluation 29. The goal of any performance management system should be to improve and augment rather than replace human judgment in the appraisal. As noted above, even for jobs with standardized tasks and results, factors such as task complexity and context should be considered in order to assess performance in a holistic way. Thus, the goal should be to 58 Pulakos, E., O’Leary, R. (2011). “Why Is Performance Management Broken?”, Industrial and Organizational Psychology, 4, pp. 146-164, p. 161; Bock, L. (2015) “Work Rules!: Insights from Inside Google That Will Transform How You Live and Lead”, Twelve, Hachette Book Group, New York 31 improve how managers judge performance, rather than try to replace their judgment through mandatory “standard” indicators. a. One way to achieve this is through diversifying the source of data used for the assessment. For some types of jobs with clear tasks or outputs this can be done through better use of administrative data (e.g. from document management or management information systems, where they exist) and modern technologies (such as tablets and cell-phones to monitor activities, especially for some types of field workers which use them in their daily work) or to gather direct citizen feedback on services provided by front-line staff (see Box 3 above, under principle 3 on measuring performance in P-Direkt in the Netherlands). Another increasingly popular way to achieve this is by including the perspectives and the feedback of more people in the assessment of a given individual. Multi-source feedback is increasingly popular in performance assessment in the public sector, and may include self-evaluation, evaluations by colleagues and even by external sources, like clients/beneficiaries/citizens59. Tools such as 360-degree evaluations (which includes feedback from supervisors, peers, clients, and subordinates) are especially valuable for managers as it can capture various aspects of managerial performance from different perspectives. However, 360- degree appraisals are resource-intensive and, unless certain conditions within the organization are met (such as ensuring anonymity of feedback providers, having an open feedback culture and using the feedback for developmental purposes), they can become an administrative burden60. The resources needed to implement and sustain a 360-degree performance process make it challenging for most public administrations to use for all but the most senior managers within their organizations61. b. Another way to increase validity and fairness of inherently subjective ratings is to acknowledge and address unconscious managerial bias in performance appraisals. Organizational psychology literature and behavioral sciences have documented numerous forms of potential managerial bias, determined by contextual and personal factors62 (see Table 2 below and the connected report on “Performance Management in the Romanian Civil Service: A Study of Behaviors and Biases”). Raters (usually line managers) who have been trained in performance appraisal techniques and best practices and have been made aware of these potential unconscious biases are more likely to provide fair and accurate ratings of their staff’s performance. The most effective types of training for this purpose were found to be “frame-of-reference” training- whereby managers are enabled to recognize a given set of standards of performance across different employees - and “behavioral-observation 59 Glifford, J. (2016) “Could do better? Assessing what works in performance management”, Chartered Institute of Personnel and Development (available at https://www.cipd.co.uk/Images/could-do-better_2016-assessing- what-works-in-performance-management_tcm18-16874.pdf) 60 Latham, G.P. and Mann S. (2006) “Advances in the science of performance appraisal: implications for practice”, International Review of Industrial and Organizational Psychology, Vol 21 61 Kuperus, H., Rode, A. (2016) “Top Public Managers in Europe. Management and Employment in Central Public Administrations”, The Hague: Ministry of the Interior and Kingdom Relations. 62 Scullen, S. E., Mount, M. K., & Goff, M. (2000) “Understanding the latent structure of job performance ratings ”, Journal of Applied Psychology, 85, 956-970. 32 training”- whereby managers are enabled to observe, record and recall staff behaviors63. Moreover, requiring managers to justify their ratings and/or establishing an independent review process of the ratings was found to reduce the effect of biases on performance rating.64 Table 2: Examples of possible managerial biases in performance appraisals Possible bias in performance Description appraisal Halo effect Managers generalize an employee’s overall performance based on only one aspect of the employee’s work Lower rating for less Managers consider staff in less complex roles, such as back challenge office jobs, as low performers simply because they perform routine tasks Personal bias Managers award high ratings to staff who they like and/or who have a similar work style Central tendency bias Managers have the tendency to award most employees an “average” performance rating, despite actual performance, because they find it difficult to distinguish between performance levels Leniency and strictness bias Managers generally assess employees either higher than their actual performance (for instance, to prevent losing them or avoiding conflict and damaging relationships) or lower than their actual performance (being overcritical of their employees) Recency effect Managers focus on the performance of their employees in the period leading to the performance appraisal, rather than on their performance throughout the assessment period Source: London, M., Mone, E.M. and Scott, J.C. (2004) Performance management and assessment: methods for improved rater accuracy and employee goal setting; Human Resources Management, 43 (4), pp. 319-336 and from Wigert, B. & Harter, J. (2017) Re-Engineering Performance Management, Gallup, Inc. 5. Motivate performance through both intrinsic and extrinsic incentives 30. High performance of civil servants can be motivated through both monetary and non- monetary rewards appealing to different drivers of performance.65 Monetary incentives (also known as performance-related pay- PRP) motivate through their extrinsic value, such as rewards through promotions and salary increases, or sanctions through pay cuts, demotions or dismissals. In turn, non-monetary incentives appeal to an individual’s 63 London, M., Mone, E.M. and Scott, J.C. (2004) “Performance management and assessment: methods for improved rater accuracy and employee goal setting”, Human Resources Management, 43 (4), pp. 319-336; Glifford, J. (2016) “Could do better? Assessing what works in performance management”, Chartered Institute of Personnel and Development (available at https://www.cipd.co.uk/Images/could-do-better_2016-assessing- what-works-in-performance-management_tcm18-16874.pdf) 64 Ibidem 65 Bandiera, O., Adnan, K., Tobias, J. (2017) “Rewarding bureaucrats: can incentives improve public sector performance?”, Growth Brief, International Growth Centre., p. 7. 33 intrinsic motivation. The latter include, inter alia, job satisfaction, new challenges, mobility, personal development or social recognition.66 Indeed, the trend in private organizations and some public ones is towards so-called “total reward strategies” which include a variety of tools other than remuneration (see Box 4 below). In the case of civil servants, this means that beyond economic self-interest, their decisions and choices are also affected by factors such as fairness, professional pride and societal responsibility.67 While administrative- focused systems traditionally tend to favor extrinsic motivation, development-focused systems often favor intrinsic aspects like non-financial rewards. Box 4: Total Reward Strategies Total reward strategies (TRS) cover all relevant aspects of the employment package that help attract and retain the right staff in the organization. While performance pay is often included in the reward package, the total reward strategy also includes other financial elements (such as medical insurance, dental insurance, leisure vouchers, etc.) and other important non-financial incentives, such as1: • The work itself- challenge, variety, autonomy • Learning and development opportunities • Opportunities to grow- career prospects • Enabling environment- working conditions, work-life balance, flexible work arrangements • Manager quality- including the quality of the framework for managing performance and encouraging manager-employee performance discussions For example, in the UK civil service, the TRS is a key element of the reform of the pay system for senior civil servants (SCS), as highlighted in the Government Evidence to the Review Body on Senior Salaries on the Pay of the Senior Civil Service (March 2020)2. As part of the reform strategy there is increased emphasis on the benefits of working in the Civil Service, outside of base pay and performance pay – the document mentions pensions, or the intrinsic importance of the role. Similarly, the British Council has developed a TRS framework3 which intends to provide an “attractive total reward offer (pay, benefits, personal development, career progression, work-life balance, and environment and culture) to attract, engage and retain” qualified staff. Besides the pay structure, the rewards strategy includes elements such as: 32 days annual leave in addition to statutory holidays plus, the benefit pension scheme, flexible working and wellbeing policies, enhanced family-friendly benefits (such as childcare vouchers), cycle to work scheme etc. The framework is accompanied by a detailed guide for local councils on developing TRS for their organization4. 1 Michael Armstong, Armstrong's Handbook of Reward Management Practice: Improving Performance Through Reward, 6th Edition, Kogan Page Publishers, 2019. 2 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/870608/ Government_Evidence_to_the_Review_Body_on_Senior_Salaries_on_the_Pay_of_the_Senior_Civil_Service.pdf 3 https://www.britishcouncil.org/about-us/how-we-work/policies/uk-pay-policy 4 https://www.local.gov.uk/sites/default/files/documents/total-reward-9b8.pdf 66 Rose, M. (2014) “Reward Management”, Kogan Page; Watkins, J., Beschel, R., (2010). “Non -monetary Awards for Public Sector Programs and Institutions: Survey of Selected International Experience”. GET Note: Public Sector Awards Programs, World Bank. 67 Guszcza, J., Bersin, B., Schwartz, J. (2015) “HR for Humans: How behavioral economics can reinvent HR”, Deloitte Review, Vol. 18. Prod, January 25. 34 31. While many governments use PRP (see Box 5 on Canada below) evidence on their effectiveness to drive and sustain performance is mixed. A review of 110 studies finds that PRP can impact service outcomes mainly in the case of “production jobs”, where outputs and outcomes are more readily observable68. For “craft” or “coping jobs”, where this is not the case, and which make up much of the core civil service jobs, there is insufficient evidence. Indeed, implementing PRP systems remains a challenging issue in many OECD countries69 (see also connected report on PRP). In part, this is because an important side-effect of monetary incentives is that they can crowd out intrinsic motivation to exert effort.70 For example, one study found that as employees may tend to worry excessively about the pay implications of even small differences in ratings, the fear of potential small losses can influence their behavior twice as much as potential gains do.71 As such, given that only a few employees are high performers, incentivizing them might not be worth demotivating all the rest. Another study found that while temporary, one- time, bonus programs generated a more pronounced improvement, this was short lived. Associating an economic value with a certain activity that should be driven by intrinsic motivation (e.g., serving the public good) changes the nature of motivation to that of a contractual exchange. As a result, the absence of continued financial rewards can disrupt the altered positive behavior. One solution to avoid employees taking yearly bonuses for granted is to award “spot bonuses” throughout the year recognizing superior effort or a salutary initiative.72 Box 5: Performance-related pay in the Canadian public administration The Performance Management Program introduced in 1999 links pay of its senior executives to their performance. On top of their base pay, executives may be awarded a lump-sum in the form of “at-risk pay”. Managers who are found to have achieved exceptional results may also receive an additional financial bonus. For managers at the most senior level, at-risk pay may reach up to 20% of base pay and bonuses may reach up to 6%. Another central feature of Canada’s Performance Management Program is that both increases in base salary and at - risk pay are only awarded to executives who successfully achieve commitments agreed to in their annual performance agreements. There are no automatic salary increases connected with length of service. Source: As per the Directive on the Performance Management Program (PMP) for Executives (available at https://www.canada.ca/en/privy-council/programs/appointments/governor-council- appointments/performance-management.html) 68 Hasnain, Z., N. Manning and J. H. Pierskalla, “Performance -related Pay in the Public Sector, A Review of Theory and Evidence”, 2012, available at http://documents.worldbank.org/curated/en/666871468176639302/pdf/WPS6043.pdf 69 OECD (2017) “Governance at a glance”, p. 140 70 Frey, B. S., Oberholzer-Gee, F. (1997) “The cost of price incentives: An empirical analysis of motivation crowding-out”, The American economic review, pp. 746-755. 71 Ewenstein, B., Hancock, B., Kimm, A. (2016) “Ahead of the Curve: The Future of Performance Management”, McKinsey Quarterly. 72 McKinsey&Company (2018) “Taking aim with talent. How to lead a people-first company”, McKinsey Quarterly, Number 2, p.52 35 32. Extrinsic rewards have been found to be better suited for routine and generic tasks, whereas intrinsic ones show better impact on performance in knowledge-intensive and more creative jobs.73 Evidence is now emerging on the cognitive and emotional dimensions of non-monetary awards. For instance, studies in public health organizations suggest that non-financial rewards can be effective in settings where the power of financial incentives is limited. In one case it was proven that they elicit effort by leveraging public employees’ prosocial motivation and by facilitating social comparisons among agents .74 Another study found that unlike in the case of financial bonuses, intrinsic motivation techniques catalyzed a change in organizational behavior that persisted beyond the removal of the incentive.75 33. Some ways to appeal to intrinsic drivers of performance in the public sector through non- monetary incentives include measures that are useful also for other purposes, such as staff engagement surveys, which can be used to inform overall organizational HRM strategies and policies, but also offer employees a way to signal their concerns to the institutional leadership – provided management acts on the insights generated by the surveys, or access to training opportunities or high-profile assignments, which enable staff development and growth. Other non-financial tools to increase motivation and stimulate performance include: - Public sector awards: A World Bank paper reviewed public sector award schemes in nine countries and found that they can encourage productivity and innovation and promote pride in one’s work.76 The conditions for such positive effects are to award only a few of them, have a transparent and fair selection process and effectively communicate the program. - Less formal recognition: lunchroom celebrations, town-hall announcements, employee-of-the-month and team-achievement awards encourage and keep high performance at little to no cost.77 - Building team spirit: A study by the University of Iowa found that for some workers the best motivation is maintaining a sense of closeness and connection with their colleagues. As they want to please, not disappoint their team members, appealing to team spirit is an effective motivating tool. However, this works only when teams are cohesive and members get along.78 - Tailor-made incentives to younger workforce: With the evolving nature of work and the labor market, the expectations of younger employees also transform. They are 73 Trost, Armin (2017) “The End of Performance Appraisal: A Practitioners’ Guide to Alternatives in Agile Organisations” Springer. 74 Nava, A., Bandiera, O., Kelsey, J. B. (2014) "No margin, no mission? A field experiment on incentives for public service delivery", Journal of Public Economics 120: 1-17, p. 26. 75 Gallani, S. (2017) “Incentives, Peer Pressure, and Behavior Persistence”, Working Paper 17-070, Harvard Business School. 76 Watkins, J., Beschel, R., (2010) “Non-monetary Awards for Public Sector Programs and Institutions: Survey of Selected International Experience”, GET Note: Public Sector Awards Programs, World Bank. 77 Carpi, R., Douglas, J., Gascon, F. (2017) “Performance management: Why keeping score is so important, and so hard”, available at https://www.mckinsey.com/business -functions/operations/our-insights/performance- management-why-keeping-score-is-so-important-and-so-hard. 78 Stewart, G.L., Courtright, S.H., Barrick, M.R. (2012) "Peer-based control in self-managing teams: linking rational and normative influence with individual and group performance," Journal of Applied Psychology, 97 (2): 435-47. 36 looking for an interactive and transparent work environment and they increasingly appreciate rewards in the form of mobility, flexible worktime, career planning sessions or other career development opportunities.79 34. Transparent, fair, and accessible opportunities for career progression and development are critical determinants of staff engagement80. This is particularly true for the new workforce from the millennial generation, which prioritizes opportunities of personal and professional development and fulfillment in a job81. A coherent and clear career path encourages staff to invest personally in a long-term commitment with their employing organization. Such a career path can be achieved through a unified structure for career progression, e.g. as used in the European Commission for permanent officials (see Figure 4 below). Increasingly, public administrations are looking towards establishing specialist tracks for the various professions operating within their organizations (e.g. Australia82 and Ireland83) or have done so already, such as the UK84. Through specialist tracks, specific career paths can be defined for each profession (such as HR, ICT, project management, etc.), together with the particular skills, competencies and experience required at each level of progression. Staff are thus able to easily identify career progression opportunities within their specific field of work and across organizations or to invest in upskilling in order to meet the prerequisites for a career change. A similar approach is used in the Dutch public administration, a purely position-based system (except for the top management levels): job profiles are standardized, grouped according to their similarity in terms of tasks and skills required by the job and ranked according to their position on a unitary pay system covering the entire public administration85. The ranking of jobs based on salary and responsibilities within (or across) a job family then serve as possible career paths for staff looking to advance in their careers. 79 Deloitte (2015) “Four performance management mistakes getting in the way of your team’s success – and what you can do about them”, available at https://www2.deloitte.com/content/dam/Deloitte/ca/Documents/public-sector/ca-en-public-sector- performance-management-aoda.PDF. 80 E.g. see Commonwealth of Australia (2019) “Our Public Service, Our Future. Independent Review of the Australian Public Service”, Department of the Prime Minister and Cabinet; and United States Government Accountability Office (2019) “Federal Workforce: Key Talent Management Strategies for Agencies to Better Meet Their Missions” 81 Wigert, B. and Harther, J. (2019) “Re-Engineering Performance Management”, Gallup 82 Commonwealth of Australia (2019) “Our Public Service, Our Future. Independent Review of the Australian Public Service”, Department of the Prime Minister and Cabinet 83 Government of Ireland (2017) “People Strategy for the Civil Service 2017-2020”, available at https://hr.per.gov.ie/civil-service-people-strategy/ 84 See UK Civil Service professions, https://www.civil-service-careers.gov.uk/professions/ 85 See https://www.functiegebouwrijksoverheid.nl/functiegebouw 37 Figure 4: Career system for permanent officials in the European Commission Source: DG HR presentation to the Romanian delegation during a study visit to the European Commission, October 2018; AST = Assistant, SC = Secretary Clerk, AD = Administrator 35. Limited career progression and development opportunities can be supplemented through structured horizontal mobility programs. Mobility schemes offer staff new challenges and opportunities, allowing them to diversify and augment their skills and competencies by working in other sectors and/or different projects, while at the same time they contribute to building informal networks between institutions which enhance interinstitutional coordination86. Recognizing the merits of mobility in staff development and in improving institutional performance through the influx of new skill sets and professional backgrounds, several administrations have introduced mandatory mobility schemes and requirements for their staff, particularly at management level (see Box 6 below). Box 6: Promoting internal mobility in the public administration Internal mobility is widely considered across public administrations as an essential instrument for building the capacity of staff and providing opportunities for career enrichment and progression87. Such opportunities can, in turn, drive staff engagement and reduce staff turnover. From an organizational perspective, internal mobility can foster collaboration between institutions to deliver whole-of-government priorities in a coordinated manner. 86 United States Government Accountability Office (2019) “Federal Workforce: Key Talent Management Strategies for Agencies to Better Meet Their Missions” 87 Kuperus, H., Rode, A. (2016) “Top Public Managers in Europe. Management and Employment in Central Public Administrations”, The Hague: Ministry of the Interior and Kingdom Relations; United States Government Accountability Office (2019) “Key Talent Management Strategies for Agencies to Better Meet Their Missions ”; Boyle, R. and O’Riordan, J. (2014) “The recruitment, retention, performance and development of senior civil servants in Ireland”, Institute of Public Administration 38 Moreover, it can help mobilize staff to fill capacity gaps in institutions or for specific projects where their expertise is required on short notice. Consequently, a number of EU and non-EU public administrations have aimed to encourage internal mobility (permanent or temporary) among their staff. For instance, in Ireland, in order to fulfill the strategic objectives pertaining to staff mobility mandated by the Civil Service Renewal Strategy, the central HRM agency (Department of Public Expenditure and Reform) has initiated in 2017 the first phase of a nationwide staff mobility program comprising all organizations in the Irish Civil Service. The program requires organizations to fill a percentage of their vacant positions through intra or inter-institutional mobility88. In a similar vein, the HRM central agency (Australian Public Service Commission) in the Australian Public Service has identified temporary inter-agency mobility as a key element for the individual development of staff. As such, between 2017 and 2018 it piloted a mobility scheme for staff across six organizations, to identify the barriers which impede inter-agency mobility. The pilot revealed that while many staff expressed interest in mobility opportunities, only a small fraction actually accepted them, suggesting that more holistic and differentiated support measures for mobility were required.89 Nevertheless, most public administrations place the emphasis on enhancing mobility among their senior managers, given their critical role in delivering government objectives by understanding and operating institutional networks. In addition to the developmental and motivational dimensions, this instrument can also provide an additional safeguard to prevent resistance to change in organizations caused by entrenched managers.90 Indeed, a 2016 OECD survey found that thirteen out of 35 OECD member states encourage, to various degrees of intensity, their senior managers to undergo mobility assignments. This can vary from formal requirements for senior managers to change positions after several years (such as in the Netherlands) to opening up vacant senior management positions first to internal mobility (such as in Ireland). A number of OECD member states also consider mobility an important factor in promotion decision for senior managers91. For instance, in the European Commission, candidates applying for a middle-management position are required to have previously gained work experience across different departments within the EC92. Moreover, the EC’s HR strategy for 2016-202093 emphasizes mobility as the prominent instrument to develop internal managerial excellence. Similarly, candidates 88 See https://hr.per.gov.ie/civil-service-mobility/ 89 Department of the Prime Minister and Cabinet (2019) “Our Public Service, Our Future. Independent Review of the Australian Public Service”, Commonwealth of Australia 90 Kuperus, H., Rode, A. (2016) “Top Public Managers in Europe. Management and Employment in Centr al Public Administrations”, The Hague: Ministry of the Interior and Kingdom Relations 91 OECD (2016) “Survey on Strategic Human Resources Management in Central/Federal Governments of OECD Countries, as seen in OECD (2018), Benchmarking Civil Service Reform in Kazakhstan, OECD Public Governance Reviews, OECD Publishing, Paris. 92 European Commission (2016) “Annex to the Commission decision on middle management staff: Competencies required to apply for a middle-management post”, C(2016) 3288 final 93 Directorate General Human Resources and Security (2016) “Strategic Plan: our vision for 2016-2020”, European Commission 39 applying for positions of high-level civil servants in the Dutch public administration must have worked in at least 2 ministries and/or within at least two different fields of work (e.g. policy, personnel, operations, inspection) before applying94. Moreover, once appointed, they are required and assisted by a central unit to change roles after five to seven years in the same position.95 While the design and scope of mobility programs differ across public administrations, a common thread that runs through them is that such initiatives are developed collaboratively between institutions, but operationally led and overseen by a central agency, which has a clear, enforceable and comprehensive legal mandate over civil service HRM. Absent this, mobility programs run the risk of failing to achieve their objectives.96 Moreover, for senior managers, public administrations generally put in place differentiated and more structured mobility programs, which, in some cases, are fully designed, operated and, where applicable, enforced by a central agency specialized in the career management of senior management (such as in the Netherlands, Ireland, the UK and the USA). 6. Enable staff performance through adequate opportunities for growth and development 36. Regular feedback and coaching of staff by managers can improve staff motivation and are essential for staff development and growth – and thus performance. Indeed, numerous studies find that more frequent conversations between managers and employees, focused on improving future performance and finding ways for the staff to develop at a personal and professional level ultimately lead to higher employee engagement and performance.97 With typical yearly performance assessments and one- off review meetings, the feedback loop is too long and does not help identify and address problems in a timely manner. It is also strongly focused on reviewing past performance and highlighting employee errors. Yet with the long feedback cycle it is difficult to consider an entire year’s worth of performance, so managers often mainly concentrate on the most recent events (“recency bias”). By contrast, regular informal conversations facilitate sharing and receiving feedback, contributes to a better and immediate understanding of performance, provides employees with direction and developmental opportunities to continually improve performance including, as well as to quickly and positively react to 94 As presented by the General Administrative Service within the Ministry of Interior during a presentation held in November 2019, in the Hague, the Netherlands 95 See https://www.algemenebestuursdienst.nl/documenten/publicatie/2017/06/27/ambitieformulier 96 Boyle, R. and O’Riordan, J. (2014) “ The recruitment, retention, performance and development of senior civil servants in Ireland”, Institute of Public Administration 97 See e.g. Latham, G.P. and Mann S. (2006) “Advances in the science of performance appraisal: implications for practice”, International Review of Industrial and Organizational Psychology, Vol 21; Soltani, E., Gennard, J., Van der Meer, R., and Williams, T. (2005) “An empirical study of performance management systems in quality - oriented organisations”; Gruman, J. A., Saks, A. M. (2011) “Performance management and employee engagement”, Human Resource Management Review, 21(2), 123-136; Wigert, B. and Harther, J. (2019) “Re- Engineering Performance Management”, Gallup 40 negative feedback.98 Such conversations should use a constructive language, focus more on future improvement and on who the employees are, rather than just on the activities undertaken.99 37. For such conversations to serve a real development purpose, it is best to separate them from formal performance conversations that have primarily administrative and control functions. Both managers and employees tend to use different cognitive processes for discussions related to pay and promotion (i.e. administrative focused), on the one hand, and for discussions focused on people development, on the other hand. Experimental studies found that managers tend to disproportionately consider examples of poor employee performance when deciding whether or not to award extrinsic benefits to staff. They were also found to rate employees more generously, to avoid conflict. Employees, in turn, take a combative approach to these discussions, focusing on justifying their weaknesses, defending against feedback, and over-emphasizing their strengths, to drive up their rating100. On the other hand, when evaluating staff performance without having to link it directly to administrative decisions, managers look at employee performance more comprehensively and tend to rate staff more realistically. Employees also are more open to talking about their weaknesses and on ways to improve performance. As such, separating discussions about pay and promotion from those about development and learning can lead to more constructive conversations about performance between managers and staff. The difference in mindset between administrative and development conversations also applies to peer feedback. Input from peers is more candid and effective in changing behaviors when it is used for developmental purposes, such as learning, rather than administrative purposes, such as being linked to promotions or bonuses.101 38. Competency-based management is one way to identify both needs and potential for development of staff. Competencies are key behaviors, skills and knowledge that staff need to perform on the job102. More and more public administrations develop competency frameworks, which identify competencies needed for key jobs/job functions, and use these not only for recruitment of staff, but also for performance management and career development103. Competencies are used in performance appraisal to enable a better 98 Trost, A. (2017) “The End of Performance Appraisal: A Practitioners’ Guide to Alternatives in Agile Organisations”, Springer. 99 Christensen, S.T (2015) “3 Ways Companies Are Changing The Dreaded Performance Review” , available at https://www.fastcompany.com/3051779/3-ways-companies-are-changing-the-dreaded-performance-review; Ewenstein, B., Hancock, B., Kimm, A. (2016). “Ahead of the Curve: The Future of Performance Management”, McKinsey Quarterly. 100 Glifford, J. (2017) “Could do better? Assessing what works in performance management”, Chartered Institute of Personnel and Development; Bock, L. (2015) “Work Rules!: Insights from Inside Google That Will Transform How You Live and Lead”, Twelve, Hachette Book Group, New York 101 Smither, J.W., London, M., Reilly, R.R. (2005) “Does performance improve following multisource feedback? A theoretical model, meta-analysis, and review of empirical findings”, Personnel Psychology, 58, 33 -66; Trost, A. (2017) “The End of Performance Appraisal: A Practitioners’ Guide to Alternatives in Agile Organisations”, Springer 102 See Output 3, Deliverable 3.2 “Competency Framework for the Romanian public administration”, developed under the HRM RAS, January 2020; and Output 1, Deliverable 1.1 “Baseline diagnostic of the national framework for HRM and its institutionalization”, developed under the HRM RAS, May 2019 103 OECD (2011) “Public Servants as Partners for Growth: Toward a Stronger, Leaner and More Equitable Workforce”, OECD Publishing 41 judgment of whether staff have the skills and behaviors needed to achieve results and identify those with potential for promotion (especially for managerial positions). Training and other forms of learning and development focused on specific competencies are then used to enable staff to better perform in their current jobs and further progress in their career (see Box 7 below). Box 7: Competency-based career development programs in the UK Civil Service The UK Civil Service places a heavy emphasis on a “talent management” approach, whereby people managers are trained and encouraged to identify and invest in developing staff who have the potential to become managers and, respectively, senior managers in the Civil Service. Talent management schemes have been found to contribute significantly to staff retention and engagement: between 2007 and 2013, the turnover rate for participants in these schemes has been 4.5%, compared to 13.7% for the wider comparable population of the Civil Service. People managers are instructed to assess the potential of their staff in terms of four criteria, called “Indicators of Potential” (aspiration, ability, engagement and values), each defined by several observable behaviors. For instance, the “aspiration” criterium is met by demonstrating ambition, motivation and flexibility. Managers use a nine-box talent grid to differentiate high performers and high potential staff in order to propose to them personalized development plans, as appropriate for each staff member’s needs. For staff identified as high potential, the Civil Service offers a wide range of development programs to accelerate their careers, based on their seniority. Source: Civil Service Talent (2016) “Civil Service Talent Toolkit: a toolkit for line managers- how effective talent management drives business performance”, available at https://civilservicelearning.civilservice.gov.uk/sites/default/files/resources/line_managers_talent_toolkit_24_03_16.pdf ; For career development programs available in the UK Civil Service, see https://www.gov.uk/government/publications/civil-service-talent-management/civil-service-talent-management 39. Although support by managers in the form of regular conversations and feedback has an important development value to it, more formal ways of professional development are also needed. Formal opportunities for learning and professional development should be promoted not just from the traditional point of view of what training is needed to perform better in the current job. Instead, they should consider the personal expectations and career aspirations of employees104. Development opportunities can take the form of trainings, mobility or new responsibilities or tasks of higher complexity and challenge. Indeed, if done well, the latter can be even more effective at developing skills and competencies than traditional forms of learning, such as trainings (see Figure 5 below). Furthermore, not only do they provide opportunities for improving soft skills and technical competencies to employees who are interested in and motivated by prospects of professional growth, but also increase motivation and staff engagement (principle 5). 104 Trost, A. (2017) “The End of Performance Appraisal: A Practitioners’ Guide to Alternatives in Agile Organisations”, p.31, Springer 42 Figure 5: Effectiveness of learning channels for public sector staff Source: as seen in McKinsey Center for Government (2019) “Delivering for Citizens: How to Triple the Success Rate of Government Transformations”, available at https://www.mckinsey.com/industries/public-sector/our- insights/delivering-for-citizens-how-to-triple-the-success-rate-of-government-transformations 40. Addressing underperformance is one of the most challenging aspects of any performance management system105. Avoiding underperformance should start at the recruitment phase, through probation periods (to evaluate fit with the job) combined with induction processes that teach newcomers key organization-specific skills and socialize them into the organizational values and culture. Addressing underperformance requires an adequate understanding of what causes it – whether lack of motivation or lack of competencies necessary to perform on the job. Numerous EU administrations use a two- pronged approach to remedying underperformance – firstly, by applying staggered sanctions, which ultimately lead to the employee’s dismissal; secondly, by providing targeted assistance to the underperforming staff to improve the key competencies which are found lacking, through more frequent manager feedback or adequate development opportunities.106 105 See e.g. Australian National Audit Office (2017) “Managing Underperformance in the Australian Public Service”; 106 Barbieri, M., Girosante, G., Valotti, G. (2017) “Comparative Analysis of the Performance Evaluation Systems of Public Sector Employees”, White Paper n.1/ 2017, Osservatorio sul Cambiamento delle Amministrazioni Pubbliche 43 7. Embed performance management in organizational culture and practice 41. For performance management to serve its purposes, it has to be embedded in organizational culture and practice. All the success factors above are premised on adequate institutional embeddedness. For instance, strategic planning must be aligned with organizational and individual performance management systems, to ensure “a clear line of sight” (principle 2 and see Box 8). Institutional safeguards (individual accountability mechanisms, appeal procedures, etc.) are also needed to ensure that managers use performance management tools adequately and that performance assessments are fair and credible. All these processes should be linked to each other through appropriate internal rules and improved communication between relevant units (e.g. departments responsible for HR, budgeting, legal, as well as public policy units). Finally, the institutionalized performance management system needs to be embedded in organizational culture through intensive and continued communication efforts, as well as public endorsements and transparent accountability measures from the organization’s leadership (see principle 1). Box 8: Integrating HRM in agency strategic planning process in the U.S. federal government US federal government agencies are required to appoint a senior official as a Chief Human Capital Officer (CHCO), whose responsibility is to align the agency’s HR policies and strategy with its organizational mission and strategic objectives. Moreover, each agency is required to develop a Human Capital Operating Plan (HCOP), which sets out how its HR policies are designed, implemented, resourced, and measured in order to contribute to achieving organizational goals. CHCOs, together with other senior officials from the same agency, are required to discuss the HCOP on annual basis with the Office for Personnel Management, or OPM, (i.e. the central HRM agency for the federal government) during a so-called “Human Capital Review” meeting. Agencies review jointly with the OPM the efficacy of their HR policies, as set out in the HCOPs, in meeting organizational priorities and the HRM criteria established by the Human Capital Framework, i.e. a set of legally-defined standards aimed at integrating human capital management practices within the strategic planning process of institutions. Sources: U.S. Government Accountability Office (2004) “Human Capital: Observations on Agencies' Implementation of the Chief Human Capital Officers Act”, available at https://www.gao.gov/products/GAO- 04-800T; and U.S. Office for Personnel Management (2018) “Human Capital Reviews”, available at https://www.opm.gov/policy-data-oversight/human-capital-management/human-capital-reviews/ 42. Staff need to be involved and consulted in the design, implementation, and calibration of the performance management system to ensure its take-up and effectiveness. For staff, having a role in shaping the policies and processes which affect them and seeing the organization’s leadership addressing their concerns can be a major boost to morale and to their engagement with the job and the institutional mission107. In addition to involving staff 107 OECD (2016) “Engaging Public Employees for a High-Performing Civil Service”, OECD Publishing, Paris. 44 representatives in internal organizational consultation processes, one increasingly common instrument for eliciting staff perceptions are staff (engagement) surveys, either large-scale or focused on a specific topic (so-called pulse surveys). Such surveys are mandatory in the majority of OECD countries and, in most cases, are undertaken every year, according to a standardized methodology for the entire public administration 108. When implementing new institution-wide policies, such instruments can help decision- makers understand how the proposed changes affect staff and what could be done to adjust the policy in order to achieve its stated aim. Moreover, standardized staff engagement surveys across institutions in the public administration are useful to determine trends and risks at the macro level and see how individual agencies compare to each other – thus identifying high-performing organizations and facilitating learning across the public administration, rather than using them for punitive purposes. Finally, staff surveys are also an essential instrument to obtain a comprehensive view of the performance of HLCS in delivering their mandate of improving organizational performance and capacity (see principle 6 above). HLCS and senior managers of institutions are held accountable for the results either implicitly, through peer pressure, by making survey results public or explicitly, by using the survey results as key performance indicators, as is done in the UK Civil Service and the US federal administration. 43. HR departments have a key role in ensuring that performance management is done well. First, they have to support the process and ensure accountability – i.e., inform managers and staff about key steps and deadlines of the process (e.g. through user-friendly internal circulars) and ensure that evaluations are done in compliance with these. More advanced roles of HR departments include content and (HR) policy support, i.e. by collecting performance data, advising, coaching, and/or training managers in conducting performance assessments, providing feedback, or having constructive conversations. Where multi-source feed-bask is used, HR departments often take the lead in commissioning data collection and have a role in analyzing and supporting the organizational leadership to present the results internally. This is even more the case where staff engagement surveys are used to evaluate management performance. In systems where performance management is more decentralized and agencies have more discretion in setting up their own systems, HR departments are even more involved, as they work with management to develop and refine the system and ensure it generates useful information for management decisions. 108 Ibidem 45 3 Analysis of the Romanian performance management system Overview 43. As it is now, the Romanian individual performance management system applicable to civil servants is almost exclusively focused on assessment. Between January 1st- March 31st, hierarchical supervisors set the individual objectives and performance indicators for their staff for the coming year. At the same time, they rate their staff’s progress in achieving last year’s individual objectives and their display of a standardized set of performance criteria (in effect, competencies109), and identify their staff’s training needs for the coming year. There rating scale has four levels (very good=4.51-5; good=3.51-4.50, satisfactory=2.51-3.50, unsatisfactory=1-2.50). The final performance grade/rating is the average between the objectives and the competency ratings. Managers are subsequently required to meet their direct reports for a performance review conversation, to inform them about their ratings and provide them with the opportunity of submitting comments to the evaluation report110. However, this does not always happen in practice and, in many instances, is treated as a formality111. Staff can also challenge the result of the performance assessment with the head of the institution or directly before administrative courts. In the latter cases, the courts most often decide in favor of staff112. 44. The results of the performance assessment are used mainly to formally meet eligibility requirements for promotion in grade for execution-level civil servants. To be eligible for promotion to the next professional grade, execution civil servants have to achieve a rating of “very good” or “good” for the previous 2 years. A rating of “unsatisfactory” leads to automatic dismissal, and the new Administrative Code has introduced a 10% pay cut for a rating of “satisfactory”, which is maintained until the next performance appraisal. The Framework Unitary Pay Law 153/2017 foresees the possibility of a performance bonus (“excellency award”), but agencies have discretion in how to distribute this bonus and a link to performance appraisal is not required. However, staff do not perceive that the results of the performance appraisal contribute to promotions or are linked to rewards in 109 10 performance criteria for execution level civil servants and, for management-level civil servants, 8 of the performance criteria for execution-level civil servants plus an additional 11 criteria related to people and resource management competencies, as per the Administrative Code 110 This rating has to be subsequently approved by a countersigning officer, usually the evaluator’s direct superior, in order to make it final. The countersigning officer may change the rating, either unilaterally or on the basis of the comments made by the evaluated staff, if these were not accepted by the evaluating manager. In practice, however, the countersigning officers rarely change the rating proposed by the evaluating manager, given the hierarchical distance between the former and the evaluated staff, which makes it difficult to monitor and, even more so, to track daily performance at the operational level. The new Administrative Code introduced an additional layer of approvals by requiring that the countersigning officers’ rating be endorsed by their direct superior, for appraisals of execution-level staff, or by the political head of the institution, for management level roles. 111 As per interviews with managers and focus groups with employees from public administration institutions, held between April-July 2019 112 Ibidem 46 any other way, which underlines the formalism of the performance appraisal process, rather than its use as a management instrument.113 45. While the assessment form template and process for civil servants are centrally mandated (standardized), there is no central-level oversight of or guidance for performance appraisal114 and little involvement of HR departments. For civil servants, the NACS, through the Ministry of Public Works, Development and Administration (MPWDPA), is responsible for developing the content and the form for the performance appraisal but does not exercise oversight or provide guidance to institutions on how to conduct the performance appraisal. The appraisal forms are filled in manually and centralized by the HR departments of each institution. Depending on each institution’s internal rules, HR departments also send a yearly circular reminding staff and managers about the start of the performance appraisal process, including the relevant forms and steps of the process. 46. High-level civil servants (HLCS) undergo a different performance assessment regime . Prior to the new Administrative Code, HLCS underwent two evaluations, a yearly one focused on assessing the delivery of operational goals and one every two years focused on assessing the delivery of strategic goals. Only the first has been maintained in the Administrative Code. A five-person committee nominated by the Prime Minister for three years evaluates HLCS based on four types of documents: i) a yearly activity report drafted by the evaluated HLCS themselves; ii) an evaluation report drafted by the HLCS’ respective supervisor; iii) the evaluated HLCS’ job description; and iv) the relevant documents which set the HLCS objectives and performance indicators for the period under evaluation115. The legal framework does not foresee clear consequences for when a HLCS underperforms or exceeds performance expectations, and cases of inadequate or excellent performance of HLCS have not been identified by the commission so far. Yet, turnover among HLCS is high, especially after government reshuffles, and there is a very high proportion of temporary appointments to these positions (see also Box 9 and Figure 6 in the next sub-section). 47. Public managers116 undergo the most complex and rigorous performance assessment among all categories of staff. Public managers were recruited between 2003 and 2009 through a special program designed to attract highly qualified individuals to the public administration. Their legal mandate is to “accelerate reform in the public administration”117. Despite the label, public managers are execution-level civil servants118. They have to fill out elaborate self-evaluation reports, and they are evaluated both by their 113 In a recent 2019 survey across the public administration, 9% of surveyed staff agreed that the results of the performance appraisal are used for promotion, whereas 1% of the same respondents agreed that the results are used to inform mobility decisions. Moreover, only 28% of respondents stated that the performance appraisal results motivate them to work harder. 114 Except for HLCS and public managers, as described in this section 115 The respective political leadership of the employing organizations for secretaries general and Minister of Interior for prefects. 116 A category of execution-level, specific civil service position, as per the Administrative Code of July 2019 117 As per Government Emergency Ordinance 92/2008 118 They can apply to managerial positions if they fulfill the requirements for them, but they give up their “public manager” status. 47 supervisors and by external evaluators (i.e. from outside the employing organization) recruited and contracted by the NACS for this purpose. External evaluations have been conducted inconsistently, as budget constraints have limited NACS’s ability to hire external evaluators. 48. As currently designed, the Romanian performance management system reflects almost entirely an administrative-focused philosophy. However, in practice, the system’s effectiveness at ensuring accountability based on performance is limited. Almost everybody gets a grade of “very good”119, drastically limiting the usefulness of the performance assessment as a tool for administrative decisions, including for rewards and sanctions. Interviews with managers in the public administration indicate that in the rare cases where staff is dismissed as a result of the appraisal, they challenge the decision in court and generally win. Financial bonuses – in the period when they were awarded120 – were not tied to performance. Staff rarely have access to training due to limited institutional resources for this121. As a result, the system fails in achieving the key goals of performance management systems – steering, motivation or development. The remainder of this chapter analyzes more in-depth how the principles of successful performance management are reflected in the current Romanian performance management system for civil servants. 3.1 Performance management must start from the top Key message: The performance management regime for HLCS and senior managers is not well developed and implemented. The high proportion of temporary appointments to HLCS and to management positions further undermines the link between performance and recruitment or promotion to these positions. Thus, opportunities to lead by example when it comes to performance management are limited. 49. There is limited leadership from top management to institutionalize performance management. In line ministries, the main role of the secretary general and of the political leadership (i.e. minister and secretaries of state) in connection to performance management is to approve the ministry-wide circular which lays out the methodology for the performance appraisal process. The circular is subsequently distributed across the institution usually by the HR department. Beyond that, interviews with staff revealed that 119 As per interviews with managers and HR departments and focus groups with employees from public administration institutions, held between April-July 2019. The 2019 public administration survey found that 94% of respondents received a performance rating of “very good” and 5% received a rating of “good”. 120 See connected report on Pay for Performance in Romania. 121 Approximately 21% of respondents to the 2019 public administration survey stated that they’ve received a type of training in the past 12 months. Moreover, 47% of respondents argued that the main problem with staff training is that too few training opportunities are provided to staff, while 47% of respondents considered that the main problem is that institutions allocate insufficient funding for training. 48 there is rarely any further involvement of the organization’s top leadership, for example in explaining the purpose and importance of the performance appraisal or its link to organizational goals. 50. This lack of leadership stems also from the fact that the performance management framework of HLCS and senior managers is not well developed and implemented. This is particularly problematic, since these should be the main actors linking individual and organizational performance management and the main vectors of internal change and organizational development. For senior managers122, there is no separate performance management regime, and their evaluation form only differs slightly from that of execution civil servants, by including additional “performance criteria” intended to reflect managerial competencies. However, these are not adequately evaluated currently, thus limiting the system’s ability to identify and reward good managers (see also principles 3 and 4) . Furthermore, unlike for execution civil servants, the results of the performance evaluation are not relevant for eligibility for promotion or applying to higher-level managerial positions. 51. As noted, HLCS face a less comprehensive performance evaluation regime than public managers, and with more limited consequences, as there is no link to promotion or mobility. The external evaluation committee for HLCS faces a series of challenges – most notably the lack of information and capacity to assess performance of HLCS (see also principle 4). The very general selection criteria for the evaluation committee123 cannot guarantee that the selected members have the required expertise, experience, authority, and knowledge of governmental objectives to assess job performance at the highest hierarchical level and link it to governmental priorities. The committee does not have other information at its disposal, beyond the self-evaluation and the supervisor’s evaluation, to appraise the performance of HLCS, and lacks both the mandate and the capacity to request and analyze such additional information. The committee can call the evaluated HLCS for an interview during the annual evaluation, but it is not mandatory, and rarely happens124. Thus, in practice, it mainly verifies whether the two are consistent, which has always been the case so far125, rather than conduct an independent assessment of its own (see also principle 4 and Box 12 on the problem of information asymmetry facing the external evaluation commission). 52. The effectiveness of the performance management regime for HLCS and senior managers is further severely undermined by the current practice of temporary appointments to such positions. Temporary appointments are meant to fill a vacant position in the short- term, until a candidate is selected through a regular recruitment competition. Managerial positions can be occupied temporarily by up to nine months in a calendar year (albeit 122 2nd level of management (equivalent of directors general and deputies in Romania) and, in some interpretations, also the 3rd echelon (equivalent of directors and deputies). 123 As per GEO 57/2019 on the Administrative Code, art. 398 124 As per interview with the president of the evaluation committee, August 2019 125 Ibidem 49 renewable the following calendar year), yet for HLCS positions there is no legal time limit for temporary appointments126. In practice, temporary appointments, particularly in HLCS positions in many cases, extend beyond reasonable timeframes for concluding a recruitment and selection competition (see Box 9 below). Temporarily appointed HLCS stay in the same position, on average, between one and two years, and their exit is rarely tied formally to their performance, as documented through the yearly or former twice- yearly performance evaluation. This can further undermine the credibility of performance management as an HRM tool and could thus preempt the emergence of a culture of performance in the public administration. Furthermore, these temporary appointments also reduce opportunities for talented and capable managers from within the public administration to accede to leadership positions based on transparent and competitive recruitment procedures. Consequently, career prospects and development opportunities are limited, which can have a negative impact on motivation and performance (see principles 5 and 6). Finally, frequent changes in leadership coupled with frequent re- organizations can also contribute to unstable organizational environments, which incentivize managers and senior leaders to focus on short-term objectives/routine tasks and activities rather than longer-term strategic organizational goals. 126 As per GEO 57/2019 on the Administrative Code, art. 509- 511 50 Box 9: Temporary appointments to top management positions in the civil service According to NACS data, in September 2019 approximately 74% of all HLCS were appointed on a temporary basis (or 84%, if excluding governmental inspectors)127. The time spent as a temporary appointee ranged between 1 and 74 months. The graph below shows the distribution of months of temporary appointment, per HLCS position (excluding governmental inspectors). For instance, 50% of all prefects and secretaries general have occupied the same position for more than 26 months and 14.5 months respectively (see Figure 6 below). Figure 6: Length of temporary appointments to HLCS positions For management-level general civil servants in the central public administration, approximately 21.4% were appointed on a temporary basis, as follows: 32.5% of directors general, 34% of deputy directors general, 20.5% of directors, 25% of deputy directors, 18% of heads of service and 20% of heads of bureau. Temporary appointments in the same position 127 90% of prefects, 97.5% of sub prefects, 68% of secretaries general, 84% of deputy secretaries general and 8% of governmental inspectors 51 frequently extend beyond the nine-month period foreseen by the Administrative Code. This is the case for approximately 29% of directors general holding temporary appointments, as well as 26% of deputy directors general, 32% of directors, 30% of deputy directors, 17.5% of heads of service and 11% of heads of bureau, respectively (see Figure 7 below). Figure 7: Length of temporary appointments to management positions 3.2 Ensure a clear line of sight (goal alignment) Key message: Institutions do not ensure a clear line of sight between the individual, departmental, and organizational objectives. 53. To ensure a clear line of sight, individual and organizational objectives must be adequately linked. Indeed, Article 485 of the Administrative Code states that individual objectives and performance indicators should be linked to the departmental ones and should be aligned with institutional objectives. An actionable institutional strategic plan, with clear goals, timelines, and roles, operationalized through annual implementation or activity plans can help ensure this “line of sight”. In Romania, generic organizational objectives are defined in the institution’s legal framework (which defines its mandate), while strategic organizational objectives are defined in Institutional Strategic Plans (for 52 primary credit holders – see Box 10)128 and sector-specific strategies. Operational tasks to be performed and specific responsibilities for departments/units within the organization are defined in the rules of internal functioning (ROFs). Box 10: Institutional Strategic Planning in the Romanian public administration In Romania, primary budget holders (mainly, but not restricted to central-level ministries) have to develop Institutional Strategic Plans for 3-4 years, after a set methodology129. These are developed by a Management Board, which is composed of the heads of the institution’s internal and decentralized structures and is coordinated by the secretary general of the organization. Public policy units (PPUs) within each institution support ISP development and monitor their implementation, acting as a technical secretariat. Each institution should have an internal dashboard for monitoring ISP implementation130, while the GSG has a central dashboard to monitor achievement of high-level ISP goals. ISPs are supposed to be operationalized through annual implementation plans, but this is rarely done in practice, since ISPs are perceived as being mostly a “technical” product, with insufficient high-level political ownership and involvement. Rather, the main yearly planning documents used by institutions are the annual action plans for implementing the governmental program131. Unlike the ISPs, these annual plans are not public and focus mainly on activities to be undertaken rather than results to be achieved. 54. In practice, organizational strategic planning and performance management are not well institutionalized in Romania. While ISPs have been developed in core ministries with World Bank support, their uptake by the institutional leadership and their link to yearly operational planning and budgeting processes has been weak132. Furthermore, many public organizations are not required to establish and do not have institutional strategic planning processes. As noted, only ministries which are primary budget-holders have to develop ISPs, and they employ only a small share of staff/civil servants. Most staff (outside of service delivery) are employed in subordinated agencies, especially those that have deconcentrated/territorial structures133. For agencies with territorial branches, the central 128 The Government Decision for Establishing the Planning and Monitoring Process has not been adopted by the Government yet. The Government Decision has been revised and adjusted as part of the Ministry of Public Finance request to unify the processes in strategic planning and program budgeting. See http://www.sgg.ro/legislativ/docs/2016/10/dy0sbfwm389q21thjg_p.pdf 129 GD 1807/2006 and GD 158/2008 130 World Bank (2017) “Output No. 4 Utilization Manual for ISP Development and for the Monitoring Tool”, developed under the Advisory Services Agreement on Strengthening Planning and Budgeting Capacity and Supporting the Introduction of Performance Budgeting (P156889), September 2017 131 Interview institutional strategic planning expert. 132 See e.g., World Bank (2020) “OUTPUT NO. 7 Final report presenting the results of the Reimbursable Advisory Services”, developed under the Advisory Services Agreement on Strengthening Planning and Budgeting Capacity and Supporting the Introduction of Performance Budgeting (P156889), January 2020 133 In February 2019, there were approx. 7,100 civil servants and approx. 5,300 contractual staff employed within primary budget holders, as opposed to approx. 53,000 civil servants and approx. 350,000 contractual staff employed in the subordinated agencies of primary budget holders, as per NACS and MLSP data 53 agency sets the objectives for each branch which are then broken down to departmental level by the head of the territorial branch (see Box 11). However, as the example in the box below illustrates, the objectives tend to focus on volume rather than results of activities, thus measuring at most outputs, rather than outcomes or impact of these activities. Box 11: Target-setting in a deconcentrated agency in the Romanian public administration The central Labor Inspection (subordinated agency under the MLSP) sets a number of standardized objectives and yearly targets for its territorial branches (Territorial Labor Inspectorates). Territorial agency heads then break down the targets and assign responsibilities for them to departments within their agency. Each head of a territorial agency is held accountable for meeting the targets by Labor Inspection top leadership the at the annual meeting of the territorial branches. However, the said targets aim mostly at assessing inputs and activities rather than outcomes and results. The focus is on issues such as the number of inspections conducted, number of labor inspectors participating. How the inspections are conducted and whether they result in higher conformity with labor legislation is not part of the performance assessment of staff or agency heads. Source: interviews held with heads of Territorial Labor Inspectorates and managers from the central Labor Inspection and a focus group held with employees from the central Labor Inspection, March 2019 55. The result is that managers set individual objectives and indicators focused on routine activities and tasks to be performed rather than results to be achieved. This is even the case for HLCS and senior managers, who should be the main nexus between organizational and individual performance management. In general, for execution level staff, tasks are taken mainly from the department’s ROF and job descriptions (see also Figure 8 below for the visualization of the links). In the words of one interviewee, “we assess activities not performance”. This can offer some advantages in terms of concreteness and ease of monitoring but represents a significant disadvantage in terms of increasing results orientation and performance focus in the Romanian public administration. ROFs are static documents, which detail the generic tasks that should be performed by each department. Individual objectives end up mirroring these activities and staff are assessed against the degree to which they complete them with little consideration of their contribution and their link organizational priorities and outcomes. 54 Figure 8: Linking organizational and individual objectives Source: own elaboration, based on interviews and document review 56. Another reason for the focus on activities rather than results is that there is limited understanding, let alone internalization, of the logic and the principles of performance management in the public administration, both at the organizational and at the individual level. Various organizational planning and development processes which touch on performance management and could help connect organizational and individual performance management are disconnected and formalistic or weakly institutionalized. For example, internal managerial control (IMC) structures monitor compliance with a set of sixteen organizational standards, which include also improving organizational and individual performance. However, the focus is on whether processes are formally set up and produce relevant documentation (“letter of the law” approach), rather than on whether they function as intended (“spirit of the law” approach). Trainings have been conducted for some organizational strategic and performance management approaches (such as ISPs, Common Assessment Framework, and Balanced Scorecard). However, these have been largely one-off, and it is not clear how many staff and mangers have participated 55 or put into practice the principles of performance management134. However, without understanding the principles of performance management, and without an explicit and robust theory of change linking activities to outputs to results, managers cannot be sure whether the input-based activities they have set as objectives for their staff contribute to the departmental and organizational objectives. 3.3 Differentiate performance assessments across institutions, job types, and levels of performance Key message: The performance management system does not adequately differentiate between types and levels of performance Differentiating between different types of performance 57. Interviews and focus groups with staff revealed a high preference for quantitative performance indicators. Indeed, about 60% of survey respondents mentioned they have at least one quantitative performance objectives. This is in part due to the above- mentioned focus on activities and tasks (where the number of such activities is counted), in part due to the presumed objectivity and verifiability of such indicators. However, as noted in Chapter 2, an over-reliance on such indicators limits the ability of managers and staff to capture all aspects of performance and adapt performance indicators and assessments to different kinds of jobs. 58. Attempts to standardize objectives and performance indicators have been made for some organizations or types of jobs. For example, for The overreliance of the current the Ministry of European Funds and staff working on performance management European funds, a series of standardized indicators have system on quantitative metrics been defined with World Bank support to assess speed, of inputs and activities to assess quality, and volume of work performed, along with performance undermines its mathematical formulas for computing performance capacity to adequately reflect ratings based on these indicators135. Tasks are classified complex aspects of performance and adapt to different job based on criteria such as standardization, discreteness profiles. and slightly different indicators are recommended for different types of tasks. Performance indicators for managers consider both the average score of their staff (timeliness and quality), and specific indicators for how managers 134 Trainings focused on ISPs have been conducted in a number of ministries and have included a significant number of staff from these institutions. However, individual performance management was not part of these trainings, as they focused mainly on institutional strategic planning 135 Ministry of European Funds (2019) “System procedure: Evaluating the individual professional performance of civil servants/contractual personnel”, p. 61-62. See also World Bank (2015) “Output 6: Final report on Performance Appraisal System”, developed under the RAS on Establishment of a Performance Appraisal System for Government Officials Managing European Union Funds, June 2015 56 achieve the objectives assigned to their respective units (e.g. policy proposal approved), as well as how they fulfill their managerial duties (variation in the volume of work of different staff, stakeholder feedback). 59. While offering the advantage of traceability of ratings, this approach also has significant limitations, as it does not succeed in capturing less quantifiable aspects of performance and can further skew incentives towards compliance with procedures rather than achieving results. Many interviewees highlighted that a key problem with using standardized quantitative indicators is that they do not capture the varying complexity of the work and external influences on volume of work (e.g. some months with high number of petitions) – even in the case of jobs with high levels of standardization and observability (e.g. transaction-processing type jobs). Furthermore, if the performance expectations defined for staff are too many or complex, it becomes unfeasible for managers to capture, prioritize, and assess the dimensions of what defines high performance. This exacerbates the tendency to evaluate quantifiable inputs rather than take a holistic look at performance and results, and risks diverting attention away from what matters to what can be measured. For example, meeting a deadline is easy to measure but improving customer service may be what is important. This problem is even worse for jobs whose “production” process is more difficult to standardize and observe , such as policy design and coordination, and where performance is not amenable to be captured through quantitative metrics. Thus, overall, the current overreliance of the performance management system on quantitative metrics to assess staff performance undermines its capacity to adequately reflect complex aspects of performance and to be adapted to different job profiles. 60. The performance appraisal approach for managers differs only to a small degree from that of execution civil servants and does not reflect managerial performance and leadership competencies. The main difference is in the list of performance criteria (“competencies”) which are to be assessed, which also include eleven “managerial” competencies, such as ability to organize, to lead, or to mediate136. However, since these are used mostly perfunctorily, their added value in assessing managerial skills and performance is currently negligible. Furthermore, there is no mechanism for ensuring feedback on managerial quality from staff. Thus, managerial competencies are currently not systematically evaluated. This deprives public organizations and the public administration as a whole of the necessary tools to identify, develop, and promote good managers and leaders, which are the cornerstone of performing organizations. 136 As per the Administrative Code GEO 57/2019, art. 29, point II of Annex 6, these include: ability to organize, to lead, to coordinate, to control, to obtain the best results, to make decisions, to delegate, to manage human resources, to develop the abilities of staff, to mediate and negotiate, to assess objectively. 57 Distinguishing between different levels of performance 61. Managers do not use the performance appraisal Currently, almost everybody process to make meaningful and consistent distinctions obtains a “very good” performance between different levels of staff performance. Indeed, rating. Thus, performance grades in the 2019 survey of public administration staff, are not useful for making fair and awarding more realistic and differentiated performance informed administrative decisions, ratings was the most frequently chosen proposal (out of such as promotion, dismissals, and 11 possible options) for improving the performance remuneration. appraisal system. Across the public administration, nearly everybody receives the highest rating, i.e. “very good” (94% of respondents received this, and 5% had a rating of “good”). Managers assign ratings of “very good” by default, since there are no formal restrictions or additional administrative steps to awarding it, nor does awarding it commit institutions or the evaluating manager to dedicate additional resources for the recipient (e.g. providing financial rewards, setting up public recognition events, managing talent management schemes). 62. This is reflected also in the fact that employees generally perceive a “very good” performance as one in which employees simply perform their duties137. Because “very good” is the default rating across the public administration, managers and staff ascribe real meaning to differences in decimals points in raw scores. The interviews conducted clarified that many managers differentiate the performance of their staff at the decimal level of their raw scores: a high performer would be evaluated at the high-end of the “very good” spectrum (near the raw score of 5), while a low performer would receive a score at the lower end of the spectrum (near the raw score of 4.51). Managers reported that they use this approach to encourage their staff to perform better, without damaging staff career prospects and without endangering collegial relationships within the team138. Staff, in turn, use the variation in decimal points as indication of whether their perceived performance has improved or has diminished from the previous year or relative to their peers. Indeed, over half of the staff surveyed in 2019 reported that they use the performance ratings they receive to keep track of their performance (52%) and to help them improve performance (56%). However, the systemic consequence is that high performers are not formally distinguished and appropriately rewarded, nor is underperformance identified and addressed. The performance ratings are thus not useful for making fair and informed administrative decisions, such as eligibility for promotion, dismissals, and remuneration. 63. Managers report facing organizational resistance to distinguishing more strongly between staff performance. Anecdotal evidence139 points out that managers who attempt to realistically rate the performance of their staff face a backlash from both supervisors 137 Interviews and focus groups held with public administration employees and managers between April-July 2019 138 Ibidem 139 Interviews with managers from public administration institutions, held between April-July 2019 58 and staff. Because “very good” is ubiquitous across organizations, anything else is generally perceived as underperformance140. As such, if a manager evaluates their staff for example along a distribution curve or gives scores that more adequately reflect different levels of performance, while other managers do not, the handful of employees who are evaluated fairly end up being flagged as underperformers and become prime targets in cases of staff- adjustment exercises. Managers who give ratings other than “very good” are confronted, as well, with accusations of bias from staff and of poor managerial skills from supervisors.141 64. Adequately distinguishing low and high performers within an organization is further limited by the lack of intra-organizational mechanisms to ensure consistency and comparability of ratings across units and seniority levels . Ensuring reliability of ratings across units within an organization is a significant challenge in performance management in general, as each manager has individual interpretations and expectations of performance142. For instance, what managers of high-performing teams might perceive as routine activities might seem as extraordinary feats of work for managers of low- performing teams. In Romania, some interviewed institutions have labored to address these distortions, albeit reportedly with limited success, either by providing detailed guiding materials and training for evaluating managers (such as the Ministry of Finance) or by using highly quantitative performance indicators (e.g. Labor Inspection, Ministry of European Funds). However, as noted above, the latter approach has significant limitations in adequately capturing performance. Moreover, in interviews, some HR department representatives perceived the uptake of internal guidelines and trainings by managers as limited. 3.4 For objectivity and fairness, improve judgment and diversify the source of information for the evaluation Key message: Performance assessments rely on few and inadequate sources of information and judgment 65. In most cases, it is not practicable to measure job performance through detailed quantitative indicators, even when performance can be quantified, due to the lack of adequate administrative data. Interviews with multiple managers across public institutions revealed that, while many of them prefer using quantitative indicators because they can justify their ratings through concrete evidence, they face significant challenges in 140 Ibidem 141 Ibidem 142 Pulakos, E.D., O’Leary R. S. (2011) “Why Is Performance Management Broken?”, Industrial and Organizational Psychology, 4 (2011), 146–164 59 recording the necessary information, and need to spend a considerable amount of time to record, track and verify such information. This is particularly true for staff in departments in which the work of staff is not recorded automatically on internal ICT platforms, so managers have to manually record it or depend on staff themselves to do it and subsequently report it143. Even in institutions where work is more integrated with an ICT platform, the software is not designed to generate the required performance information for managers about their staff. To overcome these difficulties caused by information overload, the interviewed managers reported taking either a rule-of-thumb approach to the overall grade, having as a reference point the perceived overall performance of the staff member throughout the year, and adjusting component sub-scores to arrive at the desired overall score. Alternatively, some managers entrust each staff member with the responsibility of recording and tracking their own performance data and analyzing it during the appraisal stage for major discrepancies. 66. The possibility of evaluator bias144 in performance appraisals is not considered or addressed in the Romanian public administration, and objective setting and performance appraisals do not engage the employee as a co-owner of the process. A general perception of interviewed staff was that perf ormance appraisal was done “to” them by managers, rather than “with” their managers. This suggests that the current performance management system does not enable staff to take joint ownership of their goals and their evaluation, in partnership with their managers, thereby undermining the commitment of staff to the process. Indeed, the legal framework for performance management requires managers to present employees with their respective performance appraisal and obtain their agreement on it but does not compel managers to consult with their employees prior to drafting the appraisal document145. In some cases, managers ask employees to draft their own appraisal, but this is more of a strategy to reduce the administrative burden on the managers themselves, rather than use this as the basis for dialogue/staff engagement146. 143 Some organizations use a form of workload analysis to identify time spent on tasks, e.g. by requiring managers to estimate and keep detailed track of time spent by their staff on various activities. Sometimes this is used to justify requests for additional personnel. However, this is a cumbersome process that is only suitable for certain standardized, routine and observable tasks, and thus not recommended for broader use as part of the performance management system. Applying such a method throughout the organization should be avoided, as it risks ignoring or misjudging the time and human resources required to complete tasks that are less easily quantifiable. It also risks reinforcing the currently dominant focus on activities rather than results. 144 International experience and research show that manager bias is a high-risk issue for the accuracy and, thus, fairness of performance appraisals. For instance, a study found that on average, rater bias accounts for 62% of the differences in performance ratings, whereas actual employee performance accounts for 21% (as seen in Wigert, B. and Harther, J. (2019) “Re-Engineering Performance Management”, Gallup) 145 GEO 57/2019 on the Administrative Code, annex 6 146 Interviews and focus groups held with public administration employees and managers between April-July 2019. Also see Deloitte (2013) “Raport privind dificultăţile administraţiei publice locale în gestionarea proceselor de resurse umane”, available at http://www.anfp.gov.ro/R/Doc/2014/Proiecte/Raport%20dificultati%20procese%20de%20resurse%20umane.p df 60 67. The approach to evaluating public managers showcases how more diverse sources of information and types of assessment can be used for a more balanced and comprehensive measurement of staff performance – most notably through the self- evaluation147 and through the external assessment by a dedicated committee. Public managers have to fill out extensive self-evaluation forms, which combine descriptions of activities undertaken, their relationship to departmental and organizational objectives, work environment and challenges encountered, competencies and ways in which these are demonstrated (based on examples), as well as lessons learned. This gives the evaluators a lot more contextual information and a more well-rounded basis on which to judge the performance achieved by staff. The self-evaluations are intended to serve multiple functions –aide in a more objective evaluation of the public manager’s performance, serve as a basis for self-reflection, feedback, and learning, and inform the further development and career prospects of the public manager. However, interviews suggest that public managers value it most for the opportunity to document their activities and performance, and thus serve as “proof” of work done and protection in cases of tensions with the supervisor. The external evaluators decide on the performance rating based on a review the self-evaluation form, of the supervisor’s evaluation report, and on interviews with the supervisors and peers of the evaluated public manager. In some cases, however, interviewed public managers argued that hierarchical superiors do not always fill out themselves the evaluation report, delegating this task to the evaluated public managers themselves. 68. The performance assessment regime for HLCS is less comprehensive and less consequential than that for public managers. HLCS fill out an annual activity report, which lists the activities they have undertaken, based on their legal responsibilities. The reports, however, do not include any self-reflection elements, such as narratives or explanations about the documented performance, challenges encountered, and lessons learned. The external evaluation commission does not have additional sources of information for the evaluation and there is no way for it to verify the information in the evaluation reports submitted. Hence, it cannot substantiate an independent decision on how well the HLCS performed (see also Box 12 below). This severely limits its ability to assess performance objectively and independently and calls into question the utility of the process. Box 12: Evaluation of HLCS – challenges of information asymmetry Members of the external evaluation committee for HLCS do not have the basis to assess and validate the information they receive for the performance review. They are not provided with the tools to gather and integrate into their work multiple sources of information, such as employee or peer feedback and information reflecting different strands of institutional performance. These types of information are required for a comprehensive assessment of individual performance at a strategic-level position. Nor is there an institutionalized practice 147 Interviewed staff reported filling out the evaluation forms themselves, but this is intended more as a substitute for the managers evaluation, rather than a tool for self-reflection and dialogue 61 to provide training to committee members to support them in leveraging such tools. Moreover, limited information on the day-to-day interactions of the HLSC with various stakeholders, as well on their behavior in such interactions, also renders as formal at best any efforts to assess competencies. Consequently, in practice, the committee’s role is limited to ensuring a coherence between the different performance reports received, as well as between these reports and the legislation applicable for the respective HLCS position. These challenges reduce the appraisal’s validity and usefulness, since committee members are unable to independently and reliably evaluate the performance of HLCS. 3.5 Motivate performance through both intrinsic and extrinsic incentives Key message: Rewards for high performance are few in law and rare in practice. Penalties are harsh but rarely applied. Career opportunities are limited and not linked to performance. Good managers succeed in motivating staff by creating enabling and supportive work environments. However, there is currently no learning program for managers on how to lead people. 69. High performance recorded through the appraisal process does not lead to better career development opportunities for civil servants. Indeed, only 9% of public administration staff surveyed in 2019 agreed that performance ratings are used for promotions, whereas 27% were “very confident” and 8% were “somewhat confident” that performing on the job leads to promotions (54% of surveyed staff answered that they were at the end of the execution-level career ladder and could not be promoted further). This perceived disconnect between performance on the job and performance ratings (at least in terms of effects on promotion) suggests that the performance management system is not seen by staff as a credible instrument for career development. This is in part because almost all civil servants get the highest possible performance rating, in part due to limited opportunities for promotion. The only benefit for execution-level civil servants who receive the highest performance rating, i.e. “very good”, is that they become eligible for promotion to the next professional grade148. However, there are only four professional grades and most civil servants reach that stage in a short time149. Managerial positions are filled through open recruitment competitions, and not linked to previous performance ratings or competencies. Furthermore, there is a high rate of temporary appointments to management and HLCS positions, meaning that career prospects for execution-level civil servants at the highest professional grade, as well as for managers looking to advance in 148 The Administrative Code, art. 479, requires civil servants to have a rating of at least “good”, i.e. second highest, for the previous two years in the current position, before becoming eligible for promotion to the next professional grade 149 On the challenges regarding career management of civil servants and some proposals for reform see also Chapter 4.5 of Output 1, Deliverable 1.1 “Baseline diagnostic of the national framework for HRM and its institutionalization”, developed under the HRM RAS, May 2019 (henceforth Baseline Diagnostic). 62 their career, are limited to non-existent. Consequently, for civil servants at the highest professional grade, i.e. superior, which is reached by most in 7 years, there are no extrinsic incentives for high performance. This is extremely problematic, considering also that over three quarters of civil servants are at this grade.150 70. There is limited experience with performance-related pay in the Romanian public administration151. The new Administrative Code foresees a 10% pay cut for a rating of “satisfactory” and mentions the possibility of awarding financial bonuses based on the performance rating but does not specify under what conditions152. An “excellency award” is also made possible through the Framework Unitary Pay Law 153/2017, but the award is not formally linked to performance appraisal and the criteria and procedures for the award are at the discretion of the institutions153. No funds have been yet approved by the MPF for this bonus, but a few institutions have introduced guidelines for awarding it (see Box 13 on the Penitentiary Administration and Box 14 on the Competition Council). Box 13: Performance-related pay (PRP) scheme in the Romanian Penitentiary Administration In the Penitentiary Administration the bonus can be awarded monthly for extraordinary results or very high workload, considering also certain performance criteria (competencies). Managers are required to present written justification when proposing somebody for the award, and the awards are discussed monthly by the leadership council of the institution with the participation of staff unions/representatives. The list of staff receiving the award is made public within the institution. While the award has not been given out yet due to budget constraints, this approach illustrates a simple but relatively transparent and participatory approach to awarding a performance-based bonus. 71. The main form of performance-related pay in the public administration is for staff managing EU funds, which are entitled to a bonus of up to 35% of their base salary, conditional on high performance as reflected by their performance ratings. This is part of the reason for the introduction of the elaborate approach for performance assessment in the Ministry of European Funds. However, since in practice almost everybody receives a rating of “very good”154, the bonus works as a de facto a salary top-up and is perceived more as an entitlement for the added complexity and responsibility of EU-related jobs, 150 The so-called inverted seniority pyramid, as detailed in the Baseline Diagnostic 151 See also connected report on Performance-related Pay in the Romanian public administration. 152 GEO 57/2019 on the Administrative Code, art. 485 153 Up to 5% of the institutions (base) salary expenditures can be dedicated to this, and an individual award cannot be more than two gross minimum salaries. (Art 26 Law 153/2017) 154 In the 2019 public administration survey, over 99% of respondents in the MFE stated that their last performance rating was “very good” 63 than as a reward for performance155. Staff implementing EU funded projects are also entitled to a salary top-up of up to 50% of base salary. However, this is conditional on time worked on the project rather than performance. In some line ministries, managers use participation in EU funded projects as an informal reward for high performance and a tool for motivating staff156. However, this practice is at the manager’s discretion and not tied to the formal performance evaluation process. These bonuses have a special status as they are sourced from EU funds and associated conditionalities. For example, freezes on financial bonuses only cover those paid from the national budget, not those reimbursed through the EU. While these have some motivational benefits, they can create distortions, as they skew incentives towards increasing time spent working on EU-funded projects. 155 In the 2019 public administration survey, only 7% of respondents in the MFE stated that the results of the performance appraisal is used to set pay, while no respondent stated that the result is used to award bonuses 156 As per interviews and focus groups held with public administration employees and managers between April- July 2019 64 Box 14: Performance-related pay (PRP) scheme in the Romanian Competition Council Under the Competition Law no. 21/1996, including subsequent amendment and additions, the Competition Council (CC) can allocate a part of the earnings generated by its operations as “performance bonuses” to employees with exceptional results. The bonus is awarded yearly and can comprise of up to two monthly gross wages, at the institutional average, per employee. The internal CC regulation for PRP explicitly links the allocation of the bonus to the performance of employees in the previous year, assessed against at least one of four broad criteria: i) a significant contribution to achieving institutional objectives; ii) improving the quality of the institution’s activities; iii) demonstrating personal initiative in the organization; iv) responding timely to issues and finding efficient solutions. These criteria are further disaggregated into sets of observable behaviors. Additionally, managers are also assessed against the degree to which they achieved their objectives as set through the annual activity plan. The decision about awarding the bonus to certain departments is made by the head of the institution, following consultations with the plenary members and top management. Each department is allocated a percentage of the available funds for the bonus, based on the degree to which they contributed to achieving the institution’s objectives and on their staff numbers. Department heads nominate staff members for bonuses. Managers, in turn, are nominated directly by the top management team. This approach was possible in part because the Competition Council is an autonomous, self- financing administrative body with different governing arrangements than other public institutions. However, the legality of the scheme is currently questioned by the Court of Accounts, given that its conformity with the legal provisions of the Framework Pay Law 153/2017) is unclear. Source: Interviews with Competition Council line managers, held in May 2019; Order of the President of the Competition Council 1267/2017 on implementing the Regulation on awarding pay-for-performance; Court of Accounts (2019) “Public Report for 2017” 72. Before the 2010 Unitary Pay Law157, some institutions used so-called “incentives” as financial rewards for staff in tax collection and inspections158. However, these were awarded mostly in a discretionary and non-transparent manner by the leadership of the employing institution, with little justification and without being clearly or formally tied to staff performance. Thus, the awards were not perceived as fair by most staff, and, based on their previous experience, many interviewees considered that even in the current system bonuses cannot be awarded on a meritocratic basis and, hence, would be inadvisable. Even where an attempt was made to tie the bonuses to performance – for 157 Law 284/2010 158 See connected report on Performance-related Pay in the Romanian public administration 65 example, to the amount of fines resulting from inspections-, such a link contributed to distorting incentives. For instance, inspectors were encouraged to focus more on finding and punishing irregularities, rather than having a more balanced approach to ensuring compliance, which includes prevention, counselling and cooperation with citizens and the private sector. 73. Sanctions for underperformance are drastic in law (dismissal) but difficult to apply in practice. Managers are not equipped, supported, or encouraged to effectively address staff underperformance, and thus are reluctant to tackle underperformance formally through the performance management framework. Staff who have been formally identified as underperforming can either receive a 10% pay cut for the entire year (rating of “satisfactory”) or be dismissed from their job (for a rating of “unsatisfactory”)159. However, there are no available tools, such as probationary periods for staff (other than debutants) or performance improvement programs, through which managers can work with underperforming staff to either improve the latter’s performance or to address the causes of underperformance in a proportional and predictable manner. Dismissals can be challenged in administrative courts and interviewed managers and HR department representatives indicated that the suing employee generally wins. Managing underperformance through the current performance management system brings little benefits to managers, while at the same time it can be excessively time-consuming and complex due to procedural requirements and potential legal disputes. Thus, underperforming employees are mostly tolerated, and their workload is assigned to higher-performing staff. Staff have reported that the current practice has consequences for staff morale, leading to perceptions of unfairness and bias, which in turn generate disengagement with the job and tensions among colleagues. 74. For instances of severely poor performance (such as staff failing to do their job), managers prefer to use internal disciplinary commissions . This is partly due to the fact that the performance management framework does not clearly distinguish between instances of underperformance and of misconduct. For instance, both “poor quality of work” and “not meeting deadlines for the work assigned” are defined as misconduct in the Administrative Code160. Moreover, while the responsibility and justifications for low performance ratings rests almost entirely on the evaluating managers, sanctions for misconduct are investigated and decided by a three-person committee, composed of two senior civil servants and a staff-union representative161. As such, managers prefer to treat performance issues as misconduct, because the procedures offer more safeguards and protections from legal challenges by involving more people in the decision (less burden on the manager alone), and by offering a clearer definition of sanctionable actions (more 159 Albeit in practice the latter happens only under exceptional circumstances. According to NACS data, in 2018, only 10 civil servants were unilaterally dismissed through performance ratings, while 27 were dismissed through disciplinary committees 160 GEO 57/2019 on the Administrative Code 161 GD 1344/2007 on the rules of functioning and organization of disciplinary committees. 66 observable). Such an approach also allows for a more gradual/incremental approach to sanctioning, as penalties for misconduct include written reprimands, pay cuts for up to one year, demotion for up to one year and, ultimately, dismissal from the position162. Indeed, available data for previous years163 shows that disciplinary committees are used mostly by line managers and revolve around issues related to substandard work performance, rather than what could be considered strictly as breaking the established rules of conduct (such as inappropriate behavior towards colleagues and the general public, breaching confidentiality, etc.). 75. Furthermore, there are no mechanisms to identify and address underperformance early on in a civil servant’s career. Except for entry-level civil servants (“debutants”) there is no probation period for newly hired staff. This would be understandable in a purely career- based system, but since the Romanian civil service is a combination of a career-based and a position-based system, with many external hires, the result is that many new entrants at higher grades or at managerial levels do not undergo the same kind of scrutiny – despite the fact that the impact of underperformance increases in severity with the responsibility of the staff. As such, not having a probationary period particularly for newly appointed managers makes it challenging for organizations to replace underperforming managers who are not able to prove within a reasonable period the required set of management competencies. 76. Effective managers find creative ways to reward high-performing staff, help lower- performing ones improve, and leverage intrinsic motivation . However, they do so independently of the performance management framework, not through it.164 As the behavioral analysis shows165, effective managers are those who focus on interpersonal relationships, provide continuous guidance to employees and demonstrate a sincere commitment to helping their staff. For instance, some managers ensure that their staff are recognized for their work by providing them with opportunities to showcase it to senior management. In other cases, managers engage staff in externally funded projects to provide them with otherwise absent learning and development opportunities and to diversify their work routine. On the other hand, less effective managers are those perceived as authoritarian, who give orders, rather than instructions, and limit themselves to following existing performance management procedures166. The gap between what good managers do and what the formal performance management framework emphasizes suggests that the system is too narrowly and rigidly defined as an administrative process rather than a way of enabling and motivating staff to perform. 162 GEO 57/2019 on the Administrative Code 163 See NACS reports on the management of civil service positions and civil servants for 2016, 2017 and 2018. 164 Interviews and focus groups held with public administration employees and managers between April-July 2019. See also connected report, “Performance Management in the Romanian Civil Service: A Study of Behaviors and Biases” 165 See report on “Performance Management in the Romanian Civil Service: A Study of Behaviors and Biases” in Annex 6 166 Ibidem 67 77. There is currently no effort to make good practices in performance management known across the public administration and encourage their more widespread use by managers. a. There is little to no training programs for managers in people management skills167, for example on assessing performance, addressing underperformance, or providing feedback. There are no system-wide requirements for such specific training and institutions have discretion of whether to prioritize it or not. Interviews have highlighted the fact that even when organized, the training sessions focus on how to comply with procedures, as the HR departments of institutions, which generally lead the trainings, have limited technical capacity for HRM counselling. The National Institute for Administration (NIA) had the exclusive mandate168 to provide specialized management training for managers in the public administration, but its training program was still at an early stage of implementation (having started in 2019) and could accommodate only a limited number of participants (up to 25 participants per quarter)169. b. The lack of specialized learning opportunities is exacerbated by the absence of administration-wide initiatives for structured programs through which experienced managers, identified as effective leaders, could mentor or regularly engage with recently appointed managers in order to share best managerial practices. The annual conference organized by the NACS to disseminate best practices from the public administration could be a promising platform on which to build and scale up such program.170 c. Self-learning resources, such as practitioner handbooks or instructional videos or courses, are limited and inconsistent. The NACS prepared in 2008171 and 2012172 a standard and more in-depth practitioner’s handbook on HRM practices (including on performance management) for the public administration. However, the interviewed HR departments and managers reported that the documents were not sufficiently visible and, hence, were unknown to many of them. Interviewees who were aware of the documents reported that they were of limited use to them since 167 Other than for high level civil servants, and even there it is rarely required in practice, as many HLCS are named through temporary appointments. 168 GEO 57/2019 on the Administrative Code, art. 458 169 Information provided by the NIA in August 2019 170 For more information on the “Competition of the best practices in the Romanian public administration” organized by the NACS, see http://www.anfp.gov.ro/Anunt/ANFP_da_startul_unei_noi_competitii_a_bunelor_practici_din_administratia_p ublica 171 See the “Handbook for Human Resources”, available at http://rru.anfp.gov.ro/docs/manual_management_rersurse_umane.pdf 172 See “Human Resources Management in the Public Administration”, available at http://www.anfp.gov.ro/R/Doc/2015/Proiecte/Incheiate/MAPN/4.%20Materiale%20de%20formare%20manag ementul%20resurselor%20umane.pdf 68 they provided little practical advice on how to use the existing performance management tools for real-life situations. 3.6 Enable staff performance through adequate opportunities for growth and development Key message: There are few development opportunities for civil servants, as competency- based management is in its infancy, managers do not act as coaches to staff, learning and development offerings are limited, and mobility is not used as an opportunity for job enrichment and development. 78. Annual performance reviews focus on assessing past performance but are used only formalistically to identify individual development needs. As noted, the current system prioritizes measurement of performance, without, however, credibly binding it to measures of performance improvement. As interviews have highlighted, the performance review conversation, when held, is most frequently focused on past mistakes, rather than on ways to improve performance going forward173. This approach can lead to employee demotivation and can aggravate underperformance issues174. Managers are required to recommend for each employee specific areas of development for the following year, to be covered through formal “training courses”. However, there is no requirement to explicitly link these development recommendations or explain how they could contribute to achieving particular professional objectives or developing competencies, which could help better assess the relevance of such trainings. In practice, development recommendations are often simple references to generic topics relevant to the evaluated employees’ work (e.g. public tenders, public sector pay policy, communication, IT). The evaluation report also contains a box to record the development opportunities which the evaluated employee benefited from during the evaluated timeframe, but it is not required to provide additional information on the impact and subsequent usefulness of the training/development experience on actual work performance. 79. Staff competencies are part of the annual performance appraisal, but their assessment is perfunctory and their relevance for performance and development is not well understood, let alone internalized. When evaluating staff, managers are required to assign quantitative scores also for the degree to which their staff demonstrated a standard set of competencies (“performance criteria”), which may or may not be tied to performance in a given role. The average score for the competencies represents half of the staff’s overall performance grade. Managers can also provide qualitative justifications for 173 As highlighted during interviews and focus groups held with public administration employees and managers between April-July 2019 174 Wigert, B. and Harther, J. (2019) “Re-Engineering Performance Management”, Gallup 69 their competency scores, but rarely if ever do so in practice. Thus, competencies are not really used to identify development needs or to identify high-potential personnel. This is partly because the underlying logic of competency-based management is not fully understood in the Romanian public administration, and managers are not provided with either the tools (such as detailed description of key observable behaviors for each competency), the training, or a credible reason for evaluating them175. 80. The performance management framework does not encourage managers to provide frequent and timely feedback to employees. Both the former and the new performance management framework176 provides for only one formal performance review conversation, to be held each year between January 1st- March 31st, during which managers and their staff discuss the latter’s appraisal results for the previous year and identify future objectives and development needs. There are no requirements to record a summary of the conversation or to follow up on previous conversations to assess employee progress in addressing the issues which had been previously identified. Nor are there any mechanisms to allow employees to provide feedback on the quality of their manager’s appraisal and for the latter to be assessed by a third party against their progress in acting on the feedback. Some of the interviewed institutions trialed mid-year performance reviews, but the attempts failed, reportedly because they were framed as an additional performance assessment with no clear benefits, which added new bureaucratic burdens to managers without providing commensurate benefits in return. 81. Staff and managers have limited options to address individual development needs even if these were properly identified through the performance management system. Interviewed staff highlighted a serious need for specialized training in their respective fields of work. The lack of funds allocated by institutions for staff training means that few such opportunities are available. Indeed, nearly half of the public administration staff surveyed in 2019 argued that their institution offers too little training (47% of staff) and that funding allocated for training is insufficient (47% of staff). Furthermore, in interviews it was suggested that available development opportunities are limited to generic training courses, focused on explaining procedures and legislation, which are sometimes of low quality in terms of delivery and usefulness. Interviewees suggested that most high-quality development opportunities are attached to externally funded projects, through activities such as study visits. As such, participation of staff in these is highly dependent on the capacity and positioning of their respective departments to work on externally funded projects, as well as on the willingness of their managers to assign them to these projects. Managers who were identified by staff as effective motivators are those that strove to include most of their personnel in these activities, on a rotational basis. 175 See also Output 3, Deliverable 3.2 “Competency Framework for the Romanian public administration”, developed under the HRM RAS, January 2020; and Output 1, Deliverable 1.1 “Baseline diagnostic of the national framework for HRM and its institutionalization”, developed under the HRM RAS, May 2019 176 As per GEO 57/2019 on the Administrative Code 70 82. Inadequate formal training opportunities are not compensated through on-the-job development or through the use of existing formal instruments for mobility. The current legal framework177 provides the possibility for civil servants to work (on a temporary or permanent basis) across civil service positions and organizations, which could potentially open up new opportunities for staff to enhance their skills in new settings and assignments. However, there is no government-wide structured program or strategy to use such instruments for staff development. Indeed, only 8% of respondents to the 2019 public administration survey stated that they were appointed in their current position through a transfer from another institution, and only 2% were appointed through a transfer within the same institution. Rather, the perception is that these instruments are generally used for punitive purposes by managers against inconvenient staff.178 Mobility is a particularly important tool in the case of top civil servants and senior managers, as it can prevent political capture and can maintain engagement by providing new professional challenges179. Alternative on-the-job training tools, such as formalized mentorships schemes or shadowing programs, are currently not available to staff in the public administration but were being planned by the former NAI in partnership with the NACS. 83. Managers are not equipped, nor encouraged, to be coaches to their staff. As the interviews have shown, good managers do this “instinctively”, by checking in frequently with subordinates to see where they need help and by finding ways to offer the support they need to perform better (e.g. through acting as mentors or assigning informal mentors to new staff or to staff that are struggling, using staff meetings to encourage teams to learn from experienced staff, etc.)180. However, overall in the Romanian public administration, managers lack the adequate structures, training and support to become effective coaches. Indeed, a recurring theme across interviews was “we have bosses not leaders”. Firstly, coaching staff is not perceived as being a core managerial responsibility181. Even formally, the performance criteria for management level civil servants state that managers require the capacity to develop the ability of their staff by “identifying development needs and recommending them training opportunities”182, rather than by actively providing themselves continuous guidance to their staff. Secondly, neither HR departments within organizations, nor the NACS in its role as a central HRM agency, have the technical capacity to provide dedicated and real-time support to managers to guide them on how to act as 177 As per GEO 57/2019 on the Administrative Code 178 As highlighted during interviews and focus groups held with public administration employees and managers between April-July 2019 179 Kuperus, H., Rode, A. (2016) “Top Public Managers in Europe. Management and Employment in Central Public Administrations”, The Hague: Ministry of the Interior and Kingdom Relations. 180 As highlighted during interviews and focus groups held with public administration employees and managers between April-July 2019 181 Highlighted in interviews and focus groups conducted with public administration employee throughout April-July 2019 (as part of the component on designing the competency framework for the public administration under the HRM RAS) 182 As per GEO 57/2019 on the Administrative Code, annex 6 71 coaches for their staff, particularly at critical moments in their career (such as first days on the job for new recruits, addressing dips in performance, providing advice on how to achieve career goals, etc.). Adding to this is the fact that managers who display strong coaching abilities are not recognized, rewarded, and promoted as role models for others to emulate. For instance, there is no formal program to publicly celebrate role-model managers, nor is there a system put in place, such as internal staff surveys, through which these managers could be identified183. 3.7 Embed performance management in the organizational culture and practice Key message: In addition to the missing linkages between organizational and individual performance management, the limited role of HR departments, limited staff involvement or feedback, and limited central-level support, guidance, and oversight further hamper the institutionalization of performance management in public organizations. These challenges are amplified by limited commitment on the part of senior managers to embed performance management in the organizational culture. 84. Effective performance management systems are not valued as strategic assets by public institutions. Interviews revealed that institutions across the Romanian public administration rarely take organizational-wide measures (such as internal communication campaigns, feedback sessions, etc.) to ensure that the performance management process is conducted effectively, and that staff understand its purpose and how it would benefit them. This is partly because performance management is generally perceived and legally defined solely as an HR administrative procedure, rather than as an institutional core business process. Many of the challenges identified in the previous sections contribute to this lack of institutional embeddedness of performance management, in particular the lack of linkages between individual and organizational performance management, insufficient leadership commitment, and the ineffective performance management regime for top managers. These issues are compounded by weak oversight and accountability mechanisms for performance management, as well low capacity of HR departments to lead, assist and innovate in it. There is also limited central-level oversight, guidance (beyond procedural ones), or sharing of best practices and lessons learnt among public institutions about performance management processes and approaches. 85. In some organizations, HR departments have tried to be more proactive and innovative in supporting performance management and providing quality assurance. However, without take-up by leadership, the impact of such initiatives is likely to be limited (see Box 15 for an example of best practices in the Competition Council in Romania). Overall, HR 183 Under the HRM RAS, the World Bank is supporting the Government of Romania to conduct a cross-public administration survey, which would also gather perspectives on managerial performance. 72 departments have few tools at their disposal to assess the quality and effectiveness/impact of individual performance management systems in their respective institution, let alone make proposals for improvement. Some institutions do require managers to send draft evaluation reports to the HR departments for an initial screening for procedural inconsistencies and to provide informal feedback to managers on the objectives they defined for their staff, but in most institutions HR departments play a purely administrative role. Box 15: Best practice at the Competition Council in Romania in linking individual and departmental performance The managing board (the plenary) of the Competition Council sets the organization’s multiannual strategy, which is subsequently operationalized through an annual action plan. The objectives set through the action plan are allocated to specialized departments, according to their specific functional area. The departments propose to the board the performance indicators and targets for their respective objectives. These targets can also be multi-annual but divided into yearly milestones. Nonetheless, the action plan can be revised at any time by the board to accommodate emerging priorities or to take into account shifting circumstances. At the end of the calendar year, the board assesses each department’s performance in meeting its objectives as laid out in the action plan. Departments are ranked from 1 (lowest) to 5 (highest). During the annual staff appraisal exercise, heads of departments are requested to grade the performance of their staff in line with the department’s average rating. For heads of departments themselves, the managing board aligns their performance rating with that of their unit. Consequently, performance appraisal ratings for employees have become more differentiated and realistic, with around 40% of employees receiving a rating of “good”, as opposed to the almost unanimous rating of “very good” found across the public administration. Staff of the Competition Council ascribe this change to strong and continuous support from the top management and heavy involvement of the HR department in sustaining the process through intensive communication campaigns and training programs aimed at managers to improve their appraisal skills. Source: Interviews with managers and HR representatives from the Competition Council, held in May 2019; Competition Council Rules of Internal Organization and Functioning (ROF) 86. Even though the NACS (through the MPWDPA) develops the legislation for performance management for civil servants, it does not have the data, nor the capacity to ensure compliance with existing legislation or to evaluate the impact of the legislation. Institutions report to the NACS only information related to disciplinary sanctions applied to the civil servants they employ. When individual civil servants challenge performance 73 appraisals in court, the NACS is not involved or informed. The NACS is more heavily involved in the performance management of public managers and HLCS. For the former, it selects the members of the external evaluation commission, based on an open competition184, and steers the process. For the latter, it essentially functions as a technical secretariat which ensures that procedures are followed (e.g. that the external commission meets when necessary), rather than engaging with the content and quality of the appraisal. 87. Oversight of performance management in public institutions is done primarily as part of broader organizational audit and oversight activities (mainly internal managerial control, or IMC, and internal audit). Institutions, through internal managerial control units (or staff from other departments who were assigned these responsibilities), are required to monitor and assess internally, on an yearly basis, the extent to which they have implemented the legally required procedures for staff performance appraisal (among other organizational processes) and are producing the required operational documentation, such as job descriptions, performance appraisal reports and annual activity reports. Additionally, internal audit units conduct periodical assessments of the broader HR processes within an organization, including on the functioning, from an operational perspective, of the internal managerial control system. Both the former and the latter units conduct monitoring and appraisal activities based on centrally established guidelines185. These assessments, in practice, are limited in scope, focusing mainly on verifying formal compliance with applicable legislation. Moreover, the specific responsibilities of IMC units and internal audit units, in terms of assessing issues related to organizational performance, are not clearly distinguishable. The units themselves cannot apply sanctions and their recommendations are non-binding. 88. Consequently, there is limited central oversight to guide and hold institutions accountable for improving their staff performance management systems. This is done primarily through a requirement for institutions to submit a self-assessment on their progress in implementing the internal managerial standards to the Department for Managerial Internal Control and Interinstitutional Relations (DMICIR) within the GSG186. The DMICIR processes the information and reports its findings and recommendations to the General Secretary of the Government, to be subsequently discussed in a government 184 See http://www.anfp.gov.ro/Anunt/Anunt_de_intentie__recrutarea_si_selectia_persoanelor_care_pot_avea_calita tea_de_evaluator_extern 185 See “Handbook on implementing the Internal Managerial Control System” developed by the GSG (available at https://sgg.gov.ro/new/wp-content/uploads/2018/07/Manual-SCIM-site.pdf); for internal audit guidelines see the “Practical Guide on Internal Public Audit of Performance. Improving the system of professi onal performance evaluation of personnel” developed by the Ministry of Public Finance (available at http://discutii.mfinante.ro/static/10/Mfp/audit/Ghidpracticevalperf_08052014.pdf), and Order 1624 of the MPF approving the General guide on the specific methodology for internal performance audit missions (http://discutii.mfinante.ro/static/10/Mfp/audit/GhidgeneralmisiuneperformantaUCAAPI_09122014.pdf) 186 Internal audit units report their auditing activities, including on performance management and broader HR issues, to the Central Unit for Harmonization of Internal Public Audit (UCAAPI) in the MPF 74 cabinet meeting and made public. Moreover, the DMICIR can also provide “methodological guidance” through field missions to institutions on how to apply the required managerial standards. However, the DMICIR is limited in its operational resources187 and its focus and expertise are not on HRM issues. As such, it cannot provide technical recommendations on how to improve staff performance management systems, other than by monitoring the degree to which institutions apply applicable legal rules and procedures (typically developed by the NACS). 89. Staff and their representatives are also not involved or provided with formal opportunities to provide feedback and recommendations for improvement of the performance management system within their respective organizations. In terms of platforms for consultation, the only existing structures which have a role to play towards this end are the joint committees (“comisii paritare”), established in each institution and composed by an equal number of representatives of the institution and representatives of the employee’s unions. Their mandate is consultative and generally restricted to discussing issues related to working conditions and training of staff, but they can also cover issues related to “establishing measures to improve the activity of authorities and pub lic institutions”188. These committees must report annually to the NACS, through a standardized template189 on their membership and activities conducted throughout the year. The NACS publishes the aggregate information in their annual report on the civil service. However, this public reporting is limited to specifying the number of committees established across the public administration in a given year and nothing on content of discussions, which limits the potential sharing of lessons learnt or good practices on staff consultation in the public administration. Moreover, in terms of practical functionality, these committees usually meet when management wants to present to the employee representatives a strategic decision, but the committees are not proactive in gathering feedback from employees to inform management decisions190. 4 Recommendations 90. As noted in Chapter 3, in its current form, the Romanian performance management system is almost exclusively focused on performance assessment. In this sense, it is a purely administrative-focused system. However, even in this regard the system has significant limitations. Given that almost everybody gets the highest performance rating possible, administrative actions, such as dismissals, bonuses, or promotions, are rarely if 187 8 staff covering the entire public administration as of July 2019. Interview with DMICIR staff, July 2019 188 As per GEO 57/2019 on the Administrative Code, art. 489 and GD 833/2007 189 NACS President Order 1443/2018 190 Deloitte (2013) “Raport privind dificultăţile administraţiei publice locale în gestionarea proceselor de resurse umane”, available at http://www.anfp.gov.ro/R/Doc/2014/Proiecte/Raport%20dificultati%20procese%20de%20resurse%20umane.p df 75 ever tied to performance. This diminishes the value of the yearly performance appraisal as a tool for administrative action. At the same time, development opportunities are few within the current Romanian civil service. Effective managers thus succeed in motivating their staff mostly despite rather than because of the current performance management system. 91. Romania must begin to strengthen the development orientation of the current system in order to improve staff performance and, thus, organizational and public sector performance overall. Current commitments, from the SSPA, the SDCS, and the Administrative Code, include both measures to strengthen the administrative consequences of performance, such as performance-related pay, as well as measures to strengthen the developmental aspects of the current system, such as the introduction of the competency framework. However, strengthening performance management will require also strengthening other HRM and public management functions – especially organizational performance management/strategic management and planning, career management, and training, or rather life-long learning and development. Most importantly, any reform of the performance management system will have to consider the success factors/principles discussed in previous chapters. This chapter offers recommendations for doing so. 4.1 Putting principles into practice: adapting international success factors to the Romanian context 1. Performance management must start from the top 92. As noted in Chapter 2, effective performance management requires strong support from institutional leaders. The political leadership of each institution should publicly take ownership of the performance management process and present it as a priority and a corporate obligation. Comprehensive and sustained internal communication should include targeted, simplified and clear information, not only about the process of performance management and performance appraisal, but also about key organizational objectives (linked to ISPs where appropriate) and the ways in which the performance management system would contribute to achieving them (for instance, rewarding employees who perform at high levels and providing structured support to managers and employees to address underperformance). Moreover, such a communication campaign must emphasize how the performance management system impacts the career and work of employees (the “what’s in it for me” part). Finally, an internal communication addressed to all staff prior to the performance appraisal exercise should define clearly and transparently the specific responsibilities of the actors involved in the process (such as managers, countersigning officers, HR department, head of the institution, etc.) and how the organization will ensure that these actors contribute to the well-functioning of the performance management system (for instance, that managers will be assessed against their involvement in the process). Top leadership, itself, has to lead implementation through example, by, for instance, publicly showcasing their objectives, indicators, and results achieved. 76 93. Given the central role played by HLCS and senior managers in achieving organizational performance, strengthening their performance management regime should be the first priority. At a minimum, the performance management regime of HLCS and senior managers could benefit from incorporating some of the elements of the performance assessment system for public managers, in particular a better evidence base for their evaluation and a more active involvement by the external commission in their evaluation. As noted in Chapter 3, the applicable performance appraisal regime for public managers is currently more rigorous than the one for HLCS and senior managers, even though they are execution-level staff191. Strengthening the performance management regime for HLCS would also be in line with best practices from international experience, where, as noted in Chapter 2, special performance management arrangements for this category of staff are common. 94. A strengthened performance management regime for HLCS should be in line with the principles outlined so far. To sum up again, this includes: a. First, HLCS evaluation should include the achievement of specific types of objectives related to both (i) organizational objectives – both strategic and operational, and (ii) people management and leadership (principles 2 and 3, see Annex 1 on the proposed form). b. Second, both the evidence base and the process for evaluating HLCS should be substantially strengthened. At a minimum, commission members should (i) be trained in how to rate performance (e.g., frame of reference training), (ii) have an obligation to conduct interviews with key stakeholders/”peers” with whom HLCS interact, and (iii) have access and be required to review adequate documentation192 to be able to independently assess the activity report of the evaluated HLCS and the performance review submitted by their respective hierarchical superior. c. Third, ratings of HLCS should be compared with each other through calibration, by type of HLCS, to ensure consistency (principle 3 and 4). As for other civil servants, competencies should be discussed in connection with objectives and tied to development needs/plans. d. Fourth, career paths and internal opportunities for HLCS positions should be more clearly regulated and strengthened (principles 5 and 6)193. As noted, the 191 This is both due to the history of the YPS scheme through which they were recruited, and due to their official mandate of driving change within their employing institutions. However, their ability to drive such change in the public administration is currently limited to a substantial degree by their positioning at execution level. 192 For instance, since secretaries general are responsible for the well-functioning of their employing institution, such documentation could include reports from the Court of Accounts, internal audit and IMC that pertain to the activity of the institution. This would be in addition to core organizational strategy and planning documents, such as Institutional Strategic Plans or similar strategic documents, annual operational plans etc., which reflect how the organization has delivered on its mandate. 193 Performance-related pay for HLCS is not recommended in the short term (see also connected report on Performance-related pay in the Romanian public administration). An analysis of the opportunity, costs and benefits of a performance-related pay scheme for HLCS should be done only after strengthening both (i) recruitment, appointment, and performance and career management of HLCS along the lines above, and (ii) the 77 first step is to limit both the use and the duration of temporary appointments to HLCS positions (see Box 17 below). A second step would be to set more rigorous eligibility criteria for HLCS positions, beyond work experience and formal academic degrees, as is currently done. These should include requirements for substantial managerial and leadership experience, for diversified work experience in relevant areas and/or sectors, and for demonstrating competencies specific to HLCS, as per the competency framework developed under this RAS194. For candidates who apply for a HLCS position from within the civil service, previous leadership experience must include at least several years in a director general (or at least director) position. Moreover, these internal candidates should have demonstrated adequate performance in that position for the previous three years, out of which at least one year of above average performance. Additionally, horizontal mobility policies should be redesigned to enable senior managers (such as directors general, directors, and their equivalent) to fulfill the aforementioned mobility prerequisites for applying to a HLCS position. This could be achieved by requiring that vacant or temporarily occupied senior management positions be filled first through horizontal mobility competitions, open only to candidates at the same level the advertised position. Moreover, to reinforce the use of mobility policies as a mechanism to develop managerial capacity across the Romanian public administration, legal provisions could be introduced to mandate that senior managers (director level and above) move to a different job of equal grade after spending a certain number of years within the same position (as is done, for instance, in the European Commission and the Netherlands, where they are required to move after 5 to 7 years). Such a horizontal mobility exercise should be coordinated centrally by the NACS, given its overview of available vacancies for civil service positions and of the time spent by each civil servant in a specific position. The mobility exercise would be part of the larger workforce planning cycle, in which the NACS would have a central role, as per the recommendations of the deliverable 4.1 on recruitment developed under the current RAS.195 e. Finally, the external evaluation commission, together with the evaluated HLCS, should also be required to prepare individual learning and development plans for HLCS based on the needs identified through the annual performance appraisal, including the discussion around the competencies demonstrated or in need of development. f. Performance-related pay for high-level civil servants can be considered in the medium- to long-term, after an effective system of evaluation for this category organizational performance management process, so that the individual performance of HLCS and their contribution to organizational performance can be adequately assessed. 194 Output 3, Deliverable 3.2 “Competency Framework for the Romanian public administration”, delivered under the HRM RAS, January 2020 195 “Defining a model for the national contest” 78 of staff has been set up and adequately institutionalized, as mentioned also in the connected report on performance-related pay. 95. In the short to medium term196, both the GSG, through the General Secretary of the Government, and the HR Council197, should take a leading role in the evaluation and career development of HLCS. The General Secretary of the Government, as the appointed head of the institution in charge of coordinating the implementation of government-wide priorities, should lead the evaluation of the HLCS198. As the key institutional lead on ISPs, the GSG is also ideally positioned to ensure that the evaluation of HLCS is appropriately linked with organizational strategic planning. The members of the external evaluation commission should be selected in such a way as to ensure an adequate balance between independence, expertise, and authority of commission members. Various models of HLCS evaluation commissions exist internationally, with different ways of including internal and external stakeholders. One option for Romania is to restructure the evaluation commission so that it is permanently led by the Secretary General of the Government and includes a representative of academia or civil society and an HR expert on assessing high-level management competencies (selected based on transparent criteria regarding expertise199, and endorsed by the HR Council). The evaluation commission should also include a variable membership for each HLCS consisting of one staff/labor union representative from the institution (chosen by the joint committees) and one peer or high-level representative of a key institutional stakeholder of that institution. To ensure that the commission has adequate information for their independent evaluation, the technical secretariat of the commission, currently housed in the NACS, should also provide substantive input to it by preparing the documentation and synthesizing the main conclusion/insights from the supporting documentation mentioned above (ISPs or similar documents, reports from the Romanian Court of Accounts, internal audit and/or IMC reports, feedback gathered from peers, supervisor and clients of the evaluated HLCS, if appropriate etc.). 96. Directors general, being the second highest tier of management within the organization, are another category of staff for which a more differentiated performance management regime is necessary. While similarly rigorous evaluation of directors general and directors as for HLCS is probably too costly in the short term, similar requirements for mandatory types of objectives as for HLCS can be developed for directors general and directors (e.g., on people management and leadership), alongside more stringent requirements for 196 In the long run, given the strategic importance of HLCS in delivering governmental priorities, centralized management of HLCS can be strengthened by entrusting a single coordinating body with the entire career management cycle of HLCS. To ensure that such a body has the necessary political leverage over HLCS, it should be placed at the center of government, within the GSG, with a direct line of reporting to the Prime Minister. 197 This assuming the HR Council is set up and operationalized in a timely manner. 198 For prefects, the GSG Secretary General should co-lead the evaluation process, together with the Minister of the Interior, who is in charge of perfects. 199 For instance, public managers undergo an external performance appraisal, conducted by evaluators specially recruited by the NACS for the exercise (See GEO 92/2008 and GD 78/2011). These evaluators are required to demonstrate that they have the experience and knowledge to evaluate performance (http://www.anfp.gov.ro/Anunt/Anunt_de_intentie__recrutarea_si_selectia_persoanelor_care_pot_avea_calit atea_de_evaluator_extern) 79 evidence to undergird the evaluation. Furthermore, a similar external evaluation procedure as for public managers can be considered also for directors general, the main caveat being that the final decision for the evaluation must remain with their hierarchical superior or the head of the institution. In the medium- to-long term, if directors general in central-level institutions are assimilated to HLCS positions or to a broader corps of HLCS as part of the recommended reclassification of jobs in the public administration 200, the procedure for evaluating HLCS can be adapted and expanded to these senior managers too, starting with those in central-level ministries. 2. Ensure a clear line of sight (goal alignment) 97. To enable managers to better steer employees towards achieving organizational goals, individual and organizational performance management systems need to be linked more clearly. An essential first step is integrating organizational objectives into the evaluation of HLCS and senior managers (directors general, deputy directors general) as well as mid- level ones where possible (directors and deputy directors). For institutions that are required to develop an institutional strategic plan (ISP), this will require a stronger link between the ISP and the annual organizational action plans and the attribution of clear responsibilities for ISP programs. Strengthening the link between the ISPs and budgets, as well as designating “program managers” within organizations (to be likely secretary generals, directors general, or directors where appropriate) will help in this regard201. However, all organizations, including those that have not yet developed or are not required to develop an ISP, should focus on enabling and strengthening the link between yearly organizational objectives (related to policy areas and organizational development)202, yearly organizational action plans, job descriptions, and individual objectives. To accomplish this, organizations need to set clear and actionable organizational priorities and better link the processes of organizational and individual objective setting. Standardized job descriptions can help in this process by outlining generic responsibilities for certain functions/categories of staff, but the yearly individual objectives need to be customized based on the specific organizational objectives and priorities for a given year. Thus, rather than including all possible activities staff is responsible for, as per job description, performance agreements should focus clearly or at least highlight the most important priorities for that year (see Table 3). 98. For this approach to work it will be essential that managers (and staff) understand and internalize the logic of performance management or management by objectives. Measures to achieve this include: a. Better communicating the goals of the organization and of the respective department to staff (see also principles 1 and 7). For example, to increase the 200 See Output 3 “Competency Framework” delivered under the HRM RAS, January 2020 201 See recommendations of World Bank (2020) “OUTPUT NO. 7 Final report presenting the results of the Reimbursable Advisory Services”, developed under Advisory Services Agreement on Strengthening Planning and Budgeting Capacity and Supporting the Introduction of Performance Budgeting (P156889), January 2020 202 Automatically “cascading” organizational and departmental objectives down to all staff is unfeasible and should be avoided, as it could easily become just another exercise in box-ticking. 80 salience of these goals for managers and staff during the objective setting and evaluation phases, the organizational mission and the key departmental goals (3-5 maximum) can be stated on the performance evaluation form203. This is currently done only for public managers, whose self-evaluation form includes sections on organizational and departmental priorities. Senior managers and HLCS could also be encouraged to publish and communicate across the organization their individual performance objectives. This would help facilitate and guide discussions for setting individual objectives at lower hierarchical levels. b. Substantial training in objective-setting and theory of change for managers and staff, including on setting individual objectives and linking them to organizational ones, so that they learn to differentiate between results and activities and formulate different kinds of objectives (e.g., outcome vs output vs process). This also has the potential to strengthen organizational performance management and improve the development of ISPs and their implementation, by enabling staff to better understand and thus internalize approaches to both organizational and individual performance management. For example, Portugal relied heavily on management-by-objectives training of managers and staff when introducing its organizational and individual performance management system.204 Table 3: Linking generic goals from a job description to specific organizational and individual objectives: example of an IT Specialist in the Tax Authority Generic goals from job description Goals derived from organizational objectives Goal in generic job description for professional counsellor To contribute to the execution of the unit’s specialized technical activities with quality and Organization annual objective efficiency, under supervision To develop electronic interaction with + taxpayers and citizens Goal in generic job description for ICT domain  To consistently apply specialized technical knowledge in the production of IT tools and solutions  Goal in specific job description To ensure the development of IT solutions to IT Department annual goal support electronic interaction between citizens To develop and implement an electronic and the Tax Authority platform for Vehicle Tax management   IT Specialist annual objective To program, test and pilot an electronic platform for Vehicle Tax management 203 See Ayers, R.S. (2013) “Building Goal Alignment in Federal Agencies’ Performance Appraisal Programs”, Public Personnel Management, 42(4), pages 495-520 204 Interview with expert involved in the reform process of the performance management system in Portugal, September 2019 81 3. Differentiate performance assessments across institutions, job types, and levels of performance 99. Performance indicators and targets should be adapted to the specificities of the job and the organization. Centrally mandated, standardized performance indicators are thus not recommended. Guidance on defining performance indicators, with examples for certain types of jobs can be useful. However, staff performance needs to be evaluated holistically, considering also quality of work, context and client or beneficiary satisfaction. Additionally, incentivizing performance as opposed to compliance also requires identifying and rewarding extraordinary results, innovative ideas, or other “out -of-the- ordinary” achievements or actions. Some changes to the evaluation form and process (e.g. requiring justification for grades, a better link with the “excellence award”, etc. - see in the paragraphs below) can help in this regard. However, the most important intervention is training managers on how to define objectives and performance indicators for staff, as suggested above. 100. Team performance could be considered as part of the performance management framework. The recommended entry point for team performance could be to factor in the performance of organizational units205 as part of the assessment of managerial performance. This can be done by introducing a special rubric related to the achievement of departmental/unit goals into the performance assessment form of managers (see proposals for forms in Annex 1). Where staff from different organizational units work on specific projects or assignments, under the coordination of a formally appointed project manager (as is the case for EU-funded projects), the objectives of these teams should be incorporated among the objectives of the respective staff and managers. In organizations in which the organizational strategic planning and performance management system is strong, a more stringent way to factor in team performance into managerial assessment could be to tie the individual performance ratings of managers on the performance of the units/project teams that they lead, as measured by the progress in achieving the organizational objectives assigned to them through activity plans and strategic documents206. The organizational leadership (i.e. minister, secretaries of state and secretary general, where appropriate) would be responsible for collectively assessing and agreeing on a rating for each organizational unit/project team, at the level at which responsibilities can be adequately traced and isolated. More attention to team performance and to achieving unit objectives would encourage heads of units to focus on coordinating their teams to collectively work towards organizational objectives, rather than focusing solely on each staff member’s input in isolation from others, which may or may not contribute to achieving the larger objectives. 205 These are bureaus, services, directorates and general directorates, all of which are generically referred to as “units” (“compartimente”). See EGO 57/2019 on the Administrative Code, art. 63 and art. 391 206 For instance, an option would be that if a directorate achieved 70% of the objectives it had been assigned by the institution’s leadership, then its director should have an overall perf ormance rating of no more than 3.5 (70% of the maximum rating, i.e. 5) 82 101. Certain types of performance indicators can be recommended or even mandatory for certain types of jobs - especially managerial ones or those where civil servants interact directly with citizens or external beneficiaries more broadly. For the first category, indicators regarding both contributions to organizational goals (as discussed in the paragraph above), and, especially, people management and leadership, should be required – as done in many EU/OECD countries207. For frontline staff – client satisfaction indicators are essential to ensure and increase client orientation. Such indicators can also be considered for staff whose clients are internal (e.g. other units or organizations within the public sector for which the unit/individual staff produces services). Where administrative data, e.g. on client satisfaction, is not available, the feedback could be collected anonymously from clients by the employee’s manager, with assistance from HR departments, via feedback forms or a standardized survey, delivered using publicly available ICT tools (e.g. Google Forms, SurveyMonkey, etc.). However, once again, the results of such feedback should be interpreted in context, and complemented by qualitative information, as appropriate. 102. Given the need for qualitative indicators for some jobs and types of results, and the inherent subjectivity of performance assessment, measures to ensure that assessments are fair, well balanced, and transparent are necessary. Training managers in setting objectives (principle 2), as well as on possible sources of bias, diversifying the sources of information for performance assessment (principle 4) and improving staff-manager dialogue and feedback can all help in this regard (principles 5 and 6). Facilitating agreement across managers on what different levels of performance mean (i.e. what constitutes “adequate” vs. “extraordinary” performance) can also help improve fairness and comparability of ratings across units. As noted in Chapter 2, two common and effective ways to do this are (ex-ante) frame-of-reference training (FoR) and (ex-post) calibration of grades. While a combination of both would be ideal, in the case of resource constraints it is recommended to focus on the latter, as it offers a way not only to increase comparability of ratings, but also to hold managers better to account for the ratings given. Both of these tools can also help increase internal communication (vertical and horizontal) and better tie individual and organizational performance, for example by combining a discussion of how to rate performance with a discussion on how the individual results are linked to departmental results, and – at the highest level - to the organizational results and organizational mission. 103. While calibration is most suitable and feasible at the organizational level, it can also be considered for types of jobs that fulfill cross-cutting functions across public organizations. As mentioned, calibration should be mandatory for the external assessment high-level civil servants. By comparing likes with likes (for example general secretaries with general secretaries, and prefects with prefects) the external evaluation commission can both better understand the nature of performance for these types of positions, and better assess performance of HLCS by having benchmarks for these 207 Examples of countries in which such performance objectives are mandatory for senior managers in the public administration include the UK, Ireland, the USA and Canada 83 comparisons. For other types of cross-cutting jobs, such as procurement, human resources management, internal audit etc., in the medium term, the agencies in charge of guiding and regulating that category of staff can develop performance guidelines/benchmarks for frame-of-reference for execution- and technical manager level staff. Cross-organizational calibration of grades could be challenging, given the large number of staff in these kinds of positions. However, the lead agencies could advise line agencies on how to assess the performance of these categories of staff based on the guidelines and benchmarks established. 104. Making it easier for managers to rate performance and setting the default performance rating to “adequate” or “satisfactory” (a cognitive process known as “anchoring”) on a balanced rating scale might “nudge” managers to rate employee performance more realistically. This could be achieved by changing the assessment form and rating scheme so that it helps distinguish more clearly between under-performance, adequate performance, and exceptional performance. For example, in Portugal, there are only three performance ratings for each objective/performance indicator: objective achieved (3 - default), objective surpassed (5 - requires justification) and objective not achieved (1)208. Similarly, in Ireland, since 2016, there are only two ratings, “achieved expectations” or “needs improvement”209. In Romania, this would mean transitioning to a 5-point or 3- point rating scale, with “adequate” performance representing the middle grade (not the second lowest on a 4-point scale as it is now210). Limiting the number of objectives set for each employee (e.g., to five) and prioritizing them can also focus manager and staff attention and discussion on the essential aspects of performance. Other ways of making the current performance assessment form more useful include eliminating the percentage of time to be allocated to each objective (which is currently included in the form, but not used in computing the performance grade) or replacing with weights to be allocated to each objective or job responsibility in the final grade, based on their relative importance for the specific job (see yearly appraisal form proposal in Annex 1). 105. Adequately distinguishing between different levels of performance is a fundamental prerequisite both for tying performance assessment to administrative decisions (such as performance-related pay and promotions) and for motivating staff . As noted, currently almost all staff get a “very good” rating, given that rewards for high performance are few, consequences for bad performance too drastic, and managers have few tools at their disposal to motivate staff211. This is the case even for types of jobs for which sophisticated and seemingly precise systems to assess performance have been introduced, such as those managing EU funds. Thus, strengthening incentives for managers to better differentiate between different levels of staff performance is crucial. This includes addressing underperformance in a more staggered and constructive way, as 208 See https://www.dgaep.gov.pt/index.cfm?OBJID=7D378A5B-303B-4276-86F0-9A52D4664135 209 See https://hr.per.gov.ie/pmds-2016/ 210 From highest to lowest: very good, good, satisfactory and unsatisfactory 211 To ensure fairness and avoid demotivating staff even more, many managers do try to differentiate between levels of performance by adjusting the decimals (i.e. varying between 4.5 and 5 – all “very good” grades). However, this distinction does not have much meaning and is not useful for administrative decisions. 84 recommended under principle 6. Changed forms, FoR, and calibration of ratings can help nudge towards a better differentiation of grades, and should be piloted and evaluated first, before more stringent measures are adopted if necessary, such as a centrally- mandated quotas for top ratings (for above average performance). As noted in Chapter 2, forced distribution for all grades can have significant downsides, hence it is not recommended212. 106. A quota capping only the highest grades at a certain percentage of staff could be considered if calibration and other “soft” tools prove ineffective, as it pushes managers to identify top performers without being overly punitive for the rest of staff. In the rating scheme proposed above, for example, only the percentage of staff receiving an “exceeds expectation” (4) or “extraordinary” (5) performance grade needs to be capped. If the quota is introduced and tied to rewards, a necessary precondition is to take measures to ensure that the system is transparent and perceived as fair by staff. At a minimum, calibration of ratings should be mandatory if the quota is introduced. 4. For objectivity and fairness, improve judgment and diversify the source of information for the evaluation. 107. Managers should be encouraged and enabled to gather evidence about the performance of their staff from different sources of information. The current management information systems (MIS) and practices used in most public administration organizations cannot provide managers with data which they can use to reliably track the individual activities and outputs of their staff. In the longer term, improvements in MISs could help produce the necessary data, at a sufficient level of granularity and reliability. In the mean-time, “low tech” solutions, such as managers and staff keeping track of activities via diaries or in digital files (e.g. Excel spreadsheets, Google sheets, etc.) can be useful to address issues such as “recall bias” (see Table 2 in Chapter 2) and to record relevant performance indicators. However, such methods are also time-consuming, cannot be used as a reliable or auditable paper-trail, and cannot easily be centrally mandated and enforced. As such, requiring such extensive documentation for all staff throughout the organization should be avoided. However, more targeted/detailed documentation should be required for the performance appraisal of HLCS or senior managers or to accompany proposals for performance- related bonuses. Beyond that, improving the information basis on which performance appraisals of individual staff rests should be pursued through other, less cumbersome means. 108. Self-evaluations can be one additional source of information and a way for staff to document achievements, while also offering an opportunity for self-reflection and lesson learning. This tool is currently being used formally in the performance appraisal 212 Especially not in the current Romanian context, where the new Administrative Code foresees a pay cut for a “satisfactory” grade (Art. 485, paragraph 7c)). If the recommendations of this report are adopted, this provision will need to be changed. 85 process for public managers213. Public managers reported that the opportunity to document their performance and thus ensure more objectivity and comprehensiveness in their assessment is one of the main benefits of the self-evaluation214. However, self- evaluations serve a broader range of purposes – including to help employees reflect upon their performance, competencies, and development needs, thereby encouraging them to become co-owners of the appraisal. Thus, self-evaluations should have at least three components: (i) documenting achievements and activities; (ii) reflecting on past performance; and (iii) identifying strengths and development needs. Self-evaluation and reflection components can be integrated into the annual assessment form (see proposed forms in Annex 1) or be contained in a separate form. However, to be effective, self- evaluations should not only be used to “automatically” inform the supervisors evaluations but should be actively and constructively used for staff-manager dialogue and feedback not only about past performance, but also as about development and career growth (principles 5 and 6). 109. Requiring explicit, evidence-based reasoning and justification for performance ratings (especially when performance is appraised as below or above expectations) can also ensure more objectivity and traceability of ratings, can reduce potential bias in appraisals and can increase rater accountability. The current appraisal form for execution and management level civil servants includes sections for documenting extraordinary results or challenges encountered, but there is no explicit requirement for managers to do so and/or to factor this information into the performance rating. As such, managers rarely make use of it. Requiring managers to justify their decisions can also nudge managers and staff towards weighing information more carefully and judging it in the specific context when assessing performance. Discussing the reasoning behind the rating with the evaluated employee is crucial for ensuring that employees accept the rating as being fair and can improve their openness towards feedback and learning. The quality of such conversations cannot be centrally monitored and enforced. Rather, improving performance reasoning and dialogue is a longer-term learning and cultural change process. Initial training can be the foundation for such a change, but internalizing it requires more than training. FOR and/or calibration discussions (as suggested above, in principle 3) can help to some degree in this respect, the former by illustrating the kind of reasoning to be used when rating performance (FOR) and the latter requiring managers to explain to peers how they rated their staff (calibration). 110. Possible unconscious biases in appraisal can also be reduced by making managers aware of them and how they materialize in practice. A “quick” solution for increasing awareness on these topics is to provide managers with “cheat sheets” before the start of the performance appraisal cycle and ask them to review them with their staff, before every performance appraisal discussion, and with their peers, before every calibration meeting. These handouts would succinctly explain what the most common errors in performance appraisals are (including unconscious biases), how they can distort the 213 HLCS have to prepare an annual activity report, but self-reflection/self-assessment elements are not included. 214 As per interviews conducted with public managers, July-August 2019 86 outcome of the performance appraisal and what could be done to overcome these biases. In the medium to longer term, the “cheat sheets” should be reinforced with workshops on the topic throughout the year, organized by HR departments within institutions jointly with external trainers or with other colleagues, trained previously and identified as possible “influencers” (not simply senior staff), as part of the broader performance management training/learning and development program. Ultimately, the “cheat sheet” and the lessons learnt from the workshop should be developed into an online learning course/module, to be made mandatory for all staff occupying management-level positions. 111. Frequent (informal) check-ins throughout the year and even slightly more formal mid- term or quarterly performance conversations (which have no formal consequence on the final performance rating) can also help address recall bias and more importantly, offer opportunities to have more timely discussions about the challenges staff face and their needs for support. Indeed, the interviews and behavioral analysis conducted for this study show that good managers are those that have frequent conversations with their staff about how they are doing and what support they need to stay on track 215. While encouraging such informal practices is important, slightly more formal mid-year or quarterly check-ins can help document in-year progress towards achieving objectives and to identify challenges in a timelier manner. These mid-term conversations would help record relevant information that can feed-into the more formal, end-year appraisal. For the mid-year performance conversations, simplified forms should be used to guide the discussion and record the summary of the staff-manager conversation, for future reference purposes (see proposed forms in Annex 1). 112. For HLCS216 and senior and mid-managers (directors general and their deputies, directors), the evidence base for evaluating their performance should be expanded to include peer and staff feedback. While multi-source evaluations can in theory be used for all staff, they are particularly useful for managers, as they allow a better assessment of how they perform their managerial duties and of the degree to which they demonstrate leadership and people management results and competencies. As such tools require resources for data collection and analysis, they are usually led by a dedicated department (generally HR departments) for the entire institution 217 218. For such a tool to work in a very hierarchical setting, as the current Romanian one is219, it 215 See connected report, on Performance Management in the Romanian Civil Service: A Study of Behaviours and Biases 216 For HLCS, staff (engagement) surveys are used in many countries to obtain a comprehensive view of their individual performance in delivering their mandate of improving organizational performance and capacity (see Kuperus, H., Rode, A. (2016) “Top Public Managers in Europe. Management and Employment in Central Public Administrations”, The Hague: Ministry of the Interior and Kingdom Relations). However, staff engagement surveys serve a broader range of purposes, and are discussed under principle 7 (Embed PM within institutions) 217 OECD (2016) “Engaging Public Employees for a High-Performing Civil Service”, OECD Public Governance Reviews, OECD Publishing, Paris. 218 Free survey tool could be used (for example built into Google Forms) to gather employees views. See https://www.google.com/forms/about/ 219 See connected report, on Performance Management in the Romanian Civil Service: A Study of Behaviours and Biases 87 will be crucial to (i) have buy-in from the political leadership of the institution, (ii) have HLCS and senior managers who are open and willing to learn from the results of the survey and are ready to visibly act upon them, (iii) ensure staff that their anonymity is protected and address possible “social desirability bias”, and (iv) use the results primarily for development and recognition purposes, rather than for sanctioning. Thus, the recommendation is to first pilot bottom-up/180 evaluation of managers in a few selected institutions where there is clear support from the institutional leadership for such an intervention (see also principle 1). 5. Motivate performance through both intrinsic and extrinsic incentives 113. Both the Framework Unitary Pay Law 153/2017 and the new Administrative Code foresee financial rewards and sanctions for high and low performance respectively 220. For these to have a positive rather than negative impact on staff motivation and performance, it will be crucial that they are awarded in a transparent and equitable manner. As noted, both international and Romanian experience show that performance- related pay (PRP) can have severely demotivating effects if perceived as unfairly awarded. The changes to the performance appraisal process suggested above (simplified, but more balanced rating scheme, broader/more diversified information basis, frame-of-reference training and/or calibration meetings to ensure consistency and comparability among ratings) could all help improve the basis on which decisions about financial rewards and sanctions for performance can be made. However, formally tying financial rewards to the yearly performance appraisal should only be considered for certain categories of staff after the reforms proposed here are implemented and ratings are distributed more evenly, along a curve, based on a transparent procedure and capped at a reasonably low percentage of staff. 114. The connected report on performance-related pay in the Romanian public administration offers more detailed options for awarding the performance bonus (excellency award) foreseen in L153/2017221. A careful balance will need to be struck between mandatory (standardized and centralized) criteria for awarding the bonus, and aspects that are left at the discretion of the organization and of line managers. One key decision concerning the design of the award is whether it should be tied to the annual performance appraisal or awarded more frequently throughout the year, for specific accomplishments, based on in-year check-ins and additional, dedicated procedures. As the connected reform on pay for performance concludes, in the short to medium-term, the latter is more suitable to the Romanian context. Tying bonuses (or other forms of pay for performance) to the annual appraisal rating should only be considered once the 220 The Administrative Code (GEO 57/2019) foresees a salary cut for staff which obtains only “satisfactory” during the annual evaluation (art. 485, paragraph 7c) 221 The new Administrative Code also foresees the possibility of bonuses, but does not tie these to the annual performance appraisal and does not specify the criteria based on which they should be awarded (art. 485, paragraph 7) 88 overall performance management system has been improved and ratings are adequately differentiated and reflective of performance. 115. Even for the in-year excellency award, it will be crucial to ensure it is awarded in a consistent and non-discretionary manner across organizations. Implementation norms, jointly issued and supported by MLSP and NACS/MPWDPA, can specify the mandatory elements, which ensure that a minimum set of principles are respected by public institutions when awarding the bonus (see below, and more detailed recommendations in the connected report on pay for performance), such as: a. Internal consultation and participation: both the details of the internal procedure for the excellency award, and the final list of award recipients should be discussed and agreed upon not only among the political and administrative leadership of the organization (including directors general and directors), but also with staff representatives. Calibration meetings, as proposed under principle 2, should be mandatory if the awards are tied to the yearly performance rating. b. Transparency: both the procedure and the list of award recipients should be communicated to all staff in the organization, e.g. by publishing the list of recipients on the notice board or intranet of the organization. c. Efficacy: the size of the bonus and the maximum number of recipients should be carefully calibrated to be (i) financially sustainable/affordable, and (ii) large enough and selective enough to incentivize performance and be perceived as a special award rather than an entitlement, but not too large so to de-motivate staff after it is discontinued. d. Accountability: in addition to instituting appeal procedures for staff, employing institutions should report on procedures and bonuses awarded to the NACS and MLSP (institutions employing civil servants) or to MLSP alone (broader public sector/institutions not employing civil servants). Compliance with the implementation norms should also be verified through existing accountability mechanisms (internal audit, internal managerial control, etc.). Institutions that do not have the appropriate procedures in place and do not follow the norms should not qualify for performance-related pay. 116. Changes to career management and career progression policies are necessary to strengthen both incentives for higher performance and professional growth opportunities based on key competencies (see also principle 6). Some recommendations in this regard have been made in the Baseline Diagnostic prepared under this RAS (see excerpt in Annex 4). While more detailed recommendations in this regard go beyond the scope of this deliverable, some of the changes proposed here also have implications for career management. For example, changes in the rating scheme and better differentiation between different levels of performance can help better identify high performers and thus introduce stricter rules for advancement in grade (a certain number of years of adequate performance and at least one year of above average results), as well as to managerial levels (including temporary promotions). The competency framework could be used in a similar way to identify candidates for promotion (in grade or to 89 managerial positions) – e.g. staff have to not only demonstrate the competencies necessary for their current grade, but also at least a few above average key competencies for advancing to the next grade. However, using the competency framework this way can also entail some trade-offs, as tying it strictly to career rewards can deflect attention from its development function (see principle 6). 117. More attention should be given to leveraging intrinsic motivation and offering non- monetary rewards and incentives. As noted in the behavioral analysis, managers in the Romanian public administration which are perceived by staff as being good managers already use various, sometimes innovative ways to improve the working climate and to appeal to the intrinsic motivation of staff. These include showing appreciation, offering frequent and constructive feedback, helping those that are facing difficulties, listening to staff and showing empathy, building team spirit and finding opportunities for job enrichment within the current legal framework. 118. More institutional and central level effort is needed to encourage the take up of such practices across the public administration. At a minimum, managers can be provided with a “cheat sheet” and tips for motivating and enabling employees to perform as suggested by the behavioral analysis222. Effective managers could be recognized by organizations and encouraged to share experience and other best practices with other managers through a structured program, e.g. as guest speakers in trainings on performance management, or at the annual Civil Service Award event organized by the NACS. However, to ensure the widespread take-up of such approaches by managers, a more sustained and dedicated training program in people management for all managers across the public administration needs to be implemented. 119. Overall, organizational-level measures to improve working conditions and increase staff satisfaction and engagement are essential to increase the motivation of staff. Staff motivation cannot be increased using specific, clear-cut “tools” alone, but rather requires an ongoing effort to understand the sources of staff satisfaction or dissatisfaction, for example through using staff engagement surveys and acting on their recommendations. In addition, there are also some engagement and social recognition initiatives that can be piloted by organizations to help motivate staff. Examples are congratulations letter signed by ministers for top performers or even more public awarding of recognition certificates for outstanding performance. For these to function as intended it will however be important that the number of recipients is limited and that they are carefully and transparently selected, as recommended also for the excellency award. Other organization-wide approaches to engage and motivate teams of employees in proposing innovative solutions that could be piloted in some organizations include so-called “innovation tournaments”, as detailed in Box 16 below. Box 16: Mobilizing and rewarding organizational commitment among staff in the Romanian public administration 222 Such cheat sheets can be developed in Output 5, Deliverable 5.3 “Proposed guidelines on the use of performance management”, HRM RAS 90 One of the most effective ways to enhance employee engagement with their organization is through increased opportunities for autonomy, mastery and purpose on the job, as well as through public recognition of efforts223. One way to stimulate this intrinsic motivation is through so-called “innovation competitions”. Staff would be provided with a platform to propose low-cost solutions for very specific issues which they encounter in their day-to-day work and which can improve organizational performance on various dimensions, such as staff well-being, cost efficiency, beneficiary satisfaction, etc. Once collected and aggregated, all proposals would be communicated via e-mail to all employees, who would be asked to select the proposals which they find most useful. For the top-ranking solutions (e.g. the 5 most popular), their respective owners would be asked to develop an action plan for implementation. The final plans would be discussed at the Management Board level and, if deemed appropriate and feasible, would be cleared for implementation. The winning teams and/or individuals would subsequently be publicly recognized for their contribution (an accomplishment which should be reflected in their performance appraisal) and, if permitted by budgetary rules, could be awarded a prize which would benefit their entire unit or department. Additionally, the winning proposals in each institution could feed into the larger event held by the NACS each year to recognize innovation, i.e. the “Innovation and quality in the public sector” conference. However, past experience of a number of central public administration institutions in organizing such competitions highlights the importance of carefully designing and implementing such schemes224. Otherwise, the competitions can backfire and lead to staff demotivation and frustration. Among the lessons learnt to improve the probability of success are: i) establishing clear guidelines on what type of proposals are appropriate; ii) being fully transparent about the process and setting clear expectations regarding the possible outcomes; iii) having the top political management, high level civil servants and senior managers visibly committed to the initiative; and iv) providing the option of submitting proposals anonymously or at the departmental level. 120. Constructive conversations about objectives between managers and staff are powerful motivational tools. As noted, the quality of such conversations cannot be centrally mandated, but it can be encouraged through many of the tools presented above for strengthening other aspects of performance management, such as behavioral nudges/cheat sheets or reminders about how to conduct such conversations, as well as (especially) training in feedback techniques. For example, one important idea to reinforce is that staff should be “co-owners” of their objectives, rather than just “receivers” of 223 Pink, Daniel, H. (2011) “Drive: The Surprising Truth About What Motivates Us”, Riverhead Books 224 As highlighted during interviews and focus groups held with public administration employees and managers between April-July 2019 91 objectives from above225. While managers should be the priority target group for interventions such as training, in the longer term, it would be useful to expand training to staff to empower them to be more active participants not only in the objective setting process, but also in receiving and processing feedback and using it for their own developmental purposes (see also principle 6 in the next section). 6. Enable staff performance through adequate opportunities for growth and development 121. The competency framework sets the basis for strengthening the developmental aspects of performance management by defining the competencies necessary for performance in different types of jobs at different hierarchical levels . It also supports managers and staff in assessing these competencies based on observed behavior. If done well, this can help move performance conversations beyond the current rote box-ticking approach to one focused on understanding and developing the actual drivers of staff performance. In order for this to be possible, both staff and managers need to better understand the relationship between competencies and performance. As noted, people use competencies (knowledge, skills, abilities) to meet their objectives and achieve results (performance). However, if individual objectives were not met, it can be either due to external circumstances, beyond the staff’s control, and/or because staff do not possess the necessary competencies to achieve the expected results. In other words, performance is a combination of competencies, effort, and environment (see formula below). To put it a different way, performance is an output, while competencies are an input. Performance = Competencies * Effort * Environment 122. Thus, appraising staff progress in meeting objectives, on the one hand, and competencies demonstrated, on the other, serves different purposes. The rating related to objectives represents whether staff have fulfilled their duties and achieved the results, so it would have an administrative and accountability purpose. Conversely, the competency assessment shows how staff have achieved those results (i.e. what skills, abilities and knowledge staff have used or would be needing to achieve results) and, additionally, how promising the employee is for career progression and/or leadership roles. When assessing performance and competencies, staff and managers need to think of the The primary purpose of theory of change which links exceptional or low assessing competencies as part performance with the associated competencies. In of the performance appraisal is other words, they need to understand how to enable staff to develop their competencies contribute to on-the-job-performance capacity so they can perform at in a specific case. This starts with selecting the right higher levels. 225 This perspective is even reinforced by the current framing of performance appraisal in the legal framework as being the moment when managers “inform” staff of their objectives for the coming year (see Administrative Code, annex 6) 92 competencies to be discussed during the annual appraisal (see Table 4 below for an example), and continues with identifying learning and development needs based on competencies and organizational needs (see proposed form for individual development plan in Annex 1). Table 4: Selecting competencies: Example - IT Specialist Generic job description Selected for performance assessment Problem Solving and Decision very important in developing end-user IT solutions Making limited in scope by requirements to work within set of very strict Initiative rules Planning and organizing very tight schedule and multitude of different tasks to complete no formal communication with third parties is required, but necessary Communication within the team Teamwork will have to coordinate with Vehicle Tax Department specialists Citizen Centricity has to have the citizen’s perspective when developing the platform Integrity cannot be permeable to external influences 123. The planned introduction and subsequent development of the competency framework supported through the current HRM RAS offers an opportunity for the Romanian public administration to add a developmental dimension to its current performance management framework through a better use of competencies in this process. There are different ways of integrating competencies with performance appraisal and career development. More “administrative” approaches treat competencies simila rly to performance objectives – each are rated separately, the final (annual) performance rating is the average of the two (e.g., Portugal). More developmental approaches treat competencies either as development objectives, on par with performance objectives (e.g. in the case of UK senior civil servants) or address them implicitly/indirectly, by discussing the competencies in relation to the achievement of specific objectives (such as in the US federal government, for the Senior Executive Service). Whichever model is chosen, it should not detract from the primary purposes of competencies – which is to enable staff to develop their capacity so they can perform at higher levels. The annual performance discussion and in-year check-ins can help to identify which competencies need to be further developed, and how. To this end, competencies have to be linked clearly to development opportunities – not just training, but also other tools (see Annex 1 for a proposed form for individual development). The further development of the competency framework and its link to career development offers an important avenue for ensuring this link. 124. Staff need to be provided with a diversified set of opportunities to develop their competences. These could include inter alia: a. Direct feedback from supervisors and peers and learning from more experienced peers are among the most important tools for staff development. As noted in the behavioral analysis, role-model managers already do this as part of their ongoing approach to leading people. The success 93 of such an approach depends on the ability of the manager, their management style, and the quality of manager-staff relations. A growth oriented rather than a punitive mindset is a prerequisite, as is the ability to have constructive conversations with staff (see principle 5). Such attitudes and skills cannot be legally mandated, but they can be cultivated, for example through training in people management skills (including strength- or growth-oriented feedback provision) and coaching of managers so that they can in turn be coaches to their staff. b. Adequate training offerings, tailored to different public administration functions and targeted towards the development of key competencies, accompanied by sufficient budgets for staff training are also crucial. The lack of such opportunities emerged as one of the key findings of the behavioral analysis conducted as part of this project. Training needs assessments can identify and recommend training modules to address key cross-cutting competencies that all civil servants need. However, formal training is not and should not be the only instrument used to develop competencies. c. Horizontal mobility, job enrichment, and stretch assignments, can all be used as development opportunities for staff. The team project initiative in Box 16 above is one example of a cost-effective opportunity for job enrichment, which is led and shaped directly by employees. Additionally, managers should aim to expose their staff to different projects and activities, outside of their normal routine. For instance, departments within an institution (or from different institutions) could set up staff exchange programs, whereby employees change jobs with one-another for a limited period of time. When doing so, managers should consider both what competencies staff already have (i.e. do they have the minimum competencies necessary to perform in that particular job) and what competencies staff can further develop/strengthen through that assignment. The same can be done through temporary horizontal mobility, i.e. when staff are seconded for a limited time to a different department or even a different institution. However, to change the perception that horizontal mobility is used as “punishment” for staff, more transparency and predictability is necessary about how, when and to what purpose horizontal mobility is used. A fair process should include a clearer link between horizontal mobility, competency development, and career progression. For example, to increase transparency and encourage suitable candidates to use internal mobility schemes for development purposes, information about all temporary vacant positions across the public administration should be made easily accessible to public administration employees. Moreover, having these internal mobility processes and opportunities openly promoted and encouraged by the institutional leadership would send a strong signal to staff that they are viable instruments for development. 94 125. While manager-staff attitudes and ongoing, informal conversations matter more than formal procedures, managers and staff can also be encouraged towards more development-oriented conversation as part of the annual performance assessment/management cycle. As noted, a “safe” environment for learning requires a very careful balancing between evaluating the case for “hard” (extrinsic) rewards , particularly for sanctions for underperformance (which can generate fear and resistance) with the case for “soft” factors, such as growth-oriented or strength-based feedback. One way of doing this is to focus the mid-year conversation or the quarterly check-ins on the latter rather than the former, i.e. to only check-in on staff progress in achieving their objectives as a way of identifying bottlenecks and their needs for support and guidance, while maintaining the focus of the manager feedback on opportunities for growth and development. If tied to criteria for allocating performance-related pay, such check-ins could focus on special achievements, thus further reinforcing the positive rather than the negative connotation of both the performance conversation and the “excellency award”. 126. As noted, transparent and meritocratic career progression opportunities are not only a way to motivate performance (principle 5), but also a way to ensure adequate development opportunities for those with high potential and to deploy the right people in the right jobs, based on demonstrated skills and competencies. As shown in the Baseline Diagnostic, promotion opportunities are few, in part due to quick progression across grades at the execution level and in part due to the lack of a clear career path beyond that and of promotion opportunities to managerial level. A better differentiation of performance ratings, and possibly a quota for the highest ones, combined with a more stringent performance prerequisites for qualifying for promotions in grade and to management level (for example, at least adequate performance 3 years in a row, out of which at least one year of above average performance) can strengthen the meritocracy of promotion. For eligibility for promotion to managerial levels, candidates should not only have achieved and occasionally exceeded their objectives but should also have exhibited key competencies above the required standards for their current job. These criteria should apply equally to temporary promotions to management positions. At the end of the temporary appointment, job holders should be subject to rigorous evaluation of performance and competencies against the standards expected of managers at the respective level. This way a talent pipeline of people with leadership potential can be identified that could advance to higher-level management positions through promotion competitions. 127. Establishing transparent and constructive means of addressing underperformance is an equally important factor towards enabling staff performance and engagement. This should start at the recruitment phase, through introducing probationary periods for all newly recruited staff, including for management level positions - not only for debutants, as it is now. To address underperformance, the first step is to try to identify its roots – whether lack of motivation, lack of capacity, or lack of resources needed to adequately perform. A staggered approach should be taken to address underperformance, with time- bound performance improvement measures and goals agreed among staff and managers, with support/guidance from HR departments (as practiced in other countries – see Annex 95 3, Figure 10 for an example of how this is done in Australia). While such an approach is more transaction-intensive than the current automatic termination of contract (which rarely if ever happens in practice), it does offer more safeguards against misuse and can potentially reduce the risk of litigation (due to higher evidentiary requirements and broader involvement), thus potentially also reducing the resistance of managers to address underperformance more consistently. 7. Embed performance management in the organizational culture and practices 128. For performance management to achieve its objectives of helping steer, motivate and develop staff, its purpose and principles have to be internalized by leaders and managers in public organizations, and it has to be rebranded from an HR administrative process to a core business process. To achieve the former, organizations should implement sustained communication campaigns focused on the purpose and benefits of the proposed performance management approach, developed together by HR and communications departments. These campaigns should be differentiated by target audience, i.e. political leaders, HLCSs, senior managers and technical managers, as well as non-management staff. Secondly, to rebrand individual performance management as a core business process, it has to be correlated better with other core organizational processes and routines, starting with the organizational performance management systems and the strategic and operational planning process. Responsibilities for delivering organizational objectives must be traceable to each individual department in the organization (at the level of directorates, at least), to ensure clear lines of accountability for their direct managers. These responsibilities should be reflected in the annual activity plan and, ideally, also in institutional strategic plans or similar (see also principles 1 and 2). Thirdly, to improve data availability, both for the assessment of individual performance and for the assessment of organizational performance and the effectiveness of the performance management system itself, organizational management information systems will need to be further digitalized and improved (principle 4). Finally, and most evidently, the link between performance assessment and other HRM processes will need to be strengthened. Various measures to this end have been proposed in the above sections. Annex 3 presents a summary of the key principles of performance management, the proposed performance management-related measures and interventions, and the related policy and organizational areas where additional interventions are needed. The rest of this section details additional measures necessary to embed performance management within public institutions. 129. Within institutions, HR departments can play a more prominent strategic, oversight, and support role in performance management. For HR departments to become more engaged in strengthening and adapting performance management to the needs of their organization, they need (i) strong support from the organizational leadership, (ii) increased cooperation with control and consultative structures, such as internal audit, internal 96 managerial control, and joint committees (“comisii paritare”), and (iii) increased capacity for data analytics, HR strategy making, and for acting as coaches or guides to managers and staff on performance management. Issues related to performance management on which HR departments should play a more active role include: a. Oversight, guidance and support to staff and mangers on using the performance management system. HR departments should act as the first quality check for the performance appraisal exercise. For example, they should centralize performance ratings, analyze their distribution and audit samples of performance appraisal forms to assess their quality and compliance with guidelines, particularly in terms of how well staff objectives are aligned with organizational objectives and how well managers justify the ratings awarded to their staff. HR departments should also become a center of expertise for staff with questions and complaints about the process. Additionally, HR departments should have a leading role in preparing, coordinating and moderating calibration exercises, as well as mediating between staff and managers when there are disagreements about a performance assessment, and helping staff and their managers to develop performance improvement plans and to identify career development options. A more stringent involvement of HR departments in ensuring the quality of performance appraisals would include returning incomplete performance appraisals to evaluators and providing negative feedback to their hierarchical superiors, to include in the performance appraisal rating. b. Developing and improving the performance management system. i. HR departments are best placed to lead consultations with staff on how to improve the performance management system and adapt it to the needs of the organization. For example, HR departments could moderate periodical focus groups with different categories of staff (e.g. senior managers, technical managers and execution-level staff), especially following a performance appraisal cycle. Moreover, as part of the staff consultation process, joint committees (“comisii paritare”) should have a more prominent role, as a platform for discussing and refining possible recommendations before submitting them for approval to the Management Board. Other measures include the introduction and use of staff engagement surveys, which, as argued in the Baseline Diagnostic, are crucial for improving the evidence-base for strategic HRM within the organization and across the public administration more broadly. However, significant operational and analytical capacity is required to design and implement a centrally led staff engagement survey and to process the information collected into actionable recommendations for decision-making. Moreover, an open organizational culture, as well as leadership visibly committed to change, are prerequisites for ensuring that staff provide candid and valid responses and that the results feed into decision-making. Thus, the 97 introduction of engagement surveys in all organizations should be considered as a reform measure for the medium- to- long term. However, in the short-term, HR departments could pilot simplified surveys (pulse surveys), using generic survey tools, freely available online (e.g. SurveyMonkey, Google Forms, etc.), which target specific thematic areas or key indicators like those suggested in Table 5 below. Ideally, this should be done first in high-capacity organizations where there is strong leadership support. Once their usefulness in informing key organizational decisions and HR processes is demonstrated, such surveys can be further refined and rolled out to a broader set of organizations. Alternatively, they could be conducted centrally to ensure more consistency and comparability across organizations. To enable the NACS to build capacity in developing and leading large-scale surveys, the agency should be actively involved in the aforementioned survey pilots in selected organizations. ii. To monitor and assess the well-functioning of the performance management system, HR departments could collect, track, and analyze a set of key indicators about the effectiveness of the performance management system, and discuss the findings with key organizational stakeholders to identify challenges and opportunities for improvement. Drawing on the Baseline Diagnostic prepared under this RAS, as well as the connected report on performance-related pay in the Romanian public administration, Table 5 below provides a comprehensive list of such indicators. These indicators should be progressively integrated in the monitoring process, depending on the stage of implementation of the proposed performance management system and corresponding improvements in data collection and availability. In the long-term, these indicators, aggregated at the level of each organization, could be centralized by the NACS to benchmark institutions against each other on how effectively they use the individual performance management system. Table 5: Possible KPIs to assess and track over time the effectiveness of the performance management system Administrative data Staff surveys ➢ Distribution performance ratings falling For managers in each rating category ➢ Manager perception on the utility of the instruments and ➢ % of number of FTE that public procedures provided by the performance management employees are absent on sick leave each system to motivate performers and address underperformance ➢ Manager perception on whether their organization provides them with enough training and supporting material to be able to monitor, track, assess and incentivize staff performance 98 year from total number of FTE, per For all staff, about the appraisal done by their managers department226 ➢ Staff perception of how much their managers involve them ➢ Total no. and % of performance in setting their individual objectives and indicators for the appraisal appeals, at each appeals stage, following year out of total number of performance ➢ Staff views on how well their hierarchical superiors appraisal reports submitted communicate organizational and departmental goals and ➢ No. of employees placed on a priorities performance improvement plan (PIP) ➢ Staff perception on whether managers make fair and and % of these employees which accurate distinctions between levels of performance successfully exit the (PIP) ➢ Staff views on whether their direct superiors have a ➢ No. of employees dismissed for motivational effect on them underperformance and % of these ➢ Staff views on how constructive the feedback provided by employees who are reinstated through managers during the performance appraisal conversation appeals is to improve their job performance ➢ % of successful grade promotions out of For all staff, about their organization’s role in total number of staff eligible for performance management promotion ➢ Staff views on whether their department’s management ➢ % of managers (at all levels) who have monitors, tracks and communicates to staff the attended internal and/or external department’s specific yearly objectives courses on performance management ➢ Staff views on how important the institution’s leadership techniques and unconscious bias; considers the performance appraisal exercise to be ➢ % of the sample of performance ➢ Staff perceptions on how well the organization appraisal reports reviewed by the HR communicates and makes available to staff useful department which are completed in full information about the performance management process (including justifications for ratings) (including how to prepare for the performance review ➢ Average performance-related pay meeting, the procedure of appealing a rating, who are the award per each rating per each actors involved in the process, etc.) managerial level ➢ Staff views on whether organizational management take ➢ % of these indicators which the into account the results of their feedback to improve the organization collects and tracks for at performance management framework least 2 consecutive years227 For all staff, about the performance management system ➢ Staff perception of the usefulness of the performance appraisal exercise (in terms of time spent on it versus expected benefits) ➢ Staff views on whether their performance appraisal leads to learning and development opportunities ➢ Staff perception of whether performance is adequately rewarded and recognized (execution-level as well as management level) 226 As seen in OECD (2011) “Public Servants as Partners for Growth”: “an indicator of the q uality of management and the working conditions in the public service. It is also an outcome indicator for HRM policies, since poor working environments can lead to a greater incidence of employees requiring time off.” 227 Indicator especially useful for the NACS or other key HRM institutions to track progress in implementing aspects of the performance management reform or on the effectiveness of performance management systems in public institutions 99 130. The NACS, as the central HRM body, should become the central actor in supporting and overseeing the implementation and use of the staff performance management framework in the public administration, particularly if the option to move it to the center of government, is pursued228. The NACS currently has the mandate to develop the legal and regulatory framework for the performance management system for civil servants and to provide methodological support to institutions on how to use it. It could, in principle, provide training and counseling for HR departments on how to implement and monitor the new performance management system. However, it will need to first develop adequate capacity to do so, i.e. ensure they have positions and staff with clear attributions, specialized in performance management and related training. Furthermore, it currently does not have the tools to proactively monitor and assess how effectively institutions apply the system internally. For the NACS to improve its oversight of the system and its capacity to develop evidence-based policies on performance management, a first step would be for public organizations to start collecting a pre-defined subset of the indicators listed above and to report them periodically to the NACS. The fact that HR departments in institutions employing civil servants already have clear channels of communication with the NACS greatly facilitates this reporting. Ultimately, analyzing the indicators would allow the NACS to identify institutions which require support in implementing the performance management framework, as well as role-model institutions which can share best practices. 131. Table 6 below offers an overview of institutional responsibilities in steering and implementing the performance management agenda. In the short term, the NACS would have to integrate its work on performance management within that of the HR Council (as described in the Baseline Diagnostic), to effectively guide the implementation of the reform across the public administration. An additional challenge is that the mandate of the NACS is restricted to civil servants, whereas performance management systems within institutions cover the entire organizational workforce, i.e. contractual staff as well229. In the short term, the HR Council could provide overarching policy direction on performance management also for institutions employing contract-based staff, and act as a forum where progress and challenges of implementing performance management reform can be discussed. However, the Council does not have the mandate or the capacity to become more deeply involved in supporting and overseeing how public institutions implement the new performance management system. In the medium- to long-term, to address this challenge and ensure performance management of contract-based staff is done based on similar standards and processes, it will be necessary to entrust a single institution with a mandate on HRM policy for staff in the public administration, as one of the options in the Baseline Diagnostic and related Policy Recommendations suggested 230. 228 Output 1, Deliverable 1.1 “Baseline diagnostic of the national framework for HRM and its institutionalization”, developed under the HRM RAS, May 2019 229 As per Administrative Code of July 2019, art. 406, public institutions are required to transform, where appropriate, contractual positions into civil service ones. However, this will affect likely only a limited number of positions. 230 Output 1, Deliverable 1.1 “Baseline diagnostic of the national framework for HRM and its institutionalization”, developed under the HRM RAS, May 2019 100 Table 6: Proposed mapping of institutional roles for the performance management system in the central public administration Actor Envisioned role General Secretariat of Steering role the Government (GSG) Aligns the performance management agenda with the larger government priorities on improving organizational performance Ensures that the leadership of central public administration institutions remains committed to the performance management agenda Reports to the HR Council on the progress across the central public administration in implementing the performance management framework NACS Methodological lead and oversight role (ideally moved at the - center of Drafts the strategic, procedural and legal framework for the performance government) management system Provides methodological guidance to institutions to implement and operationalize the performance management system; Monitors implementation and use of the performance management system within organizations across the public administration; HR Council Strategic advisor role Ex-ante control of draft legislation and strategies on performance management in the central public administration Ensures collective political ownership and defines individual institutional responsibilities for the performance management system Management boards in Operational delivery role line ministries - Assigns and enforces accountabilities to the secretary general and HR department management to deliver the operational objectives of the performance management agenda 132. Existing institutions with mandates in overseeing the performance management framework should delineate their specific roles more clearly and should coordinate more closely to avoid parallel reporting and duplicate activities. This is particularly relevant for the GSG-DMICIR and the NACS. While NACS defines the legal framework and can issue guidelines on performance management, the GSG-DMICIR has the advantage of having a presence in institutions through internal control units, through which it collects annual data from all primary budget holders on compliance with procedural requirements, including those pertaining to staff performance management (Standard 7- monitoring performance). Moving forward, it will be important to ensure that the DMICIR’s monitoring activities are well correlated with the new performance management framework, and that its findings feed into a single decision-making structure which could 101 issue comprehensive recommendations on how to improve the functioning of staff performance management systems in institutions (in the current context, that would be the HR Council). 133. The success principles defined in the present document could be used as a diagnostic and monitoring tool for the quality of staff performance management systems within organizations. This can be done in the short-to-medium term by incorporating the principles into guidelines on performance management issued by the NACS, as well as into the internal managerial standards which touch upon individual performance management systems (particularly standard 7- monitoring performances)231. Both the guidelines and the standards should translate the above principles into specific requirements that organizations must meet to comply with the new performance management system, including the measures proposed in this document (e.g. enforcing quotas for high performance ratings, conducting calibration meetings for ratings, holding periodic trainings for managers, regular consultations with staff, using performance improvement plans, collecting key indicators on the implementation and performance of the performance management system etc.)232. The IMC units or responsible staff within institutions233 and the GSG- DMICIR could thus monitor and track how institutions implement and use the performance management framework, and the GSG would be able to share and discuss its findings with the NACS and other HRM stakeholders within the HR Council, where it holds a seat and acts as the secretariat234. This would ensure that the findings on performance management in the public administration are disseminated to all relevant stakeholders and that best practices are publicly identified and highlighted through the HR Council’s annual report. In the long-run, to reduce transaction and coordination costs, all of the responsibilities pertaining to the development, introduction and oversight (both in terms of observing legal regulation and achieving the intended outcomes) of the staff performance management system in institutions should be placed in a single central body, specialized in HRM (currently, the NACS). 231 As done, for example, in the US federal government by the Office of Personnel Management, i.e. the central HRM body for the US federal government, see https://www.opm.gov/services-for-agencies/performance- management/performance-appraisals/#url=Appraisal-System-Evaluation 232 Similarly, relevant guides, for example those for internal audit of performance management systems, can be updated to better reflect the principles above. See, for example, http://discutii.mfinante.ro/static/10/Mfp/audit/Ghidpregprof_08052014.pdf 233 If internal managerial control and internal audit functions are merged/assimilated, as suggested in Output 3 Competency Framework of this RAS, then these responsibilities should be transferred to internal audit structures. In practice, this means that the audit of performance management systems within a given organization will happen more rarely. It will be crucial to ensure that the results of these audits are shared with the relevant HRM institutions and coordination bodies (NACS, GSG, MLSP, HR Council) so they can serve as the basis for the evaluation and further development of the performance management systems. 234 As per law 69/2019 on the establishment of the HR Council 102 4.2 Conclusion and next steps 134. The sections above have offered a series of recommendations for integrating the success factors of effective performance management into the Romanian performance management system. The key measures include: • Strengthen the performance management regime for HLCS235 by: (i) ensuring a clear link between their individual performance and organizational goals, as well as that management and leadership competencies and objectives are explicitly evaluated (see also Annex 1 for the proposed form); (ii) changing the composition and leadership of the external evaluation commission for HLCS; and (iii) expanding the evidence base for HLCS performance appraisals. For the latter, the commission should be enabled to conduct targeted interviews relevant to the evaluation, to obtain additional documentation and data for assessing key achievements of the evaluated HLCS and to incorporate multi-source feedback in the evaluation (e.g. staff surveys in the medium-term). • Update the performance appraisal form for all civil servants to include a balanced rating scale (anchored at the midpoint of adequate performance), focus the rating and the discussion on the most important staff objectives, give more room for justification, and to enable a clearer link between competencies and performance. Introduce ex-post calibration of ratings to ensure better comparability and differentiation among grades. • Introduce more opportunities for reflecting on and discussing performance , including by requiring self-evaluation, as well as in-year check-ins between managers and staff focused on (i) special achievements, (ii) progress in achieving objectives and iii) identifying development needs and means of addressing them. • Invest in training managers in performance management and people management skills. In the short term, as high priority, train managers in how to define and assess performance objectives for their staff (frame-of-reference training) and measure and objectively (bias training) evaluate performance. High priority investments should also cover training for managers in giving feedback and becoming coaches to their staff. In the medium-term, organizations should develop and roll out a structured, ongoing learning-and-development program for managers focused on performance management and “people management” skills. • Invest in better understanding and more thoughtfully promoting staff motivation and engagement. This includes piloting and expanding the use of staff engagement 235 If senior managers (directors general and their equivalent) are transitioned into the HLCS category in the medium-term, as recommended in Output 3 “Competency framework. Report on competencies and jobs in the Romanian public administration” this regime will be extended also to them. In the meantime, the evaluatio n of senior managers should incorporate some similar elements as those proposed for HLCS, in particular a clearer link to organizational objectives, mandatory evaluation of management and leadership results and competencies, and use of a broader range of information for the evaluation, such as staff and peer feedback. See also Annex 1 on the proposed evaluation forms for senior-, mid- and technical managers. 103 surveys, in conjunction or separately from 360- or 180-evaluation of managers. It also includes using a mix of instruments for motivating staff and rewarding performance, from social recognition to mobility and job-enrichment. Performance-related pay should only be one of them, and not the main one, and should be conditioned on the establishment of transparent, equitable, and efficacious processes by organizations wanting to award it. If performance-related pay is implemented, the in-year spot bonus should be prioritized, as recommended by the connected report on performance related pay, as tying the bonus too strictly to the annual performance rating requires first strengthening overall performance measurement and the introduction of quotas on the highest ratings; • Revise career management policy to strengthen performance incentives and offer more development opportunities. To this end, promotions should be conditional on proven performance – including temporary promotion, which should only be allowed from one hierarchical position to the one immediately above; horizontal mobility should be tied to competency development; probation periods should be introduced for all new hires; and a staggered approach to address underperformance should be adopted. Such measures, in addition to strengthening people-management skills of managers, encouraging more and better feedback and coaching, and offering more and better learning and development opportunities for staff will also help promote and enshrine a more development-oriented philosophy into the overall approach to performance management in the Romanian public administration. 135. Adopting and implementing the measures above requires a mix of instruments with different degrees of complexity. Modifying the performance appraisal form, as well as changing the career framework and the performance management regime for HLCS will require changes in primary legislation, as might quotas. Developing and implementing an learning and development program on performance management and people management requires a programmatic approach that includes an adequate design of the program, including an adequate institutional home and sustained funding to be able to pilot it and roll it out throughout the administration. Self-evaluation, in-year check-ins, and calibration of grades could also be done as a first step without changes in legislation, via changing internal organizational procedures. The NACS could issue guidelines and recommendations on how to do so, and these elements could be incorporated into internal managerial control standards. The same is valid for performance-related pay, where MLSP can issue guidelines and recommendations for its implementation. However, to ensure systematic and equitable application across organizations, the most important measures of the reform package should also eventually be enshrined in legislation (especially calibration, quotas if used, and ways of awarding performance-related pay). 136. Reforming the performance management system faces challenges and poses risks that need to be addressed carefully. First, both high-level political buy-in and buy-in by managers and staff throughout public organizations will be crucial for ensuring that performance management does not remain a purely formal exercise. An ample communication and consultation campaign should be the first step to build momentum 104 for the reform236. At its core should be an emphasis on the benefits of improved performance management –for public organizations and citizens, for managers and staff themselves. Considering that measures may impose additional costs on organizations, managers and staff, a better understanding of its benefits can substantially help to ensure the necessary buy-in and embed performance management in organizational culture and practice. As noted in Box 1 in Chapter 1, quality of management is associated with higher productivity in firms, schools, hospitals, and public administrations. Effective performance management not only ensures such higher productivity, but also significantly increases staff motivation and engagement – as evidenced not only by international research, but also by the 2019-2020 Romanian public administration survey. 137. Second, changes in the performance management regime for execution-level civil servants risk having limited impact without corresponding changes in the fundamentals of the overall system to ensure better career and development opportunities for talented staff, as well as without enabling managers to steer, motivate, and develop staff better. These changes should be focused on career management, on limiting temporary appointments to HLCS and senior management positions and making them conditional on performance, as also suggested in other deliverables of this RAS (see Box 17 below), as well as strengthening the overall performance management regimes of these latter categories, and developing a broader structured program for learning and development for managers that focuses on people management, including different aspects of performance management. Box 17: A holistic approach to reducing the prevalence of temporary appointments into management positions The recommended changes to the performance management system will have a limited impact in the absence of measures to drastically restrict the discretionary use of temporary appointments into HLCS and management positions. Such measures will have to extend, in a coherent manner, to other core HRM functions, including recruitment, workforce planning and promotion. In light of this, the recommendations under the current deliverable are part of a wider set of measures put forward by the HRM RAS to support the Romanian public administration in progressively curbing the use of temporary appointment to management positions. A first step in this direction would be to limit the length and frequency of temporary appointments and limit the share of positions eligible for temporary appointment, as recommended in Output 4 “Recruitment System” of this HRM RAS. As part of the proposed recruitment process, at least 60% of all HLCS and management positions occupied through 236 A detailed stakeholder engagement plan for the performance management reform will be detailed under Output 5 of the HRM RAS: Proposed roadmap for the phased introduction of alternative performance assessment tools. This plan will be supported by a high-level stakeholder engagement strategy for the broader HRM reform which will be developed under Output 6 of the HRM RAS. 105 temporary appointments would be prioritized for competitive recruitment over a period of three years, under the first multiannual national recruitment plan. Temporary appointments for the remaining eligible positions would be limited to a total of six months (subject to a one-time extension only), after the position has been vacated by a competitively recruited appointee. Moreover, under the new recruitment model, the workforce planning exercise would require organizations to track management positions which can be expected to become temporarily vacant for longer periods (e.g. due to maternity leave, retirement). This would provide sufficient notice in advance for organizations to fill the position through a regular recruitment/promotion process. Additionally, eligibility criteria for temporary appointments to HLCS and senior management positions should be made more rigorous, through measures such as such as allowing temporary promotions only to an immediately hierarchically superior position, conditional on results achieved and competencies demonstrated, as documented through the annual performance appraisal. For example, these appointments should be conditional on (i) adequate performance in the previous three years (at a minimum), (ii) at least one above- average performance rating for achieving objectives in the previous 3 years, as measured through the newly-proposed performance management system, and (iii) at least some demonstrated above-average key competencies that are relevant for the managerial level, during the same period. However, current experience highlights the fact that enforcing these rules will be problematic237. Thus, oversight for how such rules are respected in public institutions should also be strengthened. The governance structure for the performance management system proposed under this report (see Table 6 above and principle 7 under Chapter 4 Recommendations) can help consolidate the role of the NACS and the GSG to support institutions to effectively operationalize the new performance management system. 138. Third, an adequate sequencing of the reforms, which includes piloting and evaluating key elements of the system in a selected set of organizations first, accompanied by extensive consultations with staff, is key to the sustainability of the proposed changes. For example, the pilots could include different approaches to training (e.g. frame of reference training), calibration, innovation tournaments, and staff surveys. The insights gained from the pilots can be used to further refine these instruments before rolling them out throughout the public administration. This is even more important for reform measures with “hard” implications (such as the introduction of the quota for top performance ratings, or PRP) which are likely to generate more resistance. For example, 237 See Box 9, in Chapter 3, on percentage of temporary appointments to management positions which exceed the legally allowed period of 9 months 106 while a relative majority of staff want more realistic and differentiated performance ratings (40% chose this option out of eleven possible responses), the overwhelming majority are against the introduction of forced distributions or quotas for performance ratings (only 4% chose this option). While it might be difficult to achieve the former without the latter, piloting ex-post calibration of grades first, before deciding on the introduction of a quota (even only for top ratings) can indicate whether “softer” measures to encourage managers to better differentiate among levels of performance can be successful. Figure 9 below offers a broad outline of the roadmap, which will be further developed under deliverable 5.2 of the current RAS. Figure 9: Framework for the proposed roadmap for implementing the performance management reform 139. Strengthening the performance management system in the public administration is not a one-off effort, but an on-going process, which requires strong central- and institutional-level leadership, as well as continuous effort to assess how the system works and find ways to improve it. Regardless of the model chosen, its take-up within organization will be conditional on extensive consultations with relevant stakeholders in the development and implementation of the model, accompanied by supporting managers and staff in using the proposed performance management tools and approaches. At the central, systemic level, this means NACS will have to strengthen its capacities to pro- actively play such a support and policy-development role within the HRM system, as already highlighted in the Baseline Diagnostic (Output 1 of the HRM RAS). Within institutions, HR department will have to play a similar role. Ways to strengthen their capacities to support the implementation of HRM reforms proposed under this RAS will be further assessed and proposed as part of deliverable 2.4. Analysis of capacity of HR departments of this RAS. 107 140. Finally, the analysis and recommendations in the present report focus on civil servants in the central public administration and subordinated/territorial agencies. In practice, organizations apply the same performance management process and guidelines for contract-based staff too. Conceptually, the same performance management principles apply, regardless of category of staff. Focusing on civil servants first offers the opportunity to test and refine the performance management system for the category of staff that is at the core of what public institutions do. However, organizations need support and guidance on performance management regardless of the category of staff they employ. If successful, the performance management regime for civil servants can be expanded to cover contract- based staff as well. To this end, in the long term, it will be necessary to clarify institutional mandates and consider entrusting a single organization with policymaking, support, and oversight for HRM policies in the public administration, including on performance management, to ensure consistency in managing staff across institutions. 108 5 Annexes Annex 1: Proposed forms for key performance management elements Proposed yearly appraisal form for HLCS Name of job holder: Department: Position: Name of supervisor/evaluator conducting performance review: Period of performance review: For High Level Civil Servants (HLCS), this will be filled in by the evaluated employee as a self- assessment, as well as separately and independently by the hierarchical superior. Staff and supervisor should then discuss the two assessments and agree on the joint one. The external evaluation commission then reviews all the assessments and decides on the final rating. In doing so it should also compare HLCS in similar job functions with each other (e.g. secretaries general with secretaries general, prefects with prefects etc.). PART 1. RESULTS Results should include targets, indicators, and a discussion of competencies related to the following types of objectives: Policy-based results: objectives related to the development and implementation of key sectoral policies that the institution is involved in or responsible for, if such the HLCS has such policy-making attributions. To be taken from Governmental Program and from Institutional Strategic Plan or similar. If the policy-based objectives differ between the two documents, both should be included. While the objectives from the Governmental Program could change when a new Government is invested, those from the ISP or similar strategic document should be consistent/stable. Relevant competencies should also be discussed in relation to these objectives. Organizational strengthening/leadership and management results: objectives related to institutional strengthening and overall institutional performance, related to human resource management, financial management, and other managerial responsibilities that are part of the HLCS mandate. Relevant competencies should also be discussed in relation to these objectives (managerial competencies are mandatory). Other key results: objectives which reflect important responsibilities/attributions and/or competencies of the HLCS which do not fall under the two categories above. These should be only a few crucial objectives – it is not necessary to cover every responsibility of the HLCS. OPTIONAL: Weights can be assigned to the different results at the planning stage, in agreement between the supervisor and the HLCS. 109 The degree to which staff have achieved their results is rated as follows: 1 - not achieved or partially achieved 3 - successfully achieved 5- exceeded expectations Policy-based result 1 Indicators - target Indicators – actual (At the beginning of the review achievement period: define how “successfully (At the end of the review period achieved” looks like - use – assess how actual indicators which describe quantity, performance compares to the quality, timeliness and efficiency. standards/indicators defined Also mention data sources for the “successfully achieved’ foreseen for assessing/measuring level. Also mention data the indicator) sources actually used for assessing/measuring the indicator) Objective description: Weights: Target indicator 1: Indicator 1: Data source: mention documents Data source: mention Relevant document: reference or data sources used for documents or data sources relevant organizational or measuring indicator achievement used for measuring indicator governmental document, including achievement (should be the legislation, from which this result Target indicator 2: same as in left-hand column is taken or to which it contributes Data source: for the same indicator) Final results rating Etc. Indicator 2: to be filled in at the end by the Data source: evaluation commission Etc. INSTRUCTIONS: Justification for the rating In each of the justification sections below: -> Explain how the objective was met, using as reference the pre-defined indicators. -> Use this section also to explain why objectives or performance indicators have been revised, if applicable -> List 2-3 key competencies related to the achievement of the objective Justification and proposed rating from the evaluated staff: to be filled in separately by the evaluated HLCS before performance discussion 110 Justification and proposed rating from evaluator: to be filled in separately by evaluator before performance discussion Summary of the performance review discussion: Key relevant competencies: Justification and proposed rating from the external evaluation commission: to be filled in separately by the commission after reviewing the justifications provided by HLCS and their evaluators, as well as the supporting documentation providing evidence of achievement of the indicators. [add additional policy-based results and objectives as necessary, according to template above] Organizational/management Indicators - target Indicators – actual result 1 achievement Objective description: Weights: Target indicator 1: Indicator 1: Data source: Data source: Relevant document: Indicator 2: Target indicator 2: Data source: Data source: Etc. Etc. Final results rating (evaluation commission) Justification and proposed rating from the evaluated staff: Justification and proposed rating from evaluator: 111 Summary of the performance review discussion: Key relevant competencies: Justification and proposed rating from the external evaluation commission: [add additional organizational/management results and objectives as necessary, according to template above] Other key result 1 Indicators - target Indicators – actual achievement Objective description: Weights: Target indicator 1: Indicator 1: Data source: Data source: Relevant document: Indicator 2: Target indicator 2: Data source: Data source: Etc. Etc. Final results rating (evaluation commission) Justification and proposed rating from the evaluated staff: Justification and proposed rating from evaluator: 112 Summary of the performance review discussion: Key relevant competencies: Justification and proposed rating from the external evaluation commission: [add other key results and objectives as necessary, according to template above] PART 2. COMPETENCIES The degree to which staff have demonstrated the required competencies is rated as follows: 1- Inconsistently demonstrated competencies at the required level 3- Consistently demonstrated competencies at the required level 5- Demonstrated competencies above required level Providing a narrative assessment of the degree to which HLCS demonstrate the competencies under the “managerial abilities” and “leadership” competency cluster (as defined by the Competency Framework) is mandatory. Managerial abilities Key competency To be demonstrated how? Phase 1: planning Managing performance Explain link to organizational/management or other objectives above, or provide other examples of observable results or behaviors that demonstrate that staff has the required competency. Mention also data sources where appropriate. Team development Explain link to organizational/management or other objectives above, or provide other examples of observable results or behaviors that demonstrate that staff has the required competency. Mention also data sources where appropriate. 113 Justification and proposed rating from the evaluated staff: Phase 2: review Evaluator to provide i) provisional rating for each key competency; ii) short justification for the rating; and iii) recommendations on what the evaluated HLCS should improve: Summary of feedback received from peers, subordinates or internal/external clients (max Phase 3: check by commission 150 words): Must cite data sources, i.e. staff survey if available, testimonials (written or oral), complaints received, etc. Final rating and summary justification by evaluation committee: Must explain how the evaluator’s assessment and the received feedback have informed the rating Leadership Key competencies To be demonstrated how? Phase 1: planning Create engagement Promote innovation and change Justification and proposed rating from the evaluated staff: Phase 2: review Evaluator to provide i) provisional rating for each key competency; ii) short justification for the rating; and iii) recommendations on what the evaluated HLCS should improve: 114 Summary of feedback received from peers, subordinates or internal/external clients (max Phase 3: check by commission 150 words): Must cite data sources, i.e. staff survey, testimonials (written or oral), complaints received, etc. Final rating and summary justification by evaluation committee: Must explain how the evaluator’s assessment and the received feedback have informed the rating Other required competencies Competencies Proposed rating from evaluated Proposed rating from staff evaluator (provide short justification only (provide short justification if competency is rated above or only if competency is rated below the expected level) above or below the expected level) Insert additional cells as necessary Summary of feedback received from peers, subordinates or internal/external clients (max 150 words): Must cite data sources, i.e. staff survey, testimonials (written or oral), complaints received, etc. Final rating and summary justification by the evaluation commission: Must explain how the evaluator’s assessment and the received feedback have informed the evaluation’s committee decision for final ratings, for competencies where a different rating has been proposed Recommendations from the evaluation commission on how to further develop the evaluated staff’s competencies based on the assessment above: To be correlated with the individual development plan. Competencies below the expected level should automatically be included in individual development plan. 115 PART 3. PERFORMANCE RATING List of main results-based objectives Priority weight Rating and responsibilities (Results be 60% of final rating, (from above) (from above) and competencies 40%) Results-based objective Organizational/ Management objective Other key objective Etc. Results rating 60% of final grade Key competencies Other required competencies Competency rating 40% of final grade Final performance rating 100% Weighted sum of results and competencies ratings above Remember: What are the consequences of the performance rating? Unacceptable performance (rating below 2): automatic demotion or dismissal Performance must be improved (from 2 to 2,9): automatically ends temporary appointments, development of performance improvement plan; if HLCS already received a rating below 2 at least once in the past 3 performance appraisals, his performance can only be classified as unacceptable Successful performer (from 3 to 3,9): business as usual Role-model (above 4): eligible for annual performance-related pay, if introduced PART 4. FINAL AGREEMENT Final rating given by evaluation commission Final comments from evaluation commission (must include also justification for revising rating, if appropriate; and explicit confirmation that rating underwent peer calibration) Competencies recommended to be included in individual development plan Final comments and signature of agreement from staff (max 100 words) 116 Final comments and signature of agreement from evaluator (max 100 words): 117 Proposed yearly appraisal form for Directors General and Directors (Middle management) Name of job holder: Department: Position: Name of supervisor conducting performance review: Period of performance review: PART 1. OVERVIEW Organizational objectives for year insert year Departmental objectives for year insert year This will be filled in by the evaluated employee as a self-assessment, as well as separately and independently by the evaluator. Staff and evaluator should then discuss the two assessments and agree on the joint one. PART 2. RESULTS Results should include targets, indicators, and a discussion of competencies related to the following types of objectives: Key departmental results: objectives related to the development and implementation of key policies and programs that the department is involved in or responsible for. To be taken from the Institutional Strategic Plan and the institution’s annual activity plan. While the objectives from the annual activity plan could change when a new political leadership is appointed, those from the ISP or similar strategic document should be consistent/stable. Relevant competencies should also be discussed in relation to these objectives. Organizational strengthening/leadership and management results: objectives related to improving departmental capacity and effectiveness in terms of human resource management, financial management, and other managerial responsibilities that are part of the job holder’s mandate. Relevant competencies should also be discussed in relation to these objectives (managerial competencies are mandatory). Other key results: objectives which reflect important responsibilities/attributions and/or competencies of the job holder which do not fall under the two categories above. These should be only a few crucial objectives (maximum 3) – it is not necessary to cover every responsibility of the job holder. 118 The degree to which the employee has achieved his objectives is rated as follows: 1- not achieved 2- partially achieved 3- successfully achieved 4- surpassed/exceeded expectations 5- extra-ordinary achievement Departmental result 1 Indicators - target Indicators – actual (At the beginning of the review achievement period: define how “successfully (At the end of the review period achieved” looks like - use – assess how actual indicators which describe quantity, performance compares to the quality, timeliness and efficiency. standards/indicators defined Also mention data sources for the “successfully achieved’ foreseen for assessing/measuring level. Also mention data the indicator) sources actually used for assessing/measuring the indicator) Objective description: Weights: Target indicator 1: Indicator 1: Data source: mention documents Data source: mention Relevant document: reference or data sources used for documents or data sources relevant organizational or measuring indicator achievement used for measuring indicator governmental document, including achievement (should be the legislation, from which this result Target indicator 2: same as in left-hand column is taken or to which it contributes Data source: for the same indicator) Final results rating Etc. Indicator 2: to be filled in at the end by the Data source: evaluating manager Etc. INSTRUCTIONS: Justification for the rating In each of the justification sections below: -> Explain how the objective was met, using as reference the pre-defined indicators. -> Use this section also to explain why objectives or performance indicators have been revised, if applicable -> List 2-3 key competencies related to the achievement of the objective Justification and proposed rating from the evaluated staff: to be filled in separately by the job holder before performance discussion 119 Justification and proposed rating from evaluator: to be filled in separately by evaluator before performance discussion Summary of the performance review discussion: Key relevant competencies: [add additional departmental results and objectives as necessary, according to template above] Organizational/management Indicators - target Indicators – actual result 1 achievement Objective description: Weights: Target indicator 1: Indicator 1: Data source: Data source: Relevant document Indicator 2: Target indicator 2: Data source: Data source: Etc. Etc. Final results rating Justification and proposed rating from the evaluated staff: Justification and proposed rating from evaluator: Summary of the performance review discussion: Key relevant competencies: 120 [add additional organizational/management results and objectives as necessary, according to template above] Other key result 1 Indicators - target Indicators – actual achievement Objective description: Weights: Target indicator 1: Indicator 1: Data source: Data source: Relevant document: Indicator 2: Target indicator 2: Data source: Data source: Etc. Etc. Final results rating Justification and proposed rating from the evaluated staff: Justification and proposed rating from evaluator: Summary of the performance review discussion: Key relevant competencies: [add other key results and objectives as necessary, according to template above] 121 PART 3. RATING INDIVIDUAL PERFORMANCE FOR INSERT YEAR Remember: What are the consequences of the performance rating? To be eligible for internal recruitment to the next hierarchical level staff should have obtained at least one very good or extraordinary (4 or 5) and no partially satisfactory or unsatisfactory (2 or 1) performance rating during the past 3 years. Other consequences of each rating: 1- Unacceptable performance: salary decrease; automatically ends temporary appointments; warning letter signed by minister; first rating of 1: development of performance improvement plan; if employee receives at least two ratings of 1 in the past 3 appraisal exercises, manager to propose dismissal of employee to head of institution; rating or can only be awarded after peer-review through calibration (to be validated by HR). 2- Performance must be further improved (2-2,9): development of performance improvement plan; automatically ends temporary appointments; manager issues 1st written formal warning; rating or can only be awarded after peer-review through calibration (to be validated by HR). 3- Performance at expected levels (3-3,9): business as usual. 4 – Performance exceeds expectations (4-4,7): eligible for performance-related pay; rating can only be awarded after peer-review through calibration (to be validated by HR). 5 – Extraordinary performance/role model (4,7-5): congratulations letter signed by the minister; eligible to be mentor/for public sector award etc.; eligible for performance-related pay; rating can only be awarded after peer-review through calibration (to be validated by HR). List of objectives Priority weight Rating (from above) (Assigned by manager in (from above) consultation with staff. Should reflect importance rather than time spent on objective) Objective 1 Objective 2 Objective 3 Objective 4 Etc. Final rating 100% Weighted sum of ratings above 122 PART 4. COMPETENCIES Rating scheme for the assessment of competencies: 1- not displayed 2- partially/ inconsistently displayed 3- displayed at the level expected for the position 4- occasionally displayed at a higher level than expected 5- consistently displayed at a higher level than expected Providing a narrative assessment of the degree to which middle managers demonstrate the competencies under the “managerial abilities” and “leadership” competency cluster (as defined by the Competency Framework) is mandatory. Managerial abilities Key competency To be demonstrated how? Phase 1: planning Managing performance Explain link to organizational/management or other objectives above, or provide other examples of observable results or behaviors that demonstrate that staff has the required competency. Mention also data sources where appropriate. Team development Explain link to organizational/management or other objectives above, or provide other examples of observable results or behaviors that demonstrate that staff has the required competency. Mention also data sources where appropriate. Summary of feedback received from peers, subordinates or internal/external clients (max 150 words): Must cite data sources, i.e. staff survey if available, testimonials (written or oral), complaints received, etc. Phase 2: review Justification and proposed rating from the evaluated staff: Evaluator to provide i) final rating for the competencies; ii) short justification for the rating; and iii) recommendations on what the evaluated staff should improve: 123 Leadership Key competencies To be demonstrated how? Phase 1: planning Create engagement Promote innovation and change Summary of feedback received from peers, subordinates or internal/external clients (max 150 words): Must cite data sources, i.e. staff survey if available, testimonials (written or oral), complaints received, etc. Phase 2: review Justification and proposed rating from the evaluated staff Evaluator to provide i) final rating for the competencies; ii) short justification for the rating; and iii) recommendations on what the evaluated staff should improve: Other required competencies Competencies Proposed rating from Rating from evaluator (filled in during Phase 1: planning) evaluated staff (to provide short justification (to provide short justification only if competency is rated only if competency is rated above or below the expected above or below the expected level) level) Insert additional cells as needed Summary of feedback received from peers, subordinates or internal/external clients (max 150 words): Must cite data sources, i.e. staff survey, testimonials (written or oral), complaints received, etc. Evaluator to provide recommendations on how the evaluated staff can improve his/her competencies, as applicable Comments from the evaluated staff: 124 Remember: What are the consequences of the competency rating? NOTE: To be eligible for internal recruitment to the next hierarchical level, the job holder should have, during the past 3 years: • at least once consistently demonstrated both managerial and leadership competencies at a higher level than expected (rating of 4 and/or 5) - as confirmed also by staff feedback • displayed the rest of the relevant competencies at the level expected for their current position (i.e., must not have received a rating of 1 or 2 for any competency during the past 3 years). Other consequences of the rating for each competency: 1- competency not displayed: competency automatically included in individual development plan as priority. Automatically ends temporary appointments and fails probation period. Case signaled to HR for attention. 2- competency partially/inconsistently displayed: competency automatically included in individual development plan as priority. If competency does not improve after implementation of individual development plan, case signaled to HR for attention. 3 - competency displayed at the level expected for the position: business as usual. 4 – competency occasionally displayed at a higher level than expected: signals potential for staff development and growth. Competency recommended for inclusion in individual development plan as priority if aligned with staff medium-term career goals (see individual development plan template). 5 – competency consistently displayed at a higher level than expected: signals potential/readiness for next hierarchical level, if other conditions are met. PART 5. FINAL AGREEMENT Final rating for achieving objectives (performance rating) Final outcome of competency assessment Competencies to be included in individual development plan Final comments and signature of agreement from staff (max 100 words): Final comments and signature of agreement from evaluator (max 100 words): 125 Comments and signature of agreement from countersigning officer (must include also justification for revising rating, if appropriate; and explicit confirmation that rating underwent peer calibration, if rating is above or below “successful”, to be validated by HR) 126 Proposed yearly appraisal form for heads of service and heads of bureau Name of job holder: Department: Position: Name of supervisor conducting performance review: Period of performance review: PART 1. OVERVIEW Organizational objectives for year insert year Departmental objectives for year insert year This will be filled in by the evaluated employee as a self-assessment, as well as separately and independently by the evaluator. Staff and evaluator should then discuss the two assessments and agree on the joint one. PART 2. RESULTS Results should include targets, indicators, and a discussion of competencies related to the following types of objectives: Key departmental results: objectives related to the development and implementation of key programs that the department is involved in or responsible for. To be taken from the institution’s annual activity plan and the departmental activity plan. Relevant competencies should also be discussed in relation to these objectives. Other key results: objectives which reflect important responsibilities/attributions and/or competencies of the job holder which do not fall under delivering specific departmental objectives. These should be only a few crucial objectives (maximum 5) – it is not necessary to cover every responsibility of the job holder. The degree to which the employee has achieved his objectives is rated as follows: 1- not achieved 2- partially achieved 3- successfully achieved 4- surpassed/exceeded expectations 5- extra-ordinary achievement 127 Departmental result 1 Indicators - target Indicators – actual (At the beginning of the review achievement period: define how “successfully (At the end of the review period achieved” looks like - use – assess how actual indicators which describe quantity, performance compares to the quality, timeliness and efficiency. standards/indicators defined Also mention data sources for the “successfully achieved’ foreseen for assessing/measuring level. Also mention data the indicator) sources actually used for assessing/measuring the indicator) Objective description: Weights: Target indicator 1: Indicator 1: Data source: mention documents Data source: mention Associated or data sources used for documents or data sources strategic/departmental objective: measuring indicator achievement used for measuring indicator achievement (should be the Target indicator 2: same as in left-hand column Data source: for the same indicator) Final results rating Etc. Indicator 2: to be filled in at the end by the Data source: evaluator Etc. INSTRUCTIONS: Justification for the rating In each of the justification sections below: -> Explain how the objective was met, using as reference the pre-defined indicators. -> Use this section also to explain why objectives or performance indicators have been revised, if applicable -> List 2-3 key competencies related to the achievement of the objective Justification and proposed rating from evaluated staff: to be filled in separately by the job holder before performance discussion Justification and proposed rating from evaluator: to be filled in separately by evaluator before performance discussion Summary of the performance review discussion: Key relevant competencies: [add additional departmental results and objectives as necessary, according to template above] 128 Other key result 1 Indicators - target Indicators – actual achievement Objective description: Weights: Target indicator 1: Indicator 1: Data source: Data source: Associated Indicator 2: strategic/departmental objective: Target indicator 2: Data source: Data source: Etc. Etc. Final results rating Justification and proposed rating from evaluated staff: Justification and proposed rating from evaluator: Summary of the performance review discussion: Key relevant competencies: [add other key results and objectives as necessary, according to template above] PART 3. PERFORMANCE RATING Remember: What are the consequences of the performance rating? To be eligible for internal recruitment to the next hierarchical level staff should have obtained at least one very good or extraordinary (4 or 5) and no partially satisfactory or unsatisfactory (2 or 1) performance rating during the past 3 years 129 Other consequences of each rating: 1- Unacceptable performance: salary decrease; automatically ends temporary appointments; warning letter signed by minister; first rating of 1: development of performance improvement plan; if employee receives at least two ratings of 1 in the past 3 appraisal exercises, manager to propose dismissal of employee to head of institution; rating or can only be awarded after peer-review through calibration (to be validated by HR). 2- Performance must be further improved (2-2,9): development of performance improvement plan; automatically ends temporary appointments; manager issues 1st written formal warning; rating or can only be awarded after peer-review through calibration (to be validated by HR). 3- Performance at expected levels (3-3,9): business as usual. 4 – Performance exceeds expectations (4-4,7): eligible for performance-related pay; rating can only be awarded after peer-review through calibration (to be validated by HR). 5 – Extraordinary performance/role model (4,7-5): congratulations letter signed by the minister; eligible to be mentor/for public sector award etc.; eligible for performance-related pay; rating can only be awarded after peer-review through calibration (to be validated by HR). List of objectives Priority weight Rating (from above) (Assigned by manager in (from above) consultation with staff. Should reflect importance rather than time spent on objective) Objective 1 Objective 2 Objective 3 Objective 4 Etc. Final rating 100% Weighted sum of ratings above PART 4. COMPETENCIES Rating scheme for the assessment of competencies: 1- not displayed 2- partially/ inconsistently displayed 3- displayed at the level expected for the position 4- occasionally displayed at a higher level than expected 5- consistently displayed at a higher level than expected Providing a narrative assessment of the degree to which technical managers demonstrate the competencies under the “managerial abilities” competency cluster (as defined by the Competency Framework) is mandatory. 130 Managerial abilities Key competency To be demonstrated how? Phase 1: planning Managing performance Explain link to organizational/management or other objectives above, or provide other examples of observable results or behaviors that demonstrate that staff has the required competency. Mention also data sources where appropriate. Team development Explain link to organizational/management or other objectives above, or provide other examples of observable results or behaviors that demonstrate that staff has the required competency. Mention also data sources where appropriate. Summary of feedback received from peers, subordinates or internal/external clients (max 150 words): Must cite data sources, i.e. staff feedback, testimonials (written or oral), complaints received, etc. Phase 2: review Justification and proposed rating from the evaluated staff: Evaluator to provide i) final rating for the competencies; ii) short justification for the rating; and iii) recommendations on what the evaluated staff should improve: Other required competencies Competencies Proposed rating from Rating from evaluator evaluated staff (provide short justification (provide short justification only if competency is rated only if competency is rated above or below the expected above or below the expected level) level) Insert additional cells as needed 131 Summary of feedback received from peers, subordinates or internal/external clients (max 150 words): Must cite data sources, i.e. staff survey, testimonials (written or oral), complaints received, etc. Evaluator to provide recommendations on how the evaluated staff can improve his/her competencies, as applicable Comments from the evaluated staff: Remember: What are the consequences of the competency rating? NOTE: To be eligible for internal recruitment to the next hierarchical level, the job holder should have, during the past 3 years: • at least once consistently demonstrated both managerial competencies at a higher level than expected (rating of 5)- as confirmed also by staff feedback • displayed the rest of the relevant competencies at the level expected for their current position (i.e., must not have received a rating of 1 or 2 for any competency during the minimum legal period required to be eligible for the past 3 years). Other consequences of the rating for each competency: 1- competency not displayed: competency automatically included in individual development plan as priority. Automatically ends temporary appointments and fails probation period. Case signaled to HR for attention. 2- competency partially/inconsistently displayed: competency automatically included in individual development plan as priority. If competency does not improve after implementation of individual development plan, case signaled to HR for attention. 3 - competency displayed at the level expected for the position: business as usual. 4 – competency occasionally displayed at a higher level than expected: signals potential for staff development and growth. Competency recommended for inclusion in individual development plan as priority IF aligned with staff medium-term career goals (see individual development plan template). 5 – competency consistently displayed at a higher level than expected: signals potential/readiness for next hierarchical level, if other conditions are met. PART 5. FINAL AGREEMENT Final rating for achieving objectives (performance rating) Final outcome of the competency assessment 132 Competencies to be included in individual development plan Final comments and signature of agreement from staff (max 100 words): Final comments and signature of agreement from evaluator (max 100 words): Comments and signature of agreement from countersigning officer (must include also justification for revising rating, if appropriate; and explicit confirmation that rating underwent peer calibration, if rating is above or below “successful”, to be validated by HR) 133 Proposed yearly appraisal form for civil servants at execution level Name of job holder: Department: Position: Name of supervisor conducting performance review: Period of performance review: PART 1. OVERVIEW Organizational objectives for year insert year Departmental objectives for year insert year For execution-level staff238 this will be filled in by the evaluated employee as a self-assessment, as well as separately by the evaluator. Staff and evaluator should then discuss the two assessments and agree on the joint one. PART 2. INDIVIDUAL OBJECTIVES FOR INSERT YEAR Individual objectives- minimum 3 and maximum 5 objectives which the job holder must deliver in the current year, as per his/her job description as well as the departmental objectives to which the staff contributes. Each individual job responsibility must be assigned a priority weighting between 10% and 40%, based on its importance to the job and to achieving departmental objectives (not necessarily the amount of time spent on it). The degree to which the employee has achieved his objectives is rated as follows: 1- not achieved 2- partially achieved 3- successfully achieved 4- surpassed/exceeded expectations 5- extra-ordinary achievement 238 NOTE: the form should also be used for debutants/new recruits at execution levels. The ambition of objectives can be adapted, but new entrants should also have to demonstrate their ability to achieve results in the jobs they were selected for during the probation period. 134 Objective 1 Indicators - target Indicators – actual (At the beginning of the review achievement period: define how “successfully (At the end of the review period achieved” looks like - use – assess how actual indicators which describe performance compares to the quantity, quality, timeliness and standards/indicators defined efficiency) for the “successfully achieved’ level) Objective description E.g., E.g: E.g.: Respond accurately and timely to 90% of petitions must be 80% of petitions answered petitions on XYZ answered within the legally within time (out of 300 defined timeframe petitions received) Weights: 35% 80% of petitions must be cleared 30% of petitions had to be Associated without direct superior revising revised to improve content (so strategic/departmental the content of the petition 70% of petitions were cleared) objectives: 100% of petitions answered must Final objective rating to be filled be recorded in the department 90% of answered petitions in at the end, after discussion and Excel sheet were recorded in the Excel filling in justifications below sheet, 10% are unaccounted for E.g., Objective partially achieved (rating of 2) INSTRUCTIONS: Justification for the rating (max 300 words each) In each of the justification sections below: -> Explain how the objective was met, using as reference the pre-defined indicators. -> If performance is rated as under or above level 3, you are required to explain why the job holder's performance could not be rated as a level 3 -> Use this section also to explain why objectives or performance indicators have been revised, if applicable -> List 2-3 key competencies related to the achievement of the objective Justification and proposed rating from evaluated staff: to be filled in separately by staff before performance discussion Justification and proposed rating from evaluator: to be filled in separately by evaluator before performance discussion Summary of the performance review discussion: e.g. while most petitions were answered in a timely manner, there were too many significant errors for this objective to be considered fully achieved. This is in part due to the repeated and substantial changes in the legal framework in the last year which led to an overload of all staff in the unit. In part, however this was due to the lack of initiative of the part of staff to familiarize themselves with the new legislation and ask for guidance and advice from colleagues and supervisor when needed. 135 Key relevant competencies: Problem-solving and decision-making, communication Objective 2 Indicators - target Indicators – actual achievement Objective description: Weights: Associated strategic/departmental objectives: Final objective rating Justification and proposed rating from evaluated staff: Justification and proposed rating from evaluator: Summary of the review discussion: Key relevant competencies: [add other objectives as necessary, according to template above] PART 3. RATING INDIVIDUAL PERFORMANCE FOR INSERT YEAR List of objectives Priority weight Rating (from above) (Assigned by manager in (from above) consultation with staff. Should reflect importance rather than time spent on objective) Objective 1 50% 3 Objective 2 20% 4 Objective 3 20% 2 Objective 4 10% 3 Etc. Final rating 100% Weighted sum of ratings above 3 136 Remember: What are the consequences of the performance rating? NOTE: To be eligible for promotion staff should have obtained at least one very good or extraordinary (4 or 5) and no partially satisfactory or unsatisfactory (2 or 1) performance rating during the minimum period for promotion to the next hierarchical level foreseen by law. Other consequences of each rating: 1- Unacceptable performance: salary decrease; automatically ends temporary appointments; warning letter signed by minister; first rating of 1: development of performance improvement plan; if employee receives at least two ratings of 1 in the past 3 appraisal exercises, manager to propose dismissal of employee to head of institution; rating or can only be awarded after peer-review through calibration (to be validated by HR). 2- Performance must be further improved (2-2,9): development of performance improvement plan; automatically ends temporary appointments; manager issues 1st written formal warning; rating or can only be awarded after peer-review through calibration (to be validated by HR). 3- Performance at expected levels (3-3,9): business as usual. 4 – Performance exceeds expectations (4-4,7): eligible for performance-related pay; rating can only be awarded after peer-review through calibration (to be validated by HR). 5 – Extraordinary performance/role model (4,7-5): congratulations letter signed by the minister; eligible to be mentor/for public sector award etc.; eligible for performance-related pay; rating can only be awarded after peer-review through calibration (to be validated by HR). PART 4. COMPETENCIES This section assesses whether staff have the competencies required to fulfill their job responsibilities and perform at high level. The competencies to be assessed must be taken from the Competency Framework. Remember! Staff use competencies to achieve objectives/performance on the job. If an employee achieved (or surpassed) all their objectives, competencies displayed should also be at the expected level for the position (or higher). If a staff has not achieved (some of) their objectives, the competencies which contributed to this should be discussed and the competency rating should reflect that accordingly (unless the reason for not achieving objectives is beyond the control of the staff – which should be highlighted in the objectives discussion above). Rating scheme for the assessment of competencies: 1- not displayed 2- partially/ inconsistently displayed 3- displayed at the level expected for the position 4- occasionally displayed at a higher level than expected 5- consistently displayed at a higher level than expected 137 Required competencies Competencies Proposed rating from evaluated Rating from evaluator (provide staff short justification only if (provide short justification only if competency is rated above or competency is rated above or below below the expected level) the expected level) Insert additional cells as needed Evaluator to provide recommendations on how the evaluated staff could improve his/her competencies, as needed Comments from the evaluated staff: Remember: What are the consequences of the competency rating? NOTE: To be eligible for promotion staff should have, during the minimum legal period to be eligible for promotion to the next grade or hierarchical level: • at least once consistently demonstrated one competency that is relevant for the next level at a higher level than expected (rating of 5) • displayed the rest of the relevant competencies at the level expected for their current position (i.e., must not have received a rating of 1 or 2 for any competency during the minimum legal period required to be eligible for promotion). Other consequences of the rating for each competency: 1- competency not displayed: competency automatically included in individual development plan as priority. Automatically ends temporary appointments. Case signaled to HR for attention. 2- competency partially/inconsistently displayed: competency automatically included in individual development plan as priority. If competency does not improve after implementation of individual development plan, case signaled to HR for attention. 3- competency displayed at the level expected for the position: business as usual. 138 4 – competency occasionally displayed at a higher level than expected: signals potential for staff development and growth. Competency recommended for inclusion in individual development plan as priority IF aligned with staff medium-term career goals (see individual development plan template). 5 – competency consistently displayed at a higher level than expected: signals potential/readiness for promotion, if other conditions are met. PART 5: FINAL AGREEMENT Final rating for achieving objectives (performance rating) Final outcome for the competency assessment Competencies to be included in individual development plan Final comments and signature of agreement from staff (max 100 words): Final comments and signature of agreement from evaluator (max 100 words): Comments and signature of agreement from countersigning officer (must include also justification for revising rating, if appropriate) 139 Proposed mid-year conversation form Name of job holder Department/Unit Position Name of supervisor conducting Department/ Unit Position performance review Date for the present mid-year performance discussion: Organizational objectives for year insert year Departmental objectives for year insert year Note: this mid-year performance discussion is MANDATORY, but will not formally contribute to the end-year performance rating. Its purpose is to help employees and their managers to highlight employee strengths and identify barriers to future performance and short-term actions to remove them. Job holder to answer in brief the questions (bullet points or narrative, in max 300 words each question) below before the mid-year check-in. These answers will be used as a starting point for the discussion with your direct manager. The completed form should be sent to your manager before the agreed upon date for the mid-year performance discussion. 1) What were some of the specific accomplishments you have achieved in the previous 6 months in your job? Which competencies did you use for these accomplishments? (refer to specific projects/activities, your role in it and what you did to achieve performance, as well as competencies included in the competency framework) Objectives for the current year Expected performance Current status in achieving the expected performance (if applicable) 140 Objective 1 Objective 2 Objective 3 etc 2) What challenges did you encounter in your work in the previous 6 months? (Refer to the yearly objectives and expected results defined in the individual performance agreement for the current year. discuss both external challenges, and challenges or special achievements related to the use of your competencies, if relevant. Discuss here also if there is a need to adjust your yearly objectives or expected results and why). 3) What would help you to overcome these challenges in the coming months? (Refer also to short-term opportunities for development and how these could help you) 4) To be completed after mid-year discussion with manager: If agreed with your manager to revise any of your objectives or the performance expected for them, please provide a short justification. Staff comments: Manager comments: 5) FOR MANAGER: Please provide feedback to staff on strengths and areas of development. Refer to competencies as appropriate. Identify also concrete actions that you can take, and that staff can take to develop and improve performance. 141 6) MID-TERM AGREEMENT To be completed after mid-year discussion with manager: Briefly outline the key action points you agreed between manager and staff for the next 6 months 142 Proposed mid-year conversation form- linked with excellency award Name of job holder Department/Unit Position Name of supervisor conducting Department/ Unit Position performance review Following table to be filled in only if performance-related bonus is proposed Name of countersigning officer Department/Unit Position Name of HR department Department/Unit Position contact person Date for the present mid-year performance discussion: Organizational objectives for year insert year Departmental objectives for year insert year Note: this mid-year performance discussion is MANDATORY, but will not formally contribute to the end-year performance rating. Its purpose is to help employees and their managers to highlight employee strengths and identify barriers to future performance and short-term actions to remove them. Job holder to answer in brief the questions (bullet points or narrative, in max 300 words each question) below before the mid-year check-in. These answers will be used as a starting point for the discussion with your direct manager. The completed form should be sent to your manager before the agreed upon date for the mid-year performance discussion. 1) What were some of the specific accomplishments you have achieved in the previous 6 months in your job? Which competencies did you use for these accomplishments? (refer to specific projects/activities, your role in it and what you did to achieve performance, as well as competencies included in the competency framework) 143 Objectives for the current year Expected performance Current status in achieving the expected performance(if applicable) Objective 1 Objective 2 Objective 3 etc 2) What challenges did you encounter in your work in the previous 6 months? (Refer to the yearly objectives and expected results defined in the individual performance agreement for the current year. discuss both external challenges, and challenges or achievements related to the use of your competencies, if relevant. Discuss here also if there is a need to adjust your yearly objectives or expected results and why). 3) What would help you to overcome these challenges in the coming months? (Refer also to short-term opportunities for development and how these could help you) 4) To be completed after mid-year discussion with manager: If agreed with your manager to revise any of your objectives or the performance expected for them, please provide a short justification. Staff comments: Manager comments: 5) FOR MANAGER: Please provide feedback to staff on strengths and areas of development. Refer to competencies as appropriate. Identify also concrete actions that you can take, and that staff can take to develop and improve performance. 144 6) MID-TERM AGREEMENT To be completed after mid-year discussion with manager: Briefly outline the key action points you agreed between manager and staff for the next 6 months PART 2: PERFORMANCE-RELATED SPOT BONUS NOTE: this form can also be used separately from the mid-year check-in form above by organizations wishing to award the spot bonus/”excellency award” more often. The conversation between manager and staff about the reasons for the bonus and recording its results below are mandatory. Additionally, it is recommended that managers also use this opportunity to have a broader conversation with staff about individual objectives and development needs and opportunities. Step 1: Will the employee be proposed for a performance-related spot bonus? (to be filled in by the evaluating manager and the respective employee) REMEMBER! If yes, to receive final approval, the proposal must be accepted by the countersigning officer, will have to be peer-reviewed and validated by the appropriate committee consisting of managers and staff representative and by the HR department for consistency with applicable rules  Yes, with the following amount:  No (skip to validation signatures) If yes, please justify your proposal by describing the specific performance achieved by the employee and: i. why it should be considered an extraordinary achievement (in terms of quality, quantity, timeliness or cost-effectiveness of the employee’s contribution) ii. its link to individual objectives (if not applicable, please explain why) iii. its relevance to organizational objectives iv. competencies displayed in achieving this performance. 145 Step 2: Countersigning officer to provide comments regarding the proposal above for the performance-related spot bonus I explicitly agree or disagree with the above proposal. Provide reason for disagreement Step 3: HR department representative to record results of peer-review/ validation meeting and confirm that the proposal has satisfied all the required procedural and legal rules Bonus approved/not approved Provide justification if needed Step 4: Final signatures Staff signature and date: Direct manager signature and date: Countersigning officer signature and date: HR department signature and date: 146 Proposed form for the individual development plan Individual Development Plan To be completed after the yearly performance assessment and planning stage and revised at the mid-term conversation if needed HR departments to collect data in the first half of the year and provide a list of available L&D options by the mid-year review, at which managers and staff could apply to Name of job holder Department/Unit Position Name of supervisor conducting Department/Unit Position performance review Name of countersigning officer Department/Unit Position Name of HR department contact person Department/Unit Position Date of discussion: 1. Departmental objectives (as set by the insert [strategic] planning document name for the year insert year) To be filled in with top 3 priority objectives for the current year by each departmental leadership in collaboration with the HR department Objective 1: Etc…. Page 147 of 200 2. Individual performance objectives (as set by the yearly performance appraisal document for the year insert year) Objective 1: Etc …. 3. Individual career and development objectives To be discussed between manager and employee taking a mid-term perspective (e.g. next 3-5 years). 4. Medium term individual development needs and opportunities To be discussed between manager and employee taking a mid-term perspective (e.g. next 3-5 years). 5. Individual development needs and opportunities for insert year To be agreed upon jointly by evaluated staff and their direct managers, based on the results of the performance appraisal for the previous year. Remember! If staff has one or more competencies below the expected levels for the position their inclusion in the development plans is MANDATORY. If staff had more than 3 competencies below a rating of 3 (competency displayed at the expected level) manager and staff should prioritize the most important ones based on (i) their importance for achieving the staff’s main performance objectives, and/or (ii) thei r contribution to achieving departmental goals. What competencies should the Why should this competency be strengthened? employee focus on developing further Explain the main reason for focusing on each competency listed– chose one or more of the below: this year? - Contribution to achieving departmental objectives (mention departmental objective and (max 3 competencies) explain how the development activity will contribute to achieving that objective) - Essential for performing at expected levels (Link to performance appraisal – explain which objectives this competency is related to/contributes to achieving) Page 148 of 200 - Strength of staff – useful for further career development and growth (focus on competencies which will help staff advance to the next level in their career or achieve other professional development goals) 1. 2. 6. Development activities for insert year Description of planned development activity How will your direct manager support you in achieving this ->Where or with whom? development objective? ->When or by when? -> Estimated costs and sources of finance 7. Agreement ❑ I have discussed with my supervisor the options available under the IDP process and in insert year we agree to work towards developing the following competencies: insert competency 1 and/or competency 2 and/or competency 3 ❑ I have discussed with my supervisor the options available under the IDP process and we agree that no development is required at this time. Name and signature of job holder: Name and signature of supervisor: Name and signature of HR department contact person: Name and signature of countersigning officer: Page 149 of 200 Annex 2: Selected performance management tools Forced distribution method 1.1. Purpose/goal The main purpose of forced distribution is to ensure differentiation in the distribution of grades and to distinguish between high and low performers. This in turn allows for better and more rigorous administrative decisions such as promotion or pay-for-performance (bonuses or salary increases). Due to the fact that many managers are resistant to attribute low grades to their subordinates, this method is used to force the identification of the lowest and highest performers239. 1.2. Short description The forced distribution method requires the supervisor to rank each employee into 3 or more categories, usually excellent, good or poor. This method of performance management typically chooses the normal distribution curve to represent the performance distribution. This ensures that a small fraction (10% to 20%) of the entire workforce is to be placed at the extremes, which are the high performers and poor performers and a relatively large section (70% to 80%) falls in the middle of the distribution. This system of quotas is usually applied to each organization and, to some extent, to each department or unit. In smaller units, however, it is not always possible to enforce quotas, as the distribution is less likely to be a normal one240. Quotas are set centrally by law or regulations and, in some cases (e.g., in Portugal), some organizations may be entitled to a higher quota for high performance and less for poor performance, based on the organization’s performance. A hierarchical validation procedure is usually used to enforce that quotas are met, for instance by not formally accepting performance ratings, thereby inhibiting the worker to access benefits. In the case of Portugal, a supervisor that doesn’t meet the quotas will be poorly assessed on t hat matter in his/her own performance evaluation. In the case of the top manager of an organization, he/she can even be subjected to disciplinary measures, including dismissal. 239 Dominick, P. G. (2009) “Forced rankings: Pros, cons, and practices”, The professional practice series. Performance management: Putting research into action, 411-443. 240 O’Boyle Jr & Aguinis (2012) “The Best and the Rest: Revisiting the Norm of Normality of Individual Performance”, Personnel Psychology, 65: 79–119. Page 150 of 200 1.3. Where is it used? In Ireland, forced distribution in the previous performance management framework was expected but not mandatory. Quotas were defined as follows: 0-10% Unsatisfactory, 10-20% Needs improvement, 40-60% Satisfactory, 20-30% More than satisfactory, 0-10% Excellent. In Italy, forced distribution is set in rules and regulations with the following quotas: 25% Top performers, 50% Average performers, 25% Worst performers. Institutions are allowed to create more categories, but the top ranking group can never exceed 25%. In Latvia, forced distribution is mandatory with the following quotas: 3% Unsatisfactory, 7% Requires improvement, 70% Good, 15% Very good, 5% Excellent. In Portugal, a somewhat similar method is used, whereby the top category (“Very Good”) in each institution has a maximum quota of 20% but not a required (forced) minimum. From these top performers, a total of 5% (decided between the organization’s managers, not necessarily the employees with the highest grades) can be attributed an “Excellent” grade, which has more benefits in terms of bonuses and pay-scale advancements. In the UK, forced distribution is mandatory for executives (management positions) and quotas are applied by ministry. The quotas are 10% Low performance, 65% Achieving performance, 25% Top performance. 1.4. Evidence of impact Although it is a simple and cost-effective method to implement and use, it is criticized for not being accurate, as it can result in artificial and distorted assessment of performance, even more so if objective and rigorous methods are being used (such as goal setting and indicator measurement). It is also commonly perceived as unfair, leading to exacerbated competition and low levels of teamwork and motivation241. Research on the effects of forced distribution seems to point towards a somewhat limited impact on performance. It is mostly positively related to short-term effects, as it minimizes rater leniency, motivates employee effort and helps attract and retain high performers.242 241 Stewart, Gruys & Storm (2010) “Forced distribution performance evaluation systems: Advantages, disadvantages and keys to implementation”, Journal of Management & Organization, 16: 168–179. 242 Moon, Scullen & Latham (2015) “Precarious curve ahead: The effects of forced distribution rating systems on job performance”, Human Resource Management Review. Page 151 of 200 However, there is increasing evidence of risks linked to the continued use of forced distribution, such as perception of organizational injustice and dysfunctional competition. In the long run, these effects may negatively impact overall performance. In one study, the forced distribution rating system was found by managers to be “more difficult and less fair than a more traditional rating scale format. There is also a danger that forced distribution can become a crutch for poor management. Managers may use the system as an excuse for why employees received poor performance ratings, rather than taking responsibility for helping those employees with low performance to develop and improve”.243 1.5. Context adequacy Forced normal distribution is only statistically adequate when applied to large populations. In the organizational context, it is possible and to find high (and low) performing institutions, where individual performance does not adhere to a normal distribution and is actually concentrated at the extremes (either high or low performance). As pointed out in one study, the “bureaucratic organizational structure – such as centralized decision-making, standardized job tasks through formalized policies and procedures, and close supervision through narrow spans of control – result in reduced personal discretion and performance variability among most employees” and are therefore not fit for the use of forced distribution, which will more likely result in higher levels of perception of injustice and lower motivation244. On the other hand, forced distribution may be more suited for decentralized organizational structures, where performance varies significantly among employees. However, in a context where collaboration, teamwork, autonomy and interdependence are important factors for performance, forced distribution, again, may have a negative impact.245 Calibration 2.1. Purpose/goal Calibration in performance assessment aims at ensuring consistency of individual performance ratings across units, by establishing a fair and objective evaluation process and supporting 243 Stewart, Gruys & Storm (2010) “Forced distribution performance evaluation systems: Advantages, disadvantages and keys to implementation”, Journal of Management & Organization, 16: 168–179. 244 Moon, Scullen & Latham (2015) “Precarious curve ahead: The effects of forced distribution rating systems on job performance”, Human Resource Management Review 245 Ibidem Page 152 of 200 managers in applying similar standards. Calibration improves the accuracy of performance ratings, clarifies high performance standards and increases perception of fairness.246 2.2. Short description Calibration is a process whereby managers within an organization discuss the performance of employees and reach an agreement on performance assessment grades. The calibration process includes several steps to ensure that managers use a consistent set of standards in giving performance ratings247: ● Review of the standards for the performance evaluation process, ● Review the aggregate distributions of ratings for departments/functions, ● Compare the ratings given by individual managers, ● Look for individual outliers, ● Discussion of the link between individual and unit performance, ● Review of each employee’s performance rating and the supporting rationale behind it, ● Adjustment of ratings, as necessary, to accurately reflect real performance. Once the preliminary evaluation process is complete, the assessments are submitted to the top management or HR department for review. HR then facilitates calibration meetings with the managers and other top managers. Calibration discussions should include an analysis of the aggregate organizational and department level data, in order to support the discussion of individual performance. After eventual post-calibration changes are made to performance assessments, managers have performance review discussions with employees, where information may be used on organizational performance standards and how their team members are performing relative to others within and outside of the team. 2.3. Where is it used? In Ireland, calibration is facilitated by the organization’s HR office, and supported by guidelines and other materials. In Latvia, guidelines suggest the adoption of a calibration procedure (establishing a Calibration Committee with Senior Managers), in order to standardize evaluations of the same job profile within the same organization, and across organizations. In particular, calibration is suggested for 246 Schleicher, Deidra & Bull, Rebecca. (2007) “Frame-Of-Reference Training”, in Steven G. Rogelberg (Ed.) “Encyclopedia of Industrial and Organizational Psychology ”, Volume 1, Sage Publication, pp. 257-259 247 Caruso, Karen. (2013) “A Practical Guide to Performance Calibration: A Step-by-Step Guide to Increasing the Fairness and Accuracy of Performance Appraisal”, viaPeople, Inc Page 153 of 200 the top two performance categories (excellent and very good) and the bottom two (unsatisfactory and should be improved).248 In Portugal, “harmonisation” meetings are mandatory and integral part of the performance evaluation cycle. Since there are maximum quotas for the highest grades, these have to be settled in these meetings and the lowest grades also have to be discussed. However, there are no preset rules for the resolution of conflicts. The coordination committee consists of a top executive, HR Manager, and three to five executives appointed by the top executive. In the UK, a moderation procedure is adopted. During this phase, goals and performance results are standardized for executives in the same job profile, within the same organization, and across organizations. The moderation phase precedes the end of the performance management cycle, which entails performance differentiation as the final step. Moderation panels must use the following criteria to come to a judgment about performance groups: ● assessment of performance compared to objectives; ● leadership exhibited for the achievement of objectives; ● assessment of the management of resources; ● job weight; ● the degree to which the job holder has contributed to the Civil Service as part of the wider corporate community, including contributing to the running, performance and reputation of the Civil Service, leadership communication and fostering an ethos of volunteering. 2.4. Evidence of impact The use of calibration meetings during the performance assessment procedure was found to have positive impacts in accountability (managers have to justify their initial ratings), total information used in decision-making (discussion with other managers and supervisors), and a shared frame-of-reference (increasing the accuracy of ratings). This in turns mitigates cognitive and social challenges usually associated with performance evaluation249. 2.5. Context adequacy There is not much information available on this point. Performance assessment calibration procedures are more common in organizations that attribute high importance to performance evaluation and invest in preparing managers and staff for its implementation through training. 248 Barbieri, M., Girosante, G. & Valotti, G. (2017) “Comparative Analysis of the Performance Evaluation Systems of Public Sector Employees”, Osservatorio sul Cambiamento delle Amministrazioni Pubbliche 249 Speer, Andrew, Tenbrink, Andrew & Schwendeman, Michael. (2019) “Let’s talk it out: the effects of calibration meetings on performance ratings”, Human Performance. Page 154 of 200 Frame of reference training 3.1 Purpose/Goal Frame-of-reference (FOR) training is used to enable evaluators to identify, observe and evaluate, in a consistent and accurate manner, the various performance dimensions (including competencies) expected of a job. Through such training, each evaluator’s idiosyncratic perceptions of performance can be brought in line with the wider organizational values and priorities.250 3.2 Short description FOR training achieves its goal by enrolling job experts to help evaluators establish a common understanding of the performance dimensions specific to each job, based on its respective job description. Subsequently, evaluators are asked to analyze examples of employee behaviors at different levels of performance, for each job dimension. Finally, evaluators use this performance framework to rate several examples of employee performance and to provide justifications for their ratings. The trainers provide feedback on the suitability of these ratings and, thus, help evaluators define a consistent theory of performance for each performance dimension analyzed251. 3.3 Where is it used? In the UK Civil Service, organizations are expected to check that the performance objectives of senior civil servants are consistent with their respective individual job responsibilities and are of comparable difficulty with those of their peers. This would ensure that performance assessments are consistent across job holders at similar levels of seniority. The Cabinet Office verifies that the performance objectives are appropriate within and across organizations through random sampling252. In Canada, the Armed Forces used FOR training to improve both the performance appraisal of its personnel, as well as its personnel selection process253. The training consisted of i) presentations on the importance of the performance management process; ii) discussions and examples of what constitutes performance in a given job, at various levels of success; iii) practice sessions of using the established performance standards to evaluate samples of employee behavior against 250 Tsai M.H., Wee S., Koh B. (2019) “Restructured frame‐of‐reference training improves rating accu racy”, Journal of Organizational Behaviour, 40, 740-757 251 Sulsky, L.M and Kline, T.J.B (2007) “Understanding frame-of reference training success: a social learning theory perspective”, International Journal of Training and Development 11:2 252 Civil Service HR (2019) “Performance Management Arrangements for the Senior Civil Service”, Cabinet Office, London 253 As seen in Sulsky, L.M and Kline, T.J.B (2007) “Understanding frame-of reference training success: a social learning theory perspective”, International Journal of Training and Development 11:2 Page 155 of 200 the formal rating system; and iv) reviewing, through group discussions under the guidance of the trainer, the suitability of the ratings for each situation analyzed. 3.4 Evidence of Impact Numerous studies have found evidence that FOR training improves rater accuracy and reliability in the performance appraisal process254. Additionally, such training, by helping supervisors translate performance in observable behaviors, could enable them to develop more effective development plans for their staff.255 Consequently, the use of the FOR methodology has increasingly been incorporated into training curriculums for evaluators in other HR areas where subjective assessments are required, such as assessment centers, interviewing, and competency development.256 Indeed, empirical and experimental studies have shown that FOR training improves both assessor reliability in assessment centers, but also the quality of interview evaluations, even when compared with other training methodologies.257 3.5 Context Adequacy FOR training has not been found to be more effective in a particular institutional context, although other factors related to the training process itself, such as number of participants, training time and purpose of the training could moderate the effect of the training on rater accuracy258. However, since the training is aimed only at improving individual rater accuracy in isolation from the wider performance management framework, its effectiveness could be limited by the degree to which the said framework permits and encourages managers to conduct a realistic assessment of staff performance. 254 Roch, S. G., Woehr, D. J., Mishra, V., & Kieszczynka, U. (2012) “Rater training revisited: An updated meta-analytic review of frame-of- reference training”, Journal of Occupational and Organizational Psychology, 85, 370–395. 255 Stamoulis, D. T., & Hauenstein, N. M. A. (1993) “Rater training and rating accuracy: Training for dimensional accuracy versus training for rate differentiation”, Journal of Applied Psychology, 78, 994–1003 256 Hauenstein N.M.A. & McCusker M.E. (2017) “Rater training: Understanding effects of training content, practice ratings, and feedback”, International Journal of Selection and Assessment, 25, 253-266 257 Melchiers, K.G., Lienhardt, N., von Aarburg, M., Kleinmann, M. (2011) “Is more structure really better? A comparison of frame-of-reference training and descriptively anchored rating scales to improve interviewers’ rating quality”, Personnel Psychology, 64, 53-87 258 Roch, S. G., Woehr, D. J., Mishra, V., & Kieszczynka, U. (2012) “Rater training revisited: An updated meta-analytic review of frame-of- reference training”, Journal of Occupational and Organizational Psychology, 85, 370 –395 Page 156 of 200 Annex 3: Additional tables and figures Figure 10: Example of process to address underperformance (Australia) Source: Australian National Audit Office (2017) “Managing Underperformance in the Australian Public Service”, ANAO Report no. 52 Page 157 of 200 Table 7: Performance management success principles, tools, and connected policy areas Success principles for Performance management reforms/ interventions Other measures effective performance management 1. Performance Institutional leadership (political leaders, HLCS and senior Improving internal communication capacity management must start managers) should communicate to staff the purpose, benefits and within public organizations from the top objectives of the performance management process clearly and consistently Career management policy Strengthen the performance management regime of HLCS • Mandatory objectives related to organizational capacity and people management/leadership (which includes managing performance of staff) • In the short-term: i) the external evaluation commission to be chaired by the General Secretary of the Government; ii) to change the eligibility criteria for members of the external evaluation commission and to enable them (e.g. through training and peer learning from other public administrations) to assesses performance of HLCS and identify means of improving it • Expand the evidence base which is to be used by the evaluation commission for the performance appraisal exercise (access to operational and strategic documentation related to the performance of the HLCS, interviews and/or testimonies from peers, staff engagement surveys across the public administration in the medium- to long-term) Extend the use of more rigorous performance appraisals to senior managers (such as directors general, directors and their equivalent) Establish clear career paths into and out of HLCS and senior management positions, and limit temporary appointments to these positions (reduce maximum duration of temporary appointment Page 158 of 200 and limit number of successive temporary appointments to the same position, allow temporary appointments of staff only to the immediately superior hierarchical position; condition such appointments on demonstrated performance and competencies) 2. Ensure a clear line of Integrate strategic and operational organizational objectives in the Further institutionalize ISPs259 as a core sight (goal alignment) evaluation of top managers (HLCS, directors general, directors) instrument for organizational performance management Communicate organizational mission and objectives clearly and consistently to staff Strengthen internal communication systems of public institutions Train managers in setting objectives and appropriate performance indicators Training top managers in organizational strategic and performance management 3. Differentiate Develop guidelines on and examples of types of indicators suited Implement standardized job descriptions performance for measuring performance for different kinds of jobs, including, at across public administration jobs and grades assessments across the least: institutions, job types, • People management results/indicators for managers (esp. top Develop reliable and user-friendly and levels of management) mechanisms for collecting citizen feedback performance • Client satisfaction indicators for priority for staff and managers on interactions with staff in the public whose units interact directly with external and internal administration/ develop internal platforms beneficiaries (e.g. citizens) to collect feedback from internal client units, as well as feedback from staff about Simplify rating scheme and make “satisfactory” performance the managerial quality and organizational default rating (achievement of objectives) processes Develop “frame of reference” training sessions for managers (as a pilot in some organizations) 259 As defined through the RAS on “Strengthening Planning and Budgeting Capacity and Supporting the Introduction of Performance Budgeting” between the General Secretariat of the Government and the International Bank for Reconstruction and Development Page 159 of 200 Introduce mandatory calibration of grades (justification/validation of high and low staff grades among managers at a given hierarchical level) Introduce mandatory quotas for ratings of above-average performance 4. For more objectivity and Introduce self-evaluations for all staff In the long-term, develop electronic fairness, improve Management Information Systems (MIS) to judgement and diversify Require managers and staff to justify ratings in performance record individual employee activities and the source of appraisal forms and set up 3rd party verification mechanisms (e.g. outputs, where possible (e.g. for information for the HR depts to audit samples of appraisal forms annually) standardized tasks). evaluation Develop mandatory awareness sessions for managers on In the short-to-medium term, allow and unconscious biases in performance appraisals and how to mitigate encourage the use of low-tech, cost- them. Additionally, provide managers with “cheat sheets” on the effective ICT solutions for collecting topic. individual performance information (e.g. Google forms, anonymous online surveys, Mandatory, simplified mid-year performance conversations and citizen comments on the Facebook pages of check-ins (with no rating or administrative consequences) public institutions) Introduce feedback from staff and from peers as a mandatory input into the performance appraisals of managers 5. Motivate performance Award the “excellency bonus” (allowed under Law 153/2017) in a Pay policy through both intrinsic transparent and equitable manner, tied to demonstrated and and extrinsic incentives traceable performance260 Career development policy Redesign career management policies to enable differentiated Training policy career progression based on demonstrated competencies and performance 260 See connected paper on Performance-related pay in the Romanian public administration Page 160 of 200 Coach and enable managers to motivate staff by leveraging intrinsic motivation: • Disseminate best practices in leveraging intrinsic motivation (e.g. through improving working climate, building team spirit, etc.) • Find ways to recognize good managers (e.g. at the annual NACS conference) and encourage peer-to-peer learning among managers, particularly top managers • Pilot an “innovation tournament” to strengthen employee engagement by empowering them to solve issues in their daily work Train managers in having constructive conversations with staff, including on how to better involve staff in setting their own objectives and performance indicators, and how to provide better, growth-oriented feedback to staff (see also below) 6. Enable performance Make competencies a core part of the annual performance Competency Framework implementation through adequate appraisal and link them explicitly to training proposals and career opportunities for development. Recruitment policy growth and development Focus mid-term or quarterly conversations on feedback for growth Training policy Train, enable and incentivize managers to become coaches to their staff and to focus their feedback on identifying and addressing development needs Expand the use of alternative instruments for staff development, other than formal training courses (e.g. stretch assignments, exchange programs for staff working in similar fields, horizontal mobility and temporary mobility schemes through a structured and centrally coordinated program) Page 161 of 200 Introduce structured performance improvement plans, which set out predictable, fair and clear consequences at each stage of underperformance Introduce probationary periods for all external recruits, regardless of grade or hierarchical position 7. Embed performance Integrate performance management better with other institutional Strategic planning and monitoring and management in processes and relevant structures (e.g. link to the preparation and evaluation organizational culture monitoring of ISPs, existing internal data collection and practice systems/(HR)MIS etc.) (HR)MIS Periodically gauge staff perceptions about the usefulness and Internal managerial control fairness of the performance management system (e.g. through anonymous surveys, focus groups) and provide them with safe channels to make suggestions for improvement (e.g. through the joint commission- “comisiile paritare”). Strengthen the mandate and build the capacity of HR departments to i) oversee the well-functioning of the performance management process; ii) provide support and resources to managers and staff on how to use it effectively; and iii) ensure that it is integrated in strategic level decision-making Clarify roles and improve coherence and communication between existing central oversight, advisory and consultative structures with a mandate in the performance management framework (NACS, HR Council, GSG-DMICIR, internal audit) Page 162 of 200 Annex 4: Recommendations on career management reform from the Baseline Diagnostic Excerpt from Output 1, Deliverable 1.1 “Baseline diagnostic of the national framework for HRM and its institutionalization”, developed under the HRM RAS, May 2019, p92-95 Mobility policy could be redesigned to serve as a stronger incentive to motivate Civil Servants to perform better. The expectation of transparent and predictable career paths can be a strong motivational factor to attract ambitious and entrepreneurial candidates that value professional development prospects. It can also motivate existing employees to perform better, especially if linked to proven records of competencies and results. This can be achieved among other ▪ Refocus criteria for promotion across grades from means by slower career progression across accumulating seniority to proving competencies, grades, using horizontal mobility schemes as as defined by a unified competency framework; opportunity for professional development, and ▪ Redesign the career structure to reflect more increased transparency in promotions. Vertical specific functional roles, reached through mobility (promotion) could also be aligned progressively restrictive eligibility criteria; more clearly to strategic workforce planning, ▪ Review the benefits of temporary promotions for example through the competency compared to horizontal mobility instruments; framework and through yearly promotion ▪ Introduce fast-track promotions with transparent quotas. More detailed recommendations are in quotas for candidates who display competencies the next sections. above their grade; and To meet the objectives envisaged by the 2016- ▪ Encourage mobility among management-level 2020 SCSD, the career structure for general Civil Servants through customized mobility policy Civil Servants should be more narrowly and instruments. segmented along functional responsibilities and required competencies. Both the 2016- 2020 SCSD, as well as the 2017 World Bank RIA on NACS, recommended that professional grades be subdivided into several levels, to reflect seniority and increasingly sophisticated job responsibilities. As per the documents, management roles should be clearly distinguished between operational management roles (for managing smaller teams and requiring more technical input) and executive management roles (managing large, technically diverse teams). In addition to these recommendations, due consideration should be given to establishing specialist career paths which offer benefits comparable to management roles for Civil Servants wanting to continue developing in a technical and non-managerial role. The career structure within the European Commission is a case in point. Technical specialists (administrator) can advance from grade 5 up to grade 12 on the unitary 16- point grade scale, while the lowest management role (head of unit or equivalent) starts at grade 9 (see below). Page 163 of 200 Figure 11. Career system for permanent officials in the European Commission Source: DG HR presentation to RO delegation during a study visit to the European Commission, October 2018; AST = Assistant, SC = Secretary Clerk, AD = Administrator Criteria for career progression across professional grades should prioritize proven competencies and a track-record of results over seniority. Accumulating seniority on the job does not automatically entail that the skills needed to undertake the more complex tasks expected of higher grades have been acquired. Hence, to ensure an adequate fit with the higher job functions, promotion decisions should not be based primarily on reaching a minimum threshold of years of service. Instead, as envisaged by the 2016-2020 SCSD, promotion decisions should be made against specific and general competencies clearly defined for each grade by a unitary competency framework. Performance appraisals should inform the promotion process by evidencing how Civil Servants have or have not exhibited the required level of competencies while working to meet their respective individual objectives. Promotions should be designed as mechanisms to distinguish top performers . One option to do this would be to establish yearly promotion quotas for public institutions, based on budgetary limits and employment plans, as is currently done in France261. Civil Servants who meet the criteria for promotions could be put on “promotion rosters” and ordered by a weighted average of experience, proven competencies and results. Promotions would be awarded through competitions, organized in accordance with the yearly quotas. The minimum number of years needed to be promoted across grades could be increased and the progression could be less linear and more commensurate with responsibilities at each level. The current system allows promotion to the immediately superior grade every 3 years at a minimum, regardless of the grade. As such, it implies that moving from assistant to principal requires the same minimum amount of time to acquire the necessary skills as it does from principal to superior (the maximum grade). A less linear relationship, defined by progressively increasing eligibility requirements to advance along the professional grade scale, could better reflect the change in responsibilities. A similar recommendation was outlined in the 2016-2020 SCSD under the specific objective 2, while the proposed Administrative 261 See https://www.fonction-publique.gouv.fr/lavancement-de-grade Page 164 of 200 Code took a step in this direction by proposing to extend the minimum experience required for progressing across grades to 4 years. The Belgian Federal Civil Service takes such an approach by making it progressively more difficult for Civil Servants to advance through pay levels within a grade, while accelerating progression for top performers.262 A more finely calibrated fast-track promotion system could be a useful complement to more rigid career progression criteria. The instrument would allow high performing Civil Servants to access senior positions earlier, where their skills and competencies can be further developed. An existing fast-track promotion mechanism was abolished in 2018 due to the fact that eligibility rules were too lax, and it quickly became unsustainable to manage, according to interviews with NACS representatives. As such, a reformed fast- track system should have transparent quotas and be linked with top-performance, as defined via a transparent and standard set of indicators for results and competencies measured during performance appraisals. Mentorship schemes with more senior Civil Servants could be mandatory to fast-track participants to ensure that they grasp their new responsibilities and expected results quickly. Legal provisions allowing management roles to be occupied through temporary promotions should be reconsidered and tightened based on a cost-benefit analysis. The proposed Administrative Code took a step in this direction by conditioning the 3-month extension of the initial 6-month temporary appointment on at least 2 unsuccessful attempts to fill the vacancy through recruitment competitions. The said competitions were to be organized by the recruiting institution at least every 6 months. Nevertheless, regardless of the conditionalities imposed, the existence of legal provisions which allow heads of institutions to arbitrarily promote Civil Servants into management roles only on the basis of seniority and educational qualifications needs to be clearly justified. This potential analysis should consider why other instruments, such as temporary delegation of authority to other management cadres or management- level mobility schemes, cannot be used to supplant temporary appointments to management roles. Separate and tailor-made programs for mobility should be designed for high-level Civil Servants and Civil Servants in upper management roles. In most EU countries, either the central HRM authority or a specialized department provides dedicated resources to managing custom programs aimed at supporting the mobility of high-level Civil Servants.263 For Civil Servants in management roles, mobility can expand and diversify their management and leadership skills. For high-level Civil Servants it may prevent political capture and keep them engaged through new professional challenges. In acknowledgement of this, various EU public administrations have put in place or are piloting different mobility policies for its management-level Civil Servants. These include mandatory rotations of management cadres (e.g. European Commission, Ireland, France), fixed-term mandates (e.g. Belgium, Ireland, France) and requirements to fill management vacancies through mobility (e.g. Ireland)264. In line with these practices, the 2016-2020 SCSD proposes a system of mandatory mobility for critical management roles and high- level Civil Servants. 262 See https://fedweb.belgium.be/fr/parcours_de_carriere/niveau_a/carriere_pecuniaire/nouvelles_echelles 263 Kuperus and Rode (2016), Top Public Managers in Europe Management and Employment in Central Public Administrations (http://www.eupan.eu/files/repository/20170206084104_TopPublicManagersinEuropemainreport.pdf) 264 Kuperus and Rode (2016), Top Public Managers in Europe Management and Employment in Central Public Administrations (http://www.eupan.eu/files/repository/20170206084104_TopPublicManagersinEuropemainreport.pdf) Page 165 of 200 Annex 5: Interviews and focus groups Organization Role # of Discussions Discussion Type National Agency for Manager 4 In-depth Civil servants interview National Agency for Execution-level staff 2 Focus group Civil servants General Secretariat of Manager 3 In-depth the Government interview General Secretariat of Execution-level staff 1 Focus group the Government Labour Inspection Manager 2 In-depth (central) interview Labour Inspection Execution-level staff 1 Focus group (central) Labour Inspection Managers 6 In-depth (territorial agencies) interview Ministry of European Manager 1 In-depth Funds interview Ministry of European HR department 1 In-depth Funds interview Ministry of Regional Manager 1 In-depth Development and interview Public Administration Ministry of Regional HR department 1 In-depth Development and interview Public Administration Competition Council Manager 2 In-depth interview Competition Council HR department 1 In-depth interview Ministry of Public HR department 1 In-depth Finance interview Ministry of Public Public manager 1 In-depth Finance interview External Commission Member 1 In-depth for Evaluating HLCS interview Page 166 of 200 Annex 6: eMBeD report on “Performance Management in the Romanian Civil Service: A Study of Behaviors and Biases” Performance Management in the Romanian Civil Service: A Study of Behaviors and Biases Page 167 of 200 Executive Summary I. Study Background, Related Studies and Literature, and Research Questions II. Methodology and Data Collection III. Data Processing IV. Findings from Interviews 1. Performance Appraisal Tools and Practices 2. Motivational Tools and Practices 3. Perceptions and Mental Models V. Potential Interventions Using Behavioral Insights VI. References VII. Appendix Page 168 of 200 Executive Summary 1. In the context of the Romanian Civil Service, performance management is a key element for ensuring an engaged, effective, and well-functioning government. Despite structural issues around the Government of Romania’s current Civil Service performance management system, this report outlines several solutions for greater employee motivation, better management practices, and ultimately a more effective workforce. Among our findings, we identify several areas for potential improvement, including a focus on better objective setting and feedback from managers; better management practices with greater integration of tools and interactions that encourage intrinsic motivation; and other creative workarounds requiring limited funding while encouraging employee development, training, and mission buy-in. Ultimately, effective civil service management practices will incorporate behavioral insights and nudges for greater employee job satisfaction, performance, and retention. 2. The main purpose for the behavioral diagnostic exercise was to identify possible behaviors and psychological barriers for managers, and related behaviors of civil servants, that help or hinder better coordination and implementation of the performance appraisal system in the Romanian Civil Service. Recent research has shown that civil servants display the same behavioral biases seen in other contexts and individuals. Biases such as confirmation bias, loss aversion, negativity bias, present bias, and firmly held cultural beliefs and world views may all contribute to dissatisfaction with existing performance management systems. By understanding the likely biases at play, we can work to identify improvements to the system that rely on intrinsic motivation, including better management practices and non-monetary incentives such as social recognition, as well as other feasible, scalable areas for greater engagement. By understanding the broader relationship and interactions between manager and civil servant that affect the motivation and performance of the civil servant, we identify behavioral barriers to effective performance management and employee motivation and performance. 3. To understand the beliefs, motivations, and behaviors of key stakeholders, we turned to qualitative data collection. Focus groups and discussions were conducted in seven different public organizations in Romania: National Agency for Civil Servants (NACS), Labor Inspection, General Secretariat of the Government (GSG), Ministry of Regional Development and Public Page 169 of 200 Administration (MRDPA)265, the Competition Council (CC), the Ministry of Public Finance (MPF), and the Ministry of European Funds (MEF). Eleven manager interviews, four focus groups with civil servants, and four HR interviews were conducted in total for a total of 19 discussions. Each focus group had between 5-8 participants. The set of respondents was chosen by a point person in the organization and were typically from different departments within the organization. 4. Among performance evaluation tools and processes discussed, we found that objective setting and indicators and feedback provided during the appraisal interview were not clearly articulated, and objectives were not updated in a meaningful or timely way. Objective setting was identified by both managers and civil servants as one of the most important determinants of performance. However, managers and staff noted a lack of clarity around how to create and enforce effective, directive goals that are sufficiently customized for individuals to follow, or in which to find motivation. In this instance, relying on existing objectives taken from job descriptions create a missed opportunity for both a relevant planning tool as well as alignment with organizational mission. Civil servants also demand better feedback and conversations from managers during the appraisal period, including greater transparency on decisions, specific behaviors to modify and improve, and information on training opportunities as well as broader organizational developments – however, managers tend to avoid this, fail to see its relevance, and may not fully understand the structure and content of these conversations that are interesting for civil servants. 5. Patterns observed in civil servant performance ratings as part of the annual assessment may adversely affect the motivation of better performing civil servants. In a system where extremely high ratings (usually between 4.51 and 5 on a 5-point scale) are the norm due to a risk of litigation and overall culture, we found that managers prefer to maintain the status quo. While managers still ensure a distribution of ratings in this range, the negative effect of such ratings are felt most by better performing civil servants – unless managers are able to motivate them through other tools. 6. Good managers steer, motivate, and help staff develop with a combination of good management practices and motivational tools throughout the year. The lack of clarity on objective setting, discussions and feedback, and pattern of ratings in the appraisal process, all compound the effect to make this an ineffective tool in improving civil servant motivation and 265 Since the time of writing, the Ministry of Regional Development and Public Administration has been restructured into the Ministry of Public Works, Development and Administration (MPWDA) Page 170 of 200 performance. Furthermore, the broader lack of monetary incentives and opportunities for training and development further restrain the tools available to the manager to encourage better performance. Good managers instead use a number of management practices and tools within the constraints of the environment to increase intrinsic motivation and performance – including facilitating an “open” and supportive work environment that supports discussion and feedback, showing regular appreciation and encouragement, along with work hour flexibility, as well as development opportunities such as working on “interesting” assignments. 7. Perceptions of managers about management “styles” may further deter them from engaging effectively with civil servants. We find evidence that some managers may believe in the appropriateness of very hierarchical social roles, further distancing themselves from closer interaction with civil servants and from management practices that may motivate civil servants. Such belief systems may be a bottleneck to more effective management practices. 8. Ultimately, improving performance management may be about improving managerial behavior, rather than the “de jure” performance management system. The behavioral diagnostics suggest that focused training of managers on objectives setting, feedback provision, and other performance management practices that intrinsically motivate civil servants, and that are already used by some managers, may be a practical and effective way to change manager behavior and improve civil servant performance. Such training can also be used to make the appraisal process easier and more useful for managers, for instance, by providing examples and discussions around effective objective setting, discussions on how to provide broader performance and behavioral feedback to civil servants, and examples of discussions around organizational processes and goals to make public service motivation more salient. Behaviorally informed nudges can be then used, strategically, to help implement and sustain these behaviors – for example, providing helpful “cheat sheets” and reminders on the motivational tools available to managers, or social recognition of those who are best able to display these behaviors. Page 171 of 200 I. Study Background The Government of Romania has approached the World Bank to help support its efforts on strengthening the human resources management system in the Civil Service. A key part of the Civil Service is the performance evaluation or appraisal system, usually implemented at the beginning of the year, which has a detailed legal and procedural framework. However, it is widely believed that the performance evaluation system is not being implemented as originally intended and is failing to effectively promote individual civil servant motivation and performance. Furthermore, the performance appraisal procedure is merely one part of a larger performance management framework. The relationship and interactions between manager and civil servant throughout the rest of the year significantly impact civil servant motivation and performance over time. Therefore, it is crucial to think of performance management in this broader sense to truly understand its importance to the successful running of the overall Civil Service. As part of the overall task of strengthening the Civil Service, the World Bank team has applied a behavioral science lens to better understand the barriers to effective management and implementation, and to complement ongoing efforts. Lessons drawn from the behavioral sciences are an increasingly popular and innovative tool to understand and tackle intractable policy challenges. Behaviorally informed policy emphasizes the importance of context for decision making and behavior. It examines a wide set of influences, paying attention to the social, psychological, and cultural factors that affect what people think and do. It addresses details that are often overlooked in standard policy design but that influence the effectiveness of policies and implementation. In the specific context of performance management, behavioral science can help identify the psychological bottlenecks and behaviors which constrain practices that improve motivation and performance and suggest a different set of tools to change behaviors and enhance the effectiveness of the program. With this in mind, the Mind, Behavior, and Development Unit (eMBeD) in the World Bank, working in close conjunction with the Governance Global Practice, and in particular local researchers based out of Bucharest, set out to carefully study manager and civil servant behaviors that help and hinder performance management in the Romanian Civil Service. Related Studies and Literature Several individual cognitive biases have been documented among civil servants and other Government workers that come in the way of objective and impartial decision making and affect performance. Recent research has shown that civil servants display the same behavioral biases seen elsewhere. Table 1 below provides definitions of the biases. Prospect theory is a decision theory that describes that people are more motivated by avoiding losses than pursuing gains (known as loss aversion), even when they are of equal value (Kahneman and Tversky, 1979). A related concept, negativity bias, is the notion that, even when of equal intensity, things of a more negative nature (e.g. unpleasant thoughts, emotions, or social interactions; harmful/traumatic events) have a greater effect on one's psychological state and processes than neutral or positive events. This has been discussed extensively in public administration literature in the context of blame avoidance, i.e. politicians are more motivated to avoid blame for unpopular policies than take credit for popular ones (Weaver, 1986). This is transferable to bureaucrats, and in the context of the performance appraisal, it is Page 172 of 200 feasible that managers may be unwilling to adequately address the poor performance of civil servants (except for cases of very poor performance). The literature has also documented the presence of halo effects in the public sector, typically observed during performance assessments, and resulting in incorrect evaluations of civil servants that may negatively affect performance. For example, in experimental studies completed with public servants, those who were perceived to have higher skills along one dimension, were given higher scores on other dimensions, and therefore overall performance (Belle et al, 2017, Cantarelli et al, 2018). Relatedly, a recent study, Banuri (et al, 2017) finds that UK civil servants (and World Bank staff) exhibit significant confirmation bias, which hinges the success of programs and policies based on the prior beliefs and experiences of individuals. This bias may affect a number of different behaviors in performance management, for example, existing beliefs about certain management practices may be maintained, and performance assessments flawed despite contradictory evidence. Another trait that affects most decisions is present bias. The influence of present bias is documented by Andreoni (et al, 2016) for front line health workers in Pakistan, where customizing contracts for individuals based on initial measures of this bias helped to improve performance. While the context is different, it is easy to imagine civil servants needing to complete a number of urgent tasks, with little time to spare for performance management activities. A related issue may be that of status quo bias - unsurprising in bureaucracies, where sometimes it is easier to not change behavior. A recent study documented the presence of a number of biases derived from prospect theory, including the presence of status quo bias, in an experimental setup with managers and employees in the Italian public sector (Belle et al, 2018). More broadly, civil servant behavior may be influenced by deeply internalized beliefs about how the world works, also known as cultural schema or beliefs (DiMaggio, 1997). This includes the default associations, categories, concepts, identities, prototypes, stereotypes, causal narratives, and worldviews that we use to make sense of the world. These cultural schema shape perceptions and filter the “facts” that people believe, and affect decision making (World Bank, 2015). In the public administration literature, this is related to the concept of “institutional logics”266 (Thornton and Ocasio, 1999). In the context of performance management, the relationship between line managers and civil servants may be affected by how this social role is perceived by managers – in broad terms do managers subscribe to a more legalistic- bureaucratic world view, or an extremely hierarchical view, or are their views of social roles flatter and more flexible? Meyer et al (2013), for example, find that a majority i.e. nearly 40% of public sector employees in the city of Vienna subscribe to such a legalistic-bureaucratic world view and accompanying social identities. Recent research has reported on actual performance appraisal processes in the Civil Service. For example, Budworth (et al 2014) found that a particular style of providing feedback from manager to civil servant, which focuses on positive of aspects of employee performance, instead of what is wrong, helped to improve subsequent performance. 266 Defined as ‘the socially constructed, historical patterns of material practices, assumptions, values, beliefs, and rules by which individuals produce and reproduce their material subsistence, organize time and space, and provide meaning to their social reality’ Page 173 of 200 Goal setting as part of the appraisal process has also shown to be important in the public sector (see Rogers et al, 2015 for a review and applications of goal setting in other contexts). According to Perry (et al 2006), this is the most researched topic on employee motivation in public administrations. Although there are several known challenges to implementation in the public sector,267 the authors emphasize the effectiveness of goal setting as a tool for managers to motivate and improve performance. For example, Latham (et al 2008) discusses individual goal setting being adapted and implemented in the public sector in the US and Italy. In the US at higher levels of government, the lack of specificity in goal setting led to several challenges, and the authors recommend more specific behavioral goals as an alternative. They also highlight the importance of taking account of the existing context –in Italy, at local levels of government, moving away from performance assessments based on the number of tasks completed towards broader goals and objectives proved to be difficult. The literature also shows the interplay of properties of individual and organizational goals, in particular the negative relationship with goal ambiguity, and the positive relationship with perceived importance of goals, on improving outcomes such as personnel turnover intentions, job satisfaction, and performance (Jung, 2013, 2014a, 2014b). Non-monetary tools can be used to improve the intrinsic motivation and performance of civil servants. There is increasing evidence in organizational studies that shows that employees value social recognition and appreciation, particularly in the presence of budgetary constraints. Individuals crave status and recognition from communities they work in, so they can be positively and intrinsically motivated by public, peer, or supervisor recognition. Political salience is an added benefit of broader public recognition within a bureaucracy. A recent evaluation showed improved performance by Nigerian civil servants in record keeping in health clinics when a “star” certificate was publicly displayed on the wall of the clinic (Gauri et al, 2017). Recognition can also be informal or intangible, for example, acknowledging good work behaviour. Since this is costless, it can be done in person, in a group, and throughout the year, both verbally and in writing. This is a particularly useful practice for improving motivation and performance on day to day and more mundane tasks (Montgomery et al, 2008). The literature shows several other aspects of the work environment that managers can maneuver to shape employee performance. This includes transparency and openness, which can promote both increased perceptions of fairness and encourages feedback through more regular and honest communication between manager and civil servants. These conditions are what psychologists refer to as “psychological safety” where team members hold beliefs of mutual trust and respect for each other, are comfortable being themselves, and believe that they will not be punished unduly for speaking their mind (Edmondson, 2018). Psychological safety is an important predictor of performance. Additionally, the literature highlights the importance of interesting (and perceived importance of) work within public bureaucracies as a motivating factor. Wright et al, (2003) shows how job characteristics such as interesting work and environmental factors including feedback are important correlates of job satisfaction in the US public sector268. Furthermore, re-enforcing connections to teammates, and other teams within an organization can promote the concept of “relatedness” and a shared identity. Finally, work life balance is 267 Challenges in implementation include reduced importance given to goals due to weaker rewards, changing or irrelevance of goals due to changing politically priorities, and outcomes outside the control of some organizations, as well as the lack of specificity of goals in general. 268 Job satisfaction is an important correlated of performance Page 174 of 200 important – good managers can lend a helpful ear, offer encouragement, and support work life balance (Montgomery et al, 2008). Lessons from behavioral science demonstrate the outsized impact of the presentation and timeliness of information in having its desired impact on behavior. It is therefore important to investigate the most effective way to provide information and reminders concerning processes or to increase the salience of existing ones, including the timing of information provision, which is often best when provided just prior to a decision point. For example, a new study shows the impact of sending text messages to civil servants in the Ministry of Education in Peru to nudge them to complete a specific task in a low supervision setting when the activity is to be carried out. The results show that these messages successfully nudge fund disbursements provided for school maintenance activities in a timely manner (Dustan et al, 2018). In the context of the performance management system, reminders and other relevant information can be sent not only for completing the appraisal processes, but also of the perceived usefulness and purpose of each step, and to increase the salience of the different activities. Table 1: List of Key Biases and Definitions Biases Definition Confirmation Bias Favoring information that confirms your previously existing beliefs, and rejecting those that do not Halo Effects The tendency for an impression created in one area to influence opinion in another area. Present Bias The tendency of people to give stronger weight to payoffs that are closer to the present time than in the future Loss Aversion Refers to people's tendency to prefer avoiding losses to acquiring equivalent gains Negativity Bias Things of a more negative nature (e.g. unpleasant thoughts, emotions, or social interactions) have a greater effect than neutral or positive things of an equal intensity Status Quo Bias A preference for the current state of things. Salience The tendency to focus on information, ideas, or behaviors that are more prominent, and ignore or discredit that which is less so. Political salience refers to behaviors that are more politically relevant Page 175 of 200 Key Research Questions The main purpose for the behavioral diagnostic exercise was to identify a set of possible behaviors and psychological barriers for managers, and related behaviors of civil servants, that help or hinder better coordination and implementation of the performance appraisal system in the Romanian Civil Service. Furthermore, the team decided it was important to understand the broader relationship and interactions between manager and civil servant during the rest of the year, that affect the motivation and performance of civil servants. Relatedly, we wanted to ask managers about the tools they think are most effective to motivate civil servants within the constraints of the bureaucracy. We wanted to characterize “good” examples of these practices and tools, to document positive deviance behaviors in the civil service that can help to improve performance overall. Finally, we wanted to investigate if managers subscribe to broader social identities and roles, which in turn may guide their relationship and behavior with civil servants. II. Methodology and Data Collection To capture the beliefs and behaviors of key stakeholders, we carried out a series of interviews aimed at understanding practices around the performance appraisal, as well as broader motivations and perceptions that may affect performance in the Civil Service. Our main methods were open-ended and guided focus group discussions with civil servants and in-depth interviews with managers. A qualitative approach can capture the context and interconnectedness between individuals and factors in a rich way and allows us to home in on perceptions and behaviors, however small, that may encourage or impede performance. While the method is, like all research methods, subject to challenges in both the data collection phase (for example, strategic responses on the part of interviewees, confirmation bias on the part of interviewers, as well as during translation from Romanian to English) and in the analysis phase (including inaccuracies with coding and interpretation), it still gives us a nuanced and in-depth picture of existing beliefs and motivations. Since focus groups in particular capture consensus views and shared experiences, we discussed these topics in groups with civil servants to capture this shared perspective, and one-on-one with managers to capture more individualistic perspectives. We employed additional tools such as a written listing exercise at the beginning to capture original, unprimed views on motivational tools, as well as a set of vignettes269 questions to test the importance of the different components of the appraisal system on performance. We interviewed managers and civil servants in a first wave of interviews, asking about their experience and perceptions of the performance appraisal system, interactions between manager and civil servant, as well as the motivational tools that are used in the public administration. The open-ended interview guide for data collection was developed in conjunction with the research team in Romania. The instrument was adapted slightly after a first round of interviews. There was always at least one moderator and a note taker present during the discussions (as permission to record interviews was not given). These notes were later translated into English for analysis. 269 Vignettes are short stories that present circumstances similar to what respondents might face, and asks them about the choice that the main character in the story would make. This response is taken to be indicative of the choice that the respondents would make themselves. Page 176 of 200 A second wave of interviews captured further details on the performance appraisal systems and processes, as well as the perspectives of HR departments within those organizations. All data were collected between March and May 2019. Selection of Organizations within the Romanian Civil Service Table 2: List of Organizations included in study Name of Organization Abbreviation National Agency of Civil Servants NACS Labor Inspection (central and territorial agencies) LI General Secretariat of the Government GSG Ministry of Regional Development and Public Administration MRDPA Competition Council CC Ministry of Public Finance MPF Ministry of European Funds MEF Discussions were conducted in seven different public organizations in Romania (NACS, LI, GSG, MRDPA, CC, MPF, and MEF). This subset of institutions was selected due to their different mandates such as policy development, coordination, and implementation. In a second wave, organizations were selected based on where different approaches to performance appraisal had been implemented. Other criteria used for the selection of organizations included those that had senior management who were open to innovations and interested in improving performance management, were large enough organizations, and willing to try out future pilot exercises. Civil servants were typically selected from different departments within the organizations. The sampling was different between the first wave (NACS, GSG, and central LI) that sampled managers and civil servants, and the second wave (MPF, MEF, CC, and MRDPA) that sampled managers and HR employees (heads or senior employees, where possible). Managers were typically “technical”, i.e. lower-level managers that supervised directly execution-level staff teams. Eleven manager interviews, four focus groups with civil servants, and four HR interviews were conducted in total for a total of 19 discussions (See Appendix Table 1 in for a breakdown). Each focus group had between 5-8 participants. The set of respondents was chosen by a point person in the organization and were typically from different departments within the organization. While our goal was to implement at least two sets of interviews with a particular group (say civil servants or managers) within an organization, this was not always possible. III. Data Processing A conceptual framework (see Figure 1 below and Appendix Table 5) was developed in conjunction with the World Bank team in Romania for coding of the qualitative data and interpretation. The team employed both deductive and inductive methods to ensure accuracy of data processing and results of the qualitative research. While the researchers analyzing the data started with a framework, they also iteratively adapted the framework to ensure that it reflected patterns that emerged from the data. In sum, two coders coded of the entirety of the text to check for consistency, accuracy of coding, and inter- Page 177 of 200 rater agreement. Discrepancies in coding were discussed and re-coded as needed. However, it is worth noting that interpretation of different statements is still subjective, based on coders’ and researchers’ interpretations; the entire coded structure is available for further analysis and insights. The graph shows the four main components of the conceptual framework of a performance management system that was agreed upon for coding the qualitative data. The subthemes under these four main themes are listed in the Appendix Table 5. The main focus of discussion in this report will be from the first three themes (Performance Appraisal tools and practices, Motivational tools and practices, and Perceptions). The fourth theme, Systems, is discussed in Appendix Table 3. Figure 1: List of the Main Themes “Themes” Performance Management Performance Motivational Perceptions/Mental Appraisal Systems Tools/Practices Models Tools/Practices IV. Findings from the Interviews To understand fully the perceptions and mental models uncovered in this analysis, it is crucial to understand the evaluation structure in place. In this section we discuss in detail the existing performance evaluation system, including objective setting and measurement, as well as perceptions related to the performance evaluation system. In each case, we provide some background based on the qualitative interviews, before discussing key behaviors and biases. Finally, we discuss the set of motivational tools and how these are used my managers to keep civil servants motivated. 1. Performance Appraisal Tools and Practices 1.1. Objective Setting: Background The performance evaluation period is typically completed during the month of January in the Civil Service. Each civil servant has a set of objective criteria, along with a number of behavioral criteria (known also as competencies or performance criteria) that are listed on an evaluation form. The civil servant receives Page 178 of 200 grades on each of the objectives and performance criteria. The objectives are typically adapted from the job description of the civil servant and converted to measurable indicators. Performance criteria are pre- defined and differ slightly for management and operational positions. Respondents mention that the law is not necessarily clear on how the individual objectives should be set. In practice, these tend to reflect ongoing activities rather than results. The associated indicators are expected to be customized each year after a discussion between the manager and civil servant during the appraisal period, as responsibilities or priorities may change for the civil servant. In a few organizations and departments this process is used as intended, and is improving, it is believed, performance management practices. For example, in one organization, indicators are considered to be clearly defined and are linked to processes and specific outputs. HR at the organization also helps managers with guidance and calculations of indicators. At another organization, there is mention of objectives being set through discussions taking into consideration the civil servant preferences along with institutional requirements. At a different organization, the HR department plays a monitoring role if there is insufficient customization or clear indicators (for example, if they are copy/pasted from the job description). However, in most organizations, objectives are not sufficiently customized and are not updated annually. An exception to this is when the job description actually changes dramatically for a civil servant, in which case the objectives have to be updated. Managers, in very few instances, mentioned that they edit these objectives annually. Few managers report discussing the objective indicators with civil servants. These are usually presented by the manager and accepted by civil servant without discussion. 1.2 Objective Setting: Key Behavior and Biases Our findings point to two potential areas for strengthening objectives: better customization and updating through feedback from civil servants and connecting to broader organizational goals. “The big problem in our public administration is that we don’t have a clear way of setting objectives.” “It doesn’t adapt to current objectives and not correlated with motivation.” Quoted execution-level civil servant There is no clear guidance, protocol, or law regarding how to identify objectives and define clear, measurable indicators for them. Sometimes, objectives are copy-pasted from job descriptions or department functions (which are not specific), and not converted to relevant indicators. Sometimes indicators are simplistic and fail to capture the complexity of tasks. As discussed, objectives are also not updated each year to reflect changes in organizational and individual responsibilities or update to better indicators that capture performance on a given task. We also identified a lack of connectivity between individual and organizational objectives, contributing to a lack of feeling like a part of an important whole. This idea of “relatedness” and organizational ident ity has been highlighted as an important source of motivation in the literature. While in some cases there is a link to department objectives, in most cases individual objectives are not linked to organizational/institutional objectives. It would be useful if these are mentioned so that civil servants are Page 179 of 200 reminded of broader objectives of department/organization and see how each individual’s work is related to those objectives. One contributor to this repetition of goals, and a lack of customization over time, is the tendency to stick to the “default.” A large literature in behavioral economics has highlighted the power of “default” options, which are always a simpler, easier behavior to engage in rather than active choice or effort. A key trend appears to be the following: once a set of objectives have been created, it appears that these are reused repeatedly (without alteration) year after year across all organizations. Since the objectives from the previous year are available for managers to re-use, they appear to be doing exactly that – relying on the default. This is an important missed opportunity, since studies have shown that completing more precise goal setting and planning can lead to greater effort towards and success in achieving such goals (Rogers et al, 2015). This allows for better stock-taking, as well as thinking about or being aware of barriers that may impede in completing some objectives, as well as makes it easier to track progress (through awareness as well as when better indicators are used). Similarly, linking to organizational objectives are a reminder of the public service linkage to specific tasks, and can add further meaning behind an individual’s responsibilities. For example, while an individuals’ tasks may be specific, it may in some cases be possible to embed under broader categories that reflect broader objectives. Indeed, the vignettes show that objective setting is the most important factor affecting performance according to both managers and civil servants (see Table 2). This indicates that both managers and civil servants may be amenable to changing this behavior if sufficiently nudged. Objectives are Not Discussed Active engagement in the feedback system is an additional opportunity for better employee motivation and performance, but this is missing in the existing appraisal process. Discussing objectives would allow both room for feedback on the civil servant’s preferences, but also better customization of objectives through linking to actual activities and possible use of better indicators. However, in most cases these are just presented to the civil servant, but not discussed. There is a discrepancy in the importance given to performance discussions (including objective setting) between managers and civil servants (as shown in the vignette analysis in Appendix Table 2). A key factor is a lack of salience or knowhow for managers in discussing the overall performance assessment (see discussion below). However, the overall lack of importance given to the performance evaluation by managers in general may be a reason that objectives are not set more carefully or discussed as well (see “B. Perceptions and Mental Models of Performance Management,” below). 1.3. Objective Measurement, Ratings, and Conversations: Background Tracking of tasks or performance in general is not done in any systematic way by most managers. A few managers maintain excel sheets on activity tracking and quality to track errors and other quality measures, adherence to law, timeliness, assistance needed on deliverables (or some subset thereof). Managers reported updating this document on a weekly or monthly basis. Managers who work on EU-funded Page 180 of 200 projects can utilize the central information management system for EU funds to track certain staff performance indicators, such as timeliness in fulfilling various assignments. However, these managers also mention they do not have the time to keep track of individual staff performance this way. Clarity around what constitutes a formal feedback interaction may also improve satisfaction. A vast majority of managers use regular conversations to both monitor completion of tasks, as well as informally get a sense of staff abilities and performance, across all of the organizations interviewed (although it is important to note that some respondents have different views of what constitutes a performance conversation – some may think of these as more formal, while others may view any discussion of tasks as an evaluation). A few respondents report holding weekly or monthly meetings or one-on-one discussion to track progress on tasks. Conversations in person are preferred over those via email, phone, or other channels of remote communication. Conversations are reported to happen quite often between manager and civil servant, weekly and in some cases daily; in fact, civil servants in some of the interviewed organizations think there is too much time spent on conversations (especially if they have been in their position for a long period). Some managers also have personal conversations with staff, as well as get togethers outside of work, and similar activities. It is important to note, however, that these are not formal feedback mechanisms. Managers at some organizations also get feedback from internal clients (i.e. other organizations) on both the quality of work as well behavioral traits of specific staff members; this happens somewhat organically and automatically (especially when there are complaints to be made). While this is a valuable source of external feedback, the majority of civil servants do not interact with internal clients or citizens, so this is not a uniform solution. For tracking current and past performance of staff, managers mention they would benefit from better IT systems which integrate HRM components. For example, managers can’t see the job description and the evaluation form at the same time, can’t see the performance history of civil servants, and sometimes need to request documentation from departments in which the employee had previous worked (if the employee had moved to his current position). Therefore, during the evaluation period, civil servants often help with aggregating the activities and tasks completed related to the indicators on their objectives (but not the performance criteria) during the appraisal period. This can happen through a self-appraisal form, shared Excel sheet, and sometimes even evaluating themselves during the final evaluation period. Civil servants also receive a final rating on the yearly performance appraisal. This rating is a non-weighted average of the overall rating awarded for objectives, on the one hand, and for the pre-defined qualitative performance criteria (competencies), on the other hand. Civil servants can object to the rating (they are required to sign off on the form) or challenge any rating in court. Instances of both cases have been reported in the interviews with staff and managers – albeit they happen rarely. Scores on the performance criteria are perceived to be the most subjective. This is where civil servants may receive more variation in scores, and it is also not clear how they are graded here. This is where the manager may use most discretion. Overall, most civil servants get a “Very Good” (a score of between 4.51 and 5) as reported across all organizations. An exception appears to be one organization where it is reported that 40% receive a rating Page 181 of 200 of “Good” (between 4 and 4.5). This partly may be because individual ratings have to be reconciled to department ratings, which vary according to departmental performance in fulfilling their assigned workplan. Moreover, in this instance, financial bonuses are tied to this variation in ratings. However, in a setting where most ratings are high, lower ratings (even if it is a “Good”) can be used later as retaliatory ammunition against the civil servant, if, for example, the department wants to let go of some staff. Ratings of “Unsatisfactory” and “Satisfactory” are extremely rare. An “Unsatisfactory” rating indicates the civil servant should be let go immediately, but these ratings can be, and are, challenged in court. Extremely poor work ethic or effort (such as consistently showing up late, refusing to complete a task, etc.) that may result in lower ratings, is usually dealt with by a disciplinary committee, whose role is to adjudicate. Overall, managers may have trouble justifying lower ratings since they need to provide evidence (usually in the form of written documentation) of poor performance (for example, if challenged in court), and as discussed above, may not systematically track performance. Managers are also expected to have a conversation with the employee explaining the ratings, to provide feedback on performance, as well to provide training or career development advice during the appraisal period by law. Such conversations may happen in some organizations, but implementation varies in practice, depending on the evaluating manager. It is very likely that this does not take place in all organizations. Many civil servants craved more meaningful interaction that could improve their performance. When these conversations do happen, it was reported that ratings on each individual objective are discussed, especially lower scores. However, civil servants would highly value more of these conversations. In particular, they are keen to get better justification and transparency in ratings and other decisions and have a platform to give feedback to managers. Staff reported that they also appreciate when they are able to voice honest opinions. Civil servants would also highly value advice on specific behaviors to improve or change, opportunities for training and professional development, and more information on broader organizational developments (for example, developments at other departments within the organization). 1.4. Objective Measurement, Ratings, and Conversations: Key Behaviors and Biases Most Civil Servants Get a “Very Good” Rating “In terms of grades, very few people get ‘Good’ and even fewer get ‘Satisfactory’ [second lowest]. Employees are differentiated by decimals within the ‘very good’ grade, so if you’re underperforming you get 4.51 [still a rating of “Very Good”], if you’re a top performer you get 4.9 [also a rating of “Very Good”].” Quoted execution-level civil servant The ubiquity of extremely high grades, caused by a combination of anti-litigiousness and social norms, has diluted the meaningfulness of the evaluation process, and risks demotivating the best performers. This behavior is partly justified by managers by saying it is a motivational tool for low performers, since there is a lack of personnel in some organizations, or in the interest of “fairness.” However, since most civil servants get a high rating, it becomes very difficult for managers to give lower grades to civil servants, therefore putting individuals – and the entire system – at a disadvantage. However, this response is also Page 182 of 200 a convenient strategy for managers, as they can avoid the trouble from civil servant complaints and court cases. Furthermore, they differentiate by rating on a distribution between 4 or 4.51 and 5, effectively shrinking the distribution to this range. This lack of a ratings distribution therefore reduces its effectiveness on overall performance in the public administration. While this system may work for most civil servants, it nullifies an important tool used to motivate better performers. Furthermore, civil servants at the bottom of the distribution are not necessarily motivated to perform better since they know they will still receive a rating of “very good” or “good.” Most managers in their rating behavior are possibly exhibiting loss aversion and negativity bias by avoiding any confrontation or litigation as a result of poorer ratings, while ignoring the gains from encouraging better performers and performance. They may also be exhibiting a form of status quo bias by complying with the expected behavior on ratings and not exerting any effort to change this - even though they may be aware of negative implications on performance. A further explanation is that managers are conforming to established social norms within the civil service, since this is how most other managers rate civil servants. Appraisal Conversations Do Not Happen or are Not Utilized Effectively “For me it is not difficult to evaluate my employees, but it is difficult to explain this evaluation.” “I’m sure that many of us reflect on our professional evolution and on the objectives we set for ourselves, but there’s no discussion to talk about these, I end up discussing this with myself.” Quoted management-level civil servants For some respondents, moral licensing may enable some of the lackadaisical approach to evaluation. This leads to a missed opportunity for building transparency and trust. Moral licensing is a behavioral phenomenon that may occur when individuals feel that they have gone out of their way in engaging in a particular behavior (i.e. conversations throughout the year) and feel justified to therefore cut back in a related behavior (i.e. the year-end appraisal conversation). Moral licensing, thus, could be partly responsible for the missing appraisal conversations. Relatedly, it appears that managers view this year-end conversation as redundant, due to the same reasons. However, while some part of the conversation may have been discussed before, there is also demand and scope for different discussions on topics that are useful to civil servants as mentioned above. This is another missed opportunity to build trust between manager and civil servant through mechanisms of transparency and feedback (both from manager to civil servant, but also feedback to the manager). 2. Motivation Tools and Practices This section focuses on the tools that managers may use to motivate civil servants, given the constraints of the bureaucracy (see Appendix Table 4 below for a discussion on performance bonuses and other extrinsic motivation tools and impact on civil servant motivation and performance). It discusses the Page 183 of 200 explicit tools that managers mention using, as well as perceptions of “good” managers drawn from the interviews. It shows that in spite of the similar ratings in the performance evaluation system, managers can use different tools to reward better performers (when such tools are available), and also help poorer performers, indicating that performance may be driven primarily by management practices and motivational tools outside of the formal performance evaluation system. Effective managers can approach employee improvement in a number of ways, including by providing creative solutions to staff for their professional and personal development (or funded ones, where possible) and encouraging intrinsic motivation on the part of employees through informal feedback mechanisms and a satisfying work environment. Appendix Table 3 shows the distribution of topics mentioned on intrinsic motivation. An overwhelming theme of the respondents is that they benefit from very few opportunities for development. Training or learning opportunities were most often mentioned by civil servants as activities that could improve motivation, performance, and which could help with career development. Such activities were typically considered costly and rarely financed, given constant budgetary constraints. Additionally, organizations which manage and implement EU funded projects have the option of exposing their staff to international experience, a tool that can and is used by managers to improve staff motivation. Simpler, shorter and more informal learning and development opportunities could be prioritized, since course-based training options are typically limited due to budget constraints. For example, there is a demand from civil servants for practical training that would help in day to day work (instead of teaching the applicable legal framework), as well as providing tips and guidance on personal development. Civil servants also value the connections and networking opportunities with civil servants from other departments or organizations that such trainings can provide. In addition, they would like to engage with professional trainers from outside of the public administration when feasible to gain exposure to novel ideas and practices. There was also discussion of online training courses for IT staff, since these are more easily available, of good quality, and affordable, and may be worthwhile exploring for other staff on topics of general interest. In summary, training exercises based on the above findings can be a strong motivational tool for civil servants. Respondents mentioned several aspects about their working environment that are important motivating factors, either directly or indirectly. The second most highlighted area during interviews refers to the “work environment”. One of the interviewees mentioned that in her organization, an internal study found that the work environment was one of the most important variables for staff motivation (along with the type of work). This entails a number of relationships and factors, including the relationship between manager and civil servant as well as others civil servants in the team. A “friendly” environment, where you can approach the manager (to discuss work as well as personal issues) and interact with other civil servants (including at team meetings) is motivational. This is improved further if there is socialization outside of work. While institutional budgets do not allow for financing team-building exercises and are therefore hard to systematize, other informal opportunities for networking may meet these demands. The characteristics a “friendly” work environment described by civil servants during interviews related closely to the beliefs and conditions for “psychological safety”, i.e. where team members are comfortable being themselves, displaying higher levels of interpersonal trust, and unafraid of punishments. Another frequently mentioned motivational tool is recognition and appreciation from managers. Given prior evidence found by World Bank-led projects in using social recognition to improve performance, this is worth exploring. In most cases, praise and recognition from a manager of a civil servant’s work were Page 184 of 200 reported as sources of motivation for staff. Managers which were considered by staff as motivational where those who publicly recognized the work of their staff at meetings. This practice was highly appreciated by civil servants – i.e. both manager and peer recognition appear to be relevant. These are all small changes in the behavior of managers that can have strong motivational impacts on civil servants. For instance, one of the interviewees with prior work experience at the European Commission (EC) reported that in the EC, commissioners organize meetings with their staff during which they recognize top performers across departments publicly with certificates. This also indicates that public recognition from senior officials may also be a useful tool that is or has been implemented (along with peer and supervisor recognition as described above). Relatedly, respondents note that characteristics of good managers include listening to employees, being open to discussion (even if some of these discussions include “bad” ideas) and being open to receiving feedback from employees. As discussed before, an important role of managers is to explain decisions in a transparent way. Perceived fairness in task allocation is important. All of these are important traits to build trust between manager and civil servants to improve staff morale. On the other end, managers who are seen as authoritarian and who do not listen to employees are not appreciated. The range of actual behaviors of managers in this respect appear to vary quite a bit both within and across organizations. Flexibility in work hours is another important motivation tool mentioned by respondents. For instance, where possible, they would like to have the flexibility of arriving earlier at work, but being able to leave work earlier as well, or to work from home due to personal reasons. The current legal framework does not allow for flexible working hours or working remotely, but the Labor Code allows for the compensation of overtime through proportional free time during the work week, subject to the line manager’s approval. However, managers seem to underutilize this important motivation tool. Finally, because opportunities for formal development are so limited, effective managers can focus on creating “on-the-job” training and creative approaches to existing assignments. A crucial finding from the interviews is that managers are not doing enough to keep their best performers motivated. One way of motivating top performers is to give them interesting assignments to work on or assigning them to tasks with increased visibility, where this is an option. On the other hand, managers giving their top performing staff additional work to compensate for the underperformance of other colleagues, without adequate rewards, was highlighted as a source of demotivation and frustration. As one of the interviewees put it, “many of our colleagues can do much more that what they’re doing, but without any additional benefit they prefer not to get more involved in work. If you show initiative, you’ll just end up with more work on your plate with nothing in return.” 3. Perceptions and Mental Models In this section we discuss broader perceptions and mental models of performance management in the public administration, and how these may affect performance. Individual behavior is influenced by deeply internalized beliefs about how the world works, also known as mental models. When we think, we utilize concepts that reflect the shared beliefs and understandings of others in our community, rather than inventing these concepts. When these concepts are reflective of an outlook of the world that is shared by everyone around us, we tend to adhere to them without questioning. This is how mental models come to shape how we interpret the world around us and enable or constrain specific thoughts and actions (World Development Report, 2015). Page 185 of 200 “…. managers simply see the performance appraisal as just another paper to fill in.” “Currently, most people see it as a bureaucratic nuisance.” Quoted management-level civil servants Managers do not perceive the performance evaluation system as a useful tool to improve performance. Managers fail to see latent demand from civil servants on components such as objective setting and more in-depth discussions during the appraisal conversation period. They also avoid any real consequences from this exercise to the highest extent possible, for example, by awarding favorable ratings to poor performers to avoid difficult conversations with them. HR departments also recognize that while the system could have the potential to effectively incentivize performance, the implementation is not working as expected to motivate staff and to improve performance. Some managers in fact end up using other tools instead to motivate their staff, as discussed in the previous section. “An employee doing the tasks in his job description in a correct and timely manner, within the legal framework” Quoted management-level civil servant Perceptions of “performance” in the bureaucracy are defined in terms of task completion and legal compliance. Managers perceive good performance as completing tasks by deadlines, while following the law as closely as possible, and making the fewest possible errors. As one manager put it, “we are compliance specialists,” who learn how to follow procedure. A few managers admit behavioral attitudes, for example, innovation towards task completion is missing from evaluations. Even fewer mention measuring broader impacts of completed work such as contribution to organizational goals or impacts on citizens. Given these perceptions, managers were reported to prefer having frequent conversations and meetings with their staff to monitor their progress in completing assigned tasks and allocating new workloads. While frequent conversations which focus on improving staff development and their performance are desirable, the current approach, focused on tasks, rather than employees, may reduce creativity and may instill high levels of risk aversion, all the while reducing organizational flexibility and innovation. This view of performance and performance management also turns the yearly evaluation into a superfluous process from the view point of managers. “I also think that managers from the public administration should be more flexible and be less self- important.” “We don’t have leaders, we have bosses” Quoted execution-level civil servants Perceptions of managers regarding the hierarchy of social roles may not be optimal for performance. Similar to the perceptions of performance above, managers may view their relationship with civil servants Page 186 of 200 in a hierarchical framework, as opposed to espousing newer management practices. In the interviews conducted, communication, listening, and encouragement were mentioned as key tenets of a successful manager-employee relationship - implying that some managers and civil servants subscribe to and value such practices. However, concerns raised by other respondents during the interviews suggest that some managers may be conforming to traditional rigid hierarchies and maintaining power distances and dynamics with civil servants. Given the lack of extrinsic motivational tools (including monetary and training opportunities), such a mental model espoused by a manager may simultaneously also remove the tools to intrinsically motivate civil servants. For example, such a manager is unlikely to maintain an open and friendly work environment or recognize staff accomplishments often. V. Potential Interventions Using Behavioral Insights The results of our research indicate that there is clear consensus on what makes a “good” manager: one who can motivate staff and encourage development despite – not with the assistance of – the current performance management system. Insights from behavioral science provide a set of actionable tools that managers can employ to improve motivation and engagement of employees. Based on the above findings, there are small, but key behavior changes that managers can make both during the appraisal, as well as other changes during the remainder of the year. While our goal is to change the mental models of managers towards utilizing more effective management practices, this may be hard to do very directly - instead, we recommend a series of smaller steps and interventions, that may eventually add up towards changing the perceptions and behaviors of managers and overall organizational culture. While we suggest a number of possible interventions, these are not necessarily independent or separate, but in fact can be combined to create more comprehensive intervention designs. • Making the performance appraisal a more useful tool in practice. The discussion on behaviors around use of the performance appraisal system suggests that key behaviors to change include customizing objectives further (both managers and civil servants believe this would improve performance), and managers discussing both objectives and evaluation during the appraisal period (this is mostly desired by civil servants). There are several issues with perceptions of managers that may inhibit better usage as discussed in the perceptions and mental models section. For example, some managers think of it as bureaucratic procedure and may not realize how it can be used as a tool to motivate performance even within the current performance appraisal framework. There appears to be a lack of salience on the usefulness, as well as the demand for these voiced by civil servants. Timely reminders during the appraisal process containing relevant information can be sent to managers to encourage the completion of such activities. Supplemental information will also need to be provided on how to make these activities and conversations more useful to civil servants, and different from the conversations that managers tend to have during the year. For example, civil servants were keen on hearing from managers on increased transparency on decisions, feedback on behaviors and attitudes that they Page 187 of 200 can improve or modify, training and learning opportunities, as well as broader developments in the organization. • Reconsider the impact of ratings. The distribution of ratings is a more complex behavior to change, as discussed above. It may be somewhat easier to change the distribution to between “good” and “very good”, but even such small changes come with considerable risks of discrimination for civil servants who receive a rating of “good”. One way to justify this is structurally as implemented in one organization, where average employee ratings mirror department ratings, and which is varied through an assessment of departments (and excluding the monetary component). However, such an approach requires deep-seated reform in organizational performance management and strategic planning and is unlikely to be followed unless mandated by law and internalized through strong and consistent support from the top leadership. There can be potential “costs” for a manager added if there is additional justification required for a “very good” rating. However, increased differentiation in grades will not work if in practice civil servants can challenge every rating that is not “very good”. We suspect the system is most demotivating for top performers. A way to motivate better performers is to use a “complexity of tasks completed” indicator or mention in justifying the performance rating, which does not have to factor into the final score but is added only for motivational purposes (and for recognition if there is scope, see below). • Informally motivate employees outside of the formal performance management framework. A number of motivational practices (or management practices) appear to be key tools used by “good” managers to keep civil servant morale high, especially given budgetary constraints and limited opportunities for staff development. These behaviors exhibited by some managers appear to be simple, but highly effective in motivating staff. A recent study shows that small changes in behavioral approaches to the performance appraisal can be effective (Budworth et al, 2014). A simple intervention could provide a “cheat sheet” to managers with a list of tools that managers typically use. These could provide simple tips on maintaining friendly work environments, recognition and appreciation when employees complete tasks, being open to discussing ideas and receiving feedback, and encouraging work place flexibility. Other tips may include discussing relevant developments in the department or organization (the key concept of “relatedness” to promote a sense of belonging and identity amongst civil servants towards the organization), as well as connecting civil servant tasks to its intended impact on citizens which can invoke public service motivation. Additional tools and tips to help top performers stay motivated are particularly relevant (such as assigning them different and interesting or tasks of high salience to either citizens or the institution’s leadership). • Engage in more intensive management training. A more intensive version of the above intervention is management coaching. However, this would need to be customized based on the findings from this study and the broader performance management analysis. For example, practical exercises on communication and objective settings may be useful. For example, role playing could be simulated to bring up situations and topics that managers sometimes avoid such Page 188 of 200 as discussing the evaluation. Another practical exercise would be to have managers actually update objectives for one or more of their civil servants and discuss with others, getting feedback on indicators, etc. – and sharing other examples of objectives among managers. The interviews also suggested that more entrenched social roles around hierarchy espoused by managers might be preventing them from engaging further with civil servants. Therefore, the broader role and approaches towards management practices of a manager can be discussed. The findings from the interviews suggested how managers should facilitate a work environment that is open to discussion and feedback, and that is supportive in encouraging civils servants. • Use social recognition and feedback from civil servants strategically to guide the development of good managerial practices. Staff could be provided with a platform to evaluate their manager’s approach to performance management. Topics could include the perceived quality and usefulness of performance discussions, including objective setting and feedback during appraisals. Managers who perform these tasks well can subsequently be publicly recognized by department heads or by the institutional leadership as a role-model to be emulated by peers. Furthermore, as the diagnostic suggests, improving the motivation of better performing civil servants warrants explicit attention. This could be supported through townhall events, where top performers from across departments are publicly recognized by the institution’s leadership and awarded certificates of merit. Such an approach would also help to better define standards of high performance, specific to each organization, for different fields of work. VI. References Andreoni, J., M. Callen, Y. Khan, K. Jaffar, and C. Sprenger (2016). Using preference estimates to customize incentives: An application to polio vaccination drives in Pakistan. NBER Working Paper No. 22019. Banuri, S., S. Dercon, and V. Gauri (2017). Biased policy professionals. World Bank Policy Research Working Paper 8113. Belle, N., Cantarelli, P., & Belardinelli, P. (2017). Cognitive Biases in Performance Appraisal: Experimental Evidence on Anchoring and Halo Effects With Public Sector Managers and Employees. Review of Public Personnel Administration, 37(3), 275–294. https://doi.org/10.1177/0734371X17704891 Belle, N., Cantarelli, P., & Belardinelli, P. (2018). Prospect Theory goes Public. : Experimental Evidence on Cognitive Biases in Public Policy and Management Decisions. Public Administration Review. Volume 78. Issue 6. Pages 828-840. https://doi.org/10.1111/puar.12960 Budworth, Marie-Hélène & Latham, Gary & Manroop, Laxmikant. (2014). Looking Forward to Performance Improvement: A Field Test of the Feedforward Interview for Performance Management. Human Resource Management. 54. 10.1002/hrm.21618. Page 189 of 200 Cantarelli, Paola; Belle, Nicola; Belardinelli, Paolo (2018). Behavioral Public HR: Experimental Evidence on Cognitive Biases and Debiasing Interventions. 26 REVIEW OF PUBLIC PERSONNEL ADMINISTRATION. 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Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-291, March. Gary P. Latham , Laura Borgogni & Laura Petitta (2008) Goal Setting and Performance Management in the Public Sector, International Public Management Journal, 11:4, 385-403, DOI: 10.1080/10967490802491087 OECD (2017), Trust and Public Policy: How Better Governance Can Help Rebuild Public Trust, OECD, Public Governance Reviews, OECD Publishing, Paris Rogers, T., K. L. Milkman, L. K. John, and M. I. Norton (2015). Beyond good intentions: Prompting people to make plans improves follow-through on important tasks. Behavioral Science & Policy 1 (2), 33– 41Thornton, P.H. and W. Ocasio 1999. ‘Institutional Logics and the Historical Contingency of Power in Page 190 of 200 Organizations: Executive Succession in the Higher Education Publishing Industry, 1958–1990’, American Journal of Sociology, 105, 3, 801–43. Weaver , R. Kent . 1986 . The Politics of Blame Avoidance . Journal of Public Policy 6 ( 4 ): 371 – 98 . World Bank Group. (2015) World Development Report 2015: Mind, Society, and Behavior. Wright, Bradley E., & Davis, Brian S. (2003). Job Satisfaction In The Public Sector: The Role of the Work Environment, The American Review of Public Administration, Vol. 33, No. 1, pp.70-90. VII. Appendix Table 1: Survey Sample. Organization Role # of Discussions Discussion Type National Agency for Manager 4 In depth Civil servants interview National Agency for Execution-level staff 2 Focus group Civil servants General Secretariat of Manager 2 In depth the Government interview General Secretariat of Execution-level staff 1 Focus group the Government Labor Inspection Manager 2 In depth (central) interview Labor Inspection Execution-level staff 1 Focus group (central) Labor Inspection Managers 6 In depth (territorial agencies) interview Ministry of European Manager 1 In depth Funds interview Ministry of European HR department 1 In depth Funds interview Ministry of Regional Manager 1 In depth Development and interview Public Administration Ministry of Regional HR department 1 In depth Development and interview Public Administration Competition Council Manager 1 In depth interview Page 191 of 200 Competition Council HR department 1 In depth interview Ministry of Public HR department 1 In depth Finance interview Figure 2: Distribution of Coding by Organization and Roles in the Interviews Note: The organization name refers to the organization in Appendix Table 1 above, and “manager” refers to manage r interviews while “civil” refers to civil servant interviews. Page 192 of 200 Figure 3: Distribution of Intrinsic Motivational Tools Mentioned in Interviews Note: MT_IS_TRAINING is discussion on training, MT_IS_WORKENV refers to an open and supportive work environment, MT_IS_REC&APP refers to recognition and appreciation, MT_IS_FLEX refers to flexibility in work hours, MT_IS_FEEDBACK is feedback, MR_IS_ASSIGNMENTS refers to interesting assignments, MT_IS_PUBLIC refers to public service Page 193 of 200 Table 2: Regression Results from Vignette Analysis (Main effects) (1) (2) (3) Better Better Better Outcome Performance Performance Performance Sample All Civil Servants Managers Work plan 0.381*** 0.413*** 0.286 (0.0782) (0.0884) (0.182) Feedback during the appraisal 0.218*** 0.237*** 0.143 (0.0784) (0.0888) (0.182) Feedback during the year 0.260*** 0.220** 0.385** (0.0788) (0.0892) (0.181) Constant -0.0201 -0.0368 0.0220 (0.0738) (0.0824) (0.178) Observations 119 93 26 R-squared 0.277 0.293 0.262 Standard errors in parentheses *** p<0.01, ** p<0.05, * p<0.1 Page 194 of 200 Table 3: Summary of Highlights Under the Performance Management System Theme from the Interviews Performance Management Systems One of the common themes across interviews was the issue of a lack of a centralized IT system to set, monitor, and evaluate individual objectives and job performance. As staff performance was recorded on paper, respondents noted that it was hard to track metrics over time. Many noted that a system in which they could upload appraisal documents could help with continuity and employee growth – instead they sometimes keep scanned copies themselves or have to reach out to HR for a copy. There is no easy way to see information from different sources side by side, for example, the job description and evaluation form. Several innovations and changes to the regular evaluation process have been piloted in different organizations. For example, the CC introduced an IT system for self-evaluation which has been helpful in increasing interaction between manager and civil servants and was considered to be useful. A self-evaluation process was mentioned by other managers as well as a useful tool, primarily because there is no systematic way for managers to track performance throughout the year, and they are wary of both spending time doing this during the evaluation period and possibly of being inaccurate in their assessment. A self-evaluation also encourages discussions especially when there are discrepancies in perceptions of performance between manager and civil servant. The CC also implemented a 360-degree evaluation where feedback providers selected “behaviors” from a list (which get graded automatically). This resulted in a better “gaussian” distribution. However, there is mixed opinion about whether this works well. Many in other organizations thought this would be a good idea, including getting feedback from clients (when applicable), and could lead to fairer assessments. Managers thought this would give them insights on behavior with other colleagues and clients. However, some though it might fail given the lack of trust inside institutions, or when there is a poor relationship between manager and civils servants or in the overall team. Feedback on the managers could provide more information on how they are perceived. However, as mentioned, it will be necessary to ensure anonymity and convince staff that this is respected, if candid opinions are to be obtained (in other words, if social desirability bias is to be avoided). Furthermore, there might be challenges in implementing such an approach in a very hierarchical culture – which the interviews suggest is common in many organizations in the Romanian public administration. In terms of other processes, it was mentioned that it will be useful to have a predefined set of performance indicators linked to different objectives, possibly in a handbook. It was also noted that well-designed onboarding processes that expose new employees to the range of departments and jobs therein had been both effective and essential to new staff, as it can be hard to understand the complexities and realities of the organization before joining. This initiative had already been piloted by the CC. By orienting new employees, as well as providing a bit of flexibility for new staff in considering where they go within the organization, the onboarding in the CC had provided essential upfront training – workshops with senior level practitioners were cited as particularly valuable. Page 195 of 200 Opinions on “forced distributions” are mixed, and several respondents said they either oppose it, didn’t think it was a good idea, or it has “pros and cons”. However, respondents admitted they would have to adhere to it nonetheless especially if it was enforced universally, and that it would help to distinguish good performers. HR plays an important role in several organizations during the evaluation period. These include reminding managers of performance evaluation processes and deadlines, being open to questions from staff and providing guidance on how to set objectives and performance indicators, along with “practitioner guidebooks” in some cases. In several of the organizations interviewed, they check if the appraisal interview was conducted. HR will aggregate ratings, but they generally do not question any rating. HR also aggregates the training needs and proposals, but trainings are still hampered by budget constraints. At the MFP, HR developed an online e- learning course on how to conduct and engage in the performance appraisal process, with case studies and common mistakes, and assisted managers in applying the lessons learnt. HR also handles complaints. They collect testimonies and other relevant documents from everyone involved and informally provide guidance to the leader of the institution on what decision to make. Table 4: Discussion on Extrinsic Motivation Tools from the Interviews Extrinsic Motivation Discussions revealed that pay is an important consideration for a lot of civil servants. A particular benefit of higher pay is to attract talented young people, according to respondents, and be able to compete with the private sector. While there have been salary hikes for public sector employees270, these have not happened uniformly across the public sector (due to various constraints). There are cases reported of discrepancies within organizations and departments due to legal action taken by employees on a case-by-case basis. Another source of discrepancy is from departments and individuals working on EU funded projects who are eligible for a top-up to their base salary. These top- ups are awarded for the duration of their work with EU funds. However, after the adoption of L153/2017, in some cases, organizations and departments working on EU funded projects (and eligible for salary top-ups or bonuses) have reached salaries that are similar to other organizations that do not have similar responsibilities. All of these discrepancies in salaries lead to increased perceptions of unfairness across the public sector (and have possibly impacted individual performance in some cases). In discussions on performance bonuses, staff reported during interviews that these could improve performance and could be an effective incentive to retain top performers. However, most also recognized the budgetary constraints in implementing this and the difficulties in 270 Based on Law 153/2017 Page 196 of 200 allocating bonuses in a fair and transparent manner. Staff who had been in the public administration prior to 2010271 recalled that bonuses at that time were usually awarded in a discretionary and unequitable manner by managers, with little consideration to the actual performance of staff. However, the CC is one organization where performance-based bonuses were in use, given its special status272. In general, interviewed CC staff acknowledged that this has been working well, with good performers receiving the bonus. The amount allocated to each department is based on its performance in meeting departmental objectives and on its number of staff and is considered fair. A main advantage cited in the discussions is better staff retention, in part by being able to compete better with private sector wages. An added advantage is that the performance appraisal is probably better implemented (or at least more salient), since it is directly linked to bonuses. In summary, while interviews with staff indicate such a scheme would be useful in incentivizing performance, simultaneous steps would be required to increase transparency and reduce discretion. A further consideration is that it cannot necessarily be contingent only on a grade of “very good” since most civil servants receive this grade. An interesting aspect highlighted during interviews was that staff who work on EU funds consider that the top-up they receive is an integral part of their base salary, rather than an addition which could vary based on their performance, as intended. This occurs most likely because, in practice, nearly all staff working on EU funds receive the highest performance rating and, thus, consistently receive the maximum top-up. Consequently, staff working on EU funds have internalized the view that part of their salary would be “taken away” if they receive lower performance ratings (which is an example of “loss aversion”), rather than perceiving the top-up as per its intended use, as a temporary bonus to reward performance. Provided that a credible threat could be enforced whereby managers would be willing and able to accurately appraise staff performance and vary top-ups accordingly, the current mindset over bonuses related to EU funds could work to spur performance, as behavioral insights suggest that loss aversion is a stronger incentive than equivalent potential gains. Regarding promotions, most respondents felt that they were routine and automatic for most civil servants – that they are “simple formalities because everybody passes the promotion competitions,” as an individual reported. Others reported that performance ratings which make civil servants eligible for promotions are not awarded based on actual staff performance. To advance in their career, staff need to ultimately be recruited into a manager position, which several respondents mentioned was nearly “impossible” due to infrequent openings (and budgetary constraints). Furthermore, an added de-motivating factor for civil servants who are at the highest, non-managerial, grade is that the performance appraisal becomes even less salient at this stage, as high and average grades bring no additional benefits (as even pay increases are not linked with seniority and/or performance in a particular grade). 271 Since 2010, a moratorium has been in force on awarding bonuses, with the exception being the performance- based top-ups allocated for staff working with EU funds 272 Its use of performance bonuses has been, nonetheless, challenged by the Romanian Court of Accounts Page 197 of 200 Table 5: Conceptual Framework Highlighting the Four Major Themes Explored in the Interviews, the Sub-Themes and Descriptions PERFORMANCE MANAGEMENT THEME SUBTHEME 1 SUBTHEME 2 DESCRIPTION PERFORMANCE EVALUATION PERFORMANCE OBJECTIVE LINK TO ORG. EVALUATION SETTING OBJECTIVES Links to Organizational Objectives PERFORMANCE OBJECTIVE LINK TO JOB Links to job description and personal EVALUATION SETTING DESCRIPTION objectives PERFORMANCE OBJECTIVE Discussion of the indicators used to EVALUATION SETTING INDICATORS measure objectives PERFORMANCE OBJECTIVES Ratings given during the yearly appraisal EVALUATION MEASURES RATINGS process PERFORMANCE OBJECTIVES Tracking of performance throughout the EVALUATION MEASURES TRACKING year PERFORMANCE OBJECTIVES EVALUATION MEASURES 360 DEGREE Thoughts on 360 degree evaluations PERFORMANCE Conversation during the yearly appraisal EVALUATION CONVERSATION YEARLY process PERFORMANCE EVALUATION CONVERSATION MIDYEAR Thoughts on mid year appraisals PERFORMANCE EVALUATION CONVERSATION THROUGHOUT Conversations throughout the year Thoughts of content of the conversations, regardless of when the PERFORMANCE conversation find place. We also add self- EVALUATION CONVERSATION CONTENT evaluations under content The soft skills and behaviors staff need. PERFORMANCE PERFORMANCE Used as the qualitative measure for EVALUATION CRITERIA appraisal. Also called competencies PERFORMANCE Thoughts on examinations during the EVALUATION EXAMINATION yearly appraisal PERFORMANCE Usage of the workload planning EVALUATION WORKLOAD document Suggestions on performance evaluations PERFORMANCE (to distinguish suggestions from what is EVALUATION SUGGESTION practiced) PERFORMANCE Other thoughts on the performance EVALUATION OTHER evaluation MOTIVATIONAL TOOLS Thoughts on financial incentives, performance-based bonuses, and salaries MOTIVATIONAL TOOLS EXTRINSIC FINANCIAL for motivation MOTIVATIONAL TOOLS EXTRINSIC PROMOTION Thoughts on promotions MOTIVATIONAL TOOLS INTRINSIC FLEXIBILITY Thoughts on flexibility incentives Thoughts on how assignments, complexity in tasks, and work type MOTIVATIONAL TOOLS INTRINSIC ASSIGNMENTS variety influence motivation RECOGNITION AND Thoughts on appreciation and MOTIVATIONAL TOOLS INTRINSIC APPRECIATION recognition Page 198 of 200 Thoughts on trainings, professional team building, and study visits influence MOTIVATIONAL TOOLS INTRINSIC TRAINING motivation Thoughts on general feedback and the feedback from the rating system MOTIVATIONAL TOOLS INTRINSIC FEEDBACK influences motivation Thoughts on how the office environment and friendly social interactions influence WORK motivation. Social events/interactions MOTIVATIONAL TOOLS INTRINSIC ENVIRONMENT outside of work are excluded Thoughts on how working in the public sector affects motivation through the nature of the work and how it MOTIVATIONAL TOOLS INTRINSIC PUBLIC SECTOR contributes to the public good TYPE OF POOR Thoughts on incentives for poor MOTIVATIONAL TOOLS PERFORMER PERFORMANCE performers TYPE OF GOOD Thoughts on incentives for good MOTIVATIONAL TOOLS PERFORMER PERFORMANCE performers MOTIVATIONAL TOOLS OTHER Other incentives to improve motivation Suggestions for motivational tools (to MOTIVATIONAL TOOLS SUGGESTIONS distinguish suggestions from practice) PERCEPTIONS PERCEPTIONS PERFORMANCE Perceptions of performance PURPOSE OF Perceptions of the purpose of the annual PERCEPTIONS ASSESSMENT appraisal Qualities and behaviors of good PERCEPTIONS GOOD MANAGER managers OTHER/PM SYSTEMS Feedback and discussion on the OTHER/PM SYSTEMS FORM performance appraisal form Discussion on the yearly appraisal OTHER/PM SYSTEMS PROCESS process FORCED OTHER/PM SYSTEMS DISTRIBUTION Discussion on forced distributions Role that HR plays for performance ROLE OF HR management and for recruitment of OTHER/PM SYSTEMS DEPARTMENTS appropriate staff OTHER/PM SYSTEMS HR COMPLAINTS Complaints received by HR OTHER/PM SYSTEMS SUGGESTIONS Suggestions on PM Systems Other thoughts on performance management systems, other than those OTHER/PM SYSTEMS OTHER directly related to performance appraisal Page 199 of 200 Competence makes a difference! Project selected under the Administrative Capacity Operational Program, co-financed by European Union from the European Social Fund Page 200 of 200