Rescinded - Directives for the Performance Management Program (PMP) for the Executive Group - Effective April 1, 2004

Note: Instructions for the administration of Performance Awards are found in the Salary Administration Policy for the Executive Group.

In its 1998 report the Advisory Committee on Senior Level Retention and Compensation recommended the implementation of a Performance Management Program for the Executive (EX) Group both as a management tool to support the achievement of business results and as the tool to be used in determining changes in the compensation of executives.

Performance management is the process of planning, managing, improving, developing, supporting, assessing and rewarding performance; it is linked to other key Human Resources initiatives that take place in departments and agencies, such as: human resources planning (including succession planning), career management and training and development.

The PMP is:

• A key component of an effective human resource strategy for the attraction, retention and compensation of senior managers in the federal Public Service;
• A key management tool to:
  • Link individual accountability at all levels to the strategies and business priorities of the government;
  • Communicate expectations and priorities related to business planning and the application of leadership competencies;
  • Ensure that executives follow through on commitments and accountabilities;
  • Support organizational results-based planning and performance measurement, reporting and accountability;
  • Ensure that executives understand corporate priorities and how they are expected to contribute to the achievement of these priorities;
  • Support individual development in Public Service leadership competencies; and,
  • Support horizontal initiatives within departments as well as between departments and agencies, jurisdictions, and levels of government or external stakeholders through recognition of such teamwork in the performance agreements of individual executives.
• A critical component of total compensation for the EX Group, recognizing that compensation given to members of the Executive Group should reflect their performance.

The effective date of these Directives is April 1, 2004.

These Directives apply to Public Service organizations employing members of the occupational groups and levels identified in the Salary Administration Policy for Executives.

The objectives of the Performance Management Program (PMP) for the Executive Group are to:

• Support a management regime that is based on values and ethics and clearly defined leadership competencies;
• Encourage excellence in performance by recognizing and rewarding the achievement of results that are linked to business plans and/or corporate priorities and the demonstration of Public Service leadership competencies, values and ethics; and,
• Provide a framework within which a consistent and equitable approach to managing performance can be applied.

The principles of respect and fairness govern the exercise of authority in managing the performance of executives.  These principles mean that it is recognized and respected that employees are entitled to:

• A clear idea of what is expected of them;
• Regular feedback concerning their performance; and,
• Learning and development opportunities to help them improve their performance.

The PMP for Executives is a tool for a consistent and equitable approach to performance management and assessment and is designed to support objective evaluation and differentiation of levels of performance across the EX Group.

The Performance Management Program requires that every person in the organization who is being paid as an EX have a written performance agreement.

The performance agreement:

• Demonstrates the link between an organization's business plans and priorities and an individual's commitments.  The process to develop performance agreements must be integrated with the annual departmental business planning cycle; and,
• Documents the mutual understanding between the executive and his/her supervisor of the what (results) and the how (leadership competencies) that will be used to assess the performance of the executive for the performance cycle. 

The starting points for deciding what commitments should be included in performance agreements each year are:

• Priorities of the government;
• Priorities of the Clerk of the Privy Council as Head of the Public Service;
• Priorities and plans of individual departments and agencies; and,
• Individual development needs, which may include the development of leadership competencies.

Assistant Deputy Head performance agreements, as the main linkage between individual executives and the business plans of each organization, should demonstrate alignment with corporate plans, and include uniformity in certain ongoing commitments, defining what might be called the broad executive management agenda for the organization.

The performance agreements for each successive level of executive should demonstrate cascading of commitments – that is, each commitment is an operationalization of the supervisor's commitments, within the realm of each executive's responsibilities.

The performance agreement between the executive and his/her supervisor must include the following mandatory components to be considered valid:

1. Ongoing Commitments*
2. Key Commitments*
3. Performance measures of successful achievement of the commitments and leadership competencies
4. A written assessment of actual results achieved during the performance cycle and the level of leadership competency demonstrated
5. The signatures of the executive and the supervisor when the commitments are approved.

* In situations where the job consists solely of a special project or assignment, there are normally only Ongoing Commitments.  Exceptions could be considered when the assignment is of such scope and complexity to warrant the development of Key Commitments as well.

Performance agreements are subject to revision throughout the performance cycle, dictated by such factors as changed priorities and feedback.  An executive may have several performance agreements throughout a performance cycle, for example, if the executive changes jobs or takes on a new assignment or if the supervisor changes.  Each revision or new agreement must be signed.

It is a best practice that each performance agreement include a personal learning plan that identifies training and development commitments along with the resources that will be provided to support the learning plan. 

• Ongoing Commitments are the principal results that the executive is expected to accomplish so that the department can achieve its business mandate.  They are linked to the departmental business plans and/or priorities, and are reflective of the position description.
• Ongoing Commitments are part of the continuing responsibilities of the position that do not normally change from year to year.  They should reflect a balanced representation of core accountabilities such as: financial management (budget), human resources management, business planning, policy development and operational program delivery and, self-development.
• Ongoing Commitments should be Specific (clearly stated), Measurable, Achievable (through influence and control), Results-based and Timely (SMART).  Within the performance cycle the executive undertakes to achieve specified results for each Ongoing Commitment.
• Executives may document a personal learning plan, which may include the development of leadership competencies, in their performance agreements as an Ongoing Commitment.
• A minimum of four (4) and a maximum of seven (7) Ongoing Commitments should be established per performance cycle.

• Key Commitments are areas of focus over and above ongoing commitments for the performance cycle.  They may reflect change initiatives linked to business plans, corporate departmental priorities or Public Service priorities identified by the Clerk of the Privy Council as Head of the Public Service. They are intended to be challenging but achievable with effort.
• Normally Key Commitments change from year to year.
• At least one (1) Key Commitment and a maximum of three (3) Key Commitments should be established per performance cycle.

• Performance measures describe how an observer would know that the results have been achieved within the performance cycle and define standards for expected level of achievement of these results.
• The first step in defining performance measures is the establishment of SMART (Specific (clearly stated), Measurable, Achievable (through influence and control), Results-based and Timely) commitments.
• The choice of a performance measure implies that quantifiable data/information indicating performance achievement will be available and that efforts will be made to obtain the information defined in the measure.
• If feasible, performance measures should also describe what characterizes levels of performance that are above expectations.
• Performance measures should be established at the start of the performance cycle when commitments are established and can be adjusted during the performance cycle. There should be 1-3 measures per Ongoing and Key Commitment.
• Performance measures should be assessed to ensure they are measuring the right results.

There is no set format requirement for the performance agreement;  departments and agencies have the flexibility to develop an agreement template or system that best suits the organization's business planning and results reporting requirements. Minimum requirements of a performance agreement include:

• Parties involved
• Signature block
• Date of performance cycle
• Ongoing Commitments and performance measures
• Key Commitments and performance measures
• Results achieved (completed at the end of the performance cycle)
• Narrative assessment (completed at the end of the performance cycle)
• A statement about Privacy of Information
• In addition, to clearly identify linkages to corporate priorities and the Clerk's priorities, a simple checklist is recommended

Annex A to these Directives shows a sample performance agreement that meets the minimum requirements.

Performance agreements should be periodically reviewed by the executive and his/her supervisor and adjusted as required. In the event of significant changes, commitments and the related performance measures can be adjusted.

At the end of the performance cycle each individual is assessed on the "Results Achieved" based on the measures set for commitments. The results are documented on the performance agreement with the appropriate Summary Ratings for ongoing commitments and key commitments. The demonstration of leadership competencies in the achievement of all commitments should be taken into consideration when applying the assessment rating. Finally, an overall narrative assessment of performance with suggested career development action plans should also be documented.

The Performance Management Program also requires that the deputy head have in place in the organization a review mechanism or mechanisms, such as a review committee, to ensure equity and consistency in performance assessment ratings of all executives across the organization for the performance cycle.

Prior to authorizing the issuing of payments for a performance cycle, the deputy head must, prior to June 30, send a letter to the President of the Public Service Human Resources Management Agency of Canada (PSHRMAC) personally attesting that:

• Each employee subject to the PMP has a signed performance agreement; and,
• The department has a review mechanism to review the performance of each executive for equity and consistency.

The letter of attestation should also provide information about the overall expenditure for lump sum payments, as a percentage of executive payroll. A sample letter of attestation, which may be sent to the Agency by FAX is in Annex B.

The Public Service Human Resources Agency of Canada will authorize payment when all of the above requirements have been met.

Each department and agency is responsible for developing performance assessment standards that respond to the organization's specific needs. Deputy heads are responsible for communicating these standards, including clear information on what makes some commitments more challenging, or important or critical to the organization's mission than others.

Assessment must include, at a minimum:

• An assessment of each individual's performance against commitments, including assessment of how the results were achieved, based on the leadership competencies;
• One-on-one performance discussions with each executive, including constructive feedback and identification of, and support for development and learning opportunities; and,
• Vertical and horizontal cross-organization review of performance assessments to ensure consistency and fairness.

The performance level descriptions below are to be used to assess performance against commitments.  Levels 2 to 4 may be further sub-divided, provided that definitions are developed to describe the expected level of performance and communicated to executives. Other titles may be substituted provided they are cross-referenced to the four levels for reporting purposes. 

Note that for 2004-2005 fiscal, leadership competencies that must be considered in assessing performance refer to those related to valuing and managing people.  In     2005 - 2006 the revised leadership competencies all refer to valuing and managing people.

This performance level and results achieved can be characterized by the following statements:

• Delivered on all commitments and exceeded expectations in the delivery of major commitments
• Consistently delivers results that provide exceptional value to stakeholders and the organization
• In delivering commitments, is seen as an organizational role model in demonstrating the departmental/leadership competencies.

This performance level and results achieved can be characterized by the following statements:

• Delivered on all commitments
• A strong contributor to stakeholder and organizational successes
• In delivering commitments, clearly demonstrated the departmental/leadership competencies.

This performance level and results achieved can be characterized by the following statements:

• Delivered on the most important commitments but not necessarily on all commitments
• Performance results indicate a need for development in some areas
• In delivering commitments, demonstrated a need to show improvement in the departmental/leadership competencies.

This performance level and results achieved can be characterized by one or more of the following statements:

• Delivered on some but did not deliver on one or more of the most important commitments

or

• Performance results fall below expected standards

or

In delivering commitments, had ongoing difficulty in demonstrating the departmental/leadership competencies.

Note: Individuals who receive a 'Did Not Meet' assessment should receive appropriate follow-up that addresses performance issues.

Individuals who are 'Unable to Assess' are eligible for salary range increases, but no in-range movement or lump sum performance pay.

An individual is considered 'Unable to Assess' when there has been insufficient opportunity (e.g. fewer than three (3) months) to allow for the achievement of performance commitments.  This does not mean that the individual has not established a performance agreement, just that there has been insufficient opportunity for achievement against the commitments. There are 4 situations where Unable to Assess could apply for both Ongoing and Key Commitments:

1. New to the Public Service
2. Newly appointed to the group from another occupational group
3. Non-EX acting in an EX position for fewer than three months
4. Employee absent from the job for a significant period of the performance cycle, e.g. leave without pay or sick leave.

   There are two situations where executives might be considered Unable to Assess for Key Commitments only:

5. Executives on language training have only one Ongoing Commitment for the duration of the language training – attendance at language training in order to meet the language requirements of the position, and must be considered to have met ongoing commitments. Since there are no Key Commitments for the period of training, they receive an Unable to Assess rating for Key Commitments in that period.
6. Situations where no Key Commitments were established for the performance cycle, for example, an employee whose job consists of a single project or assignment to accomplish for the performance cycle.

Note on distribution of assessment levels:  It is recognized that a normal distribution would result in 5% of the population assessed at level 1.

The performance assessment and resulting compensation effects should take place within sixty days of the end of the performance cycle.

Performance awards include in-range movement and lump sums.

No performance award may be authorized in the absence of a signed performance agreement.

Deputy heads have flexibility to provide performance awards that are appropriate to their organizational priorities and requirements provided these awards are within the PMP Directives.

In determining the percentage of in-range movement and lump sums, deputy heads should take into account the importance and impact of results achieved. The focus should be equally on what was accomplished and how it was done.

The executive earns a base salary for the accomplishment of Ongoing Commitments.

The achievement of Ongoing Commitments and how the results were achieved (demonstration of leadership competencies) affect progression through the salary range for the position (in-range movement) which should vary with assessed performance.

Over and above the base salary, executives have opportunities to earn at-risk pay and bonuses based on the achievement of key commitments.

A prerequisite for access to at-risk pay and bonuses is that expectations for the achievement of ongoing commitments have been met.

The achievement of Key Commitments and how the results were achieved (demonstration of leadership competencies) affect the amount of lump sum performance awards, defined as at-risk pay and bonuses.

At-risk pay is defined as any lump sum performance award for:

• EX-1 to EX-3 – up to seven per cent (7%) of base salary
• EX-4 and EX-5 – up to ten per cent (10%) of base salary

A bonus is defined as any lump sum performance award for:

• EX-1 to EX-3 – up to an additional three per cent (3 %) of base salary
• EX-4 and EX-5 – up to an additional five per cent (5 %) of base salary

Only those who receive full 7 % (EX-1 to EX-3) or 10 % (EX-4 and EX-5) are eligible for a bonus.

At-risk pay and bonuses must be re-earned each year, and do not increase an individual's base salary.

The budget for at-risk pay and bonuses is part of the annual departmental reference levels, totaling seven percent (7 %) of the March 31^st payroll for members of the occupational groups and levels to which the provisions of the PMP apply.

Departments may exceed the budget where results warrant, and when the excess can be found from existing reference levels.

Organizations with fewer than ten executives should follow the budget guidelines below:

Annually, departments and agencies must submit to the PSHRMAC:

1. PMP Report: The Requirements of this report are in Annex C.
2. Monitoring and Evaluation Framework Scorecard: the requirements consist of annual and triennial reports in a scorecard format. Triennial elements are reported on a rotating schedule so that in any year, one-third of departments and agencies are reporting.  PSHRMAC will advise departments and agencies as to the timing of these reports and provide training and support. This reporting requirement begins with the 2005 – 2006 fiscal year.
3. Quality Review of Performance Agreements: upon request, departments and agencies must submit copies of performance agreements for review.

The PMP performance cycle is the fiscal year from April 1^st to March 31^st. 

Non-compliance with the required elements of the Performance Management Program may result in a citing of the department or agency in the President of PSHRMAC's annual report to Parliament on human resources management.  In some cases, the consequences may be a modification or withdrawal of delegation of authority and/or recovery of amounts paid.

The following table highlights some of the roles of key players accountable for the PMP for executives.

The following describes roles for other players that reflect expectations for the effective management of the program.

Comments and questions related to these directives should be referred to responsible officers in departmental headquarters who in turn may direct question to:

Executive Management Policies Directorate
The Leadership Network

Public Service Human Resources Management Agency of Canada

Ottawa, Ontario
Tel:
(613) 995-3146
(613) 943-5519
(613) 947-2845
Fax:
(613) 943-5205