Objective:
To implement a structured appraisal process for supply chain staff
Definition
A performance appraisal process is used to provide formal feedback to employees on their performance; identify any performance gaps and future training needs or opportunities; set goals for upcoming periods; and review career aspirations. Organizations should have training and development curriculum to support continuous improvement and development of human capital within the organization and provide motivation to employees.2
Rationale
A structured personal performance and development review process is an essential component of high-performing organizations. This process helps ensure that:
- Employees understand expectations and feel they are valued contributors to the organization’s success;
- Employees have opportunities to discuss with management their aspirations and any job- or performance-related issues or concerns;
- Individuals reach their full potential in the organization, through ongoing reviews of performance, constructive feedback and structured personal development and training; and
- Good performance is recognized and potential challenges are identified early so that appropriate action can be taken.
Benefits
Patient Care
Well-trained motivated staff will help the supply chain department to support their customers to provide the highest level of patient care.
Customer Service
Strong morale and employee satisfaction within the supply chain department will result in motivated employees and better customer relationships, leading to higher quality of service to customers.
Employee Productivity/Satisfaction
Performance appraisals increase employee satisfaction by providing timely constructive feedback and creating actionable performance plans. Organizational support for employees’ personal and professional development improves motivation and staff retention. Increased morale will, in turn, improve employee productivity.
Related Metrics
6.1 Voluntary Turnover
Guiding Principles
The performance appraisal process should be documented and clearly communicated. Standard templates should be developed in cooperation with the central Human Resources (HR) department to ensure that appraisals are done consistently. The appraisal form should be appropriately sized to allow for capture of all key information, but not so large that it discourages participation.
The process should be consistently and rigorously applied across the supply chain department. Reviews of each jobholder’s performance and progress against job requirements and personal objectives should be conducted annually, with less formal interim reviews occurring more frequently to maintain a focus on goals and targets for the year and provide the jobholder with feedback on how to achieve them.
Performance reviews should be scheduled with sufficient advance notice to allow the jobholder appropriate thought and preparation. Usually, managers conduct appraisals of their staff, although peers may also appraise each other. Managers can also be appraised by their staff through 360-degree appraisals. The review process should be designed to gather feedback from the manager, the individual being appraised, and any other stakeholder deemed to have valuable input.
The performance appraisal process is aligned with standard 6.1 Job Roles and Specifications. Managers and employees should use the job role and specifications to help form the employee’s objectives and targets for the performance period. The competency framework, addressed in standard 6.1, should be used to help assess and direct the employee’s training and development plans.
Key Components
Performance Appraisal Process
Performance reviews have four main objectives:
1. Review of past period
The manager and staff member should discuss the jobholder’s performance against his or her personal objectives and targets for the previous period.
2. Expectations for upcoming period
The manager and staff member will negotiate and agree to personal performance goals and objectives for the upcoming period against which performance will be monitored and assessed at the next appraisal.
3. Training and development plan
The manager and staff member reassess jobholder’s competency levels against those required for the position, as defined by the role’s competency framework, as outlined in standard 6.1. This enables manager and employee to identify and agree on competency gaps and put in place targeted training and development plans.
4. Goals and other concerns
The staff member has the opportunity to discuss with management his or her career aspirations and any other concerns or issues.
The output of the annual performance review should be documented and agreed to by both the jobholder and manager. Furthermore, performance appraisals should not be limited to annual reviews, but be a continuous process throughout the year.
Key Performance Appraisal Indicators
Key performance appraisal indicators provide a structured format to assess and communicate an employee’s work performance with regard to knowledge, behaviour and skills that are applicable to both the organization as a whole and the supply chain department specifically. Attachment 6.2a provides a sample list of indicators to consider for supply chain employees.
Training and Development Curriculum
Organizations should have a training and development curriculum to address all of the competencies required in the supply chain department. It should be aligned and fully consistent with the competency framework. The curriculum could be available in several formats from both internal and external formal training courses to on-the-job development opportunities. It should also offer employees the opportunity to obtain professional designations, as appropriate.
The curriculum is intended to address the development needs of all employees in the supply chain department. It should support the jobholder’s efforts to:
- Fully achieve the skill level set out in the competency profile for the position; and
- Progressively develop his or her competencies in preparation for planned advancement to more challenging assignments.
Once a jobholder’s assessment has been completed using the competence framework, a targeted training and development plan should be established. This process is an integral part of the annual performance appraisal and development cycle for every employee.
Implementation Challenges
Challenges:
- In a unionized environment, the union should be involved throughout the development of the process to ensure that the union accepts the process and criteria for appraisals as well as use of the output information.
- Urgent and immediate business challenges could take precedence over the implementation of the performance appraisal process or the thoroughness of annual employee appraisals and the development of training plans. Senior executives must establish the performance appraisal process as a high priority and stress the importance of training and development as a method to maximize the value of the supply chain department.
- Implementing a formal incentive program tied to the performance evaluation can enhance the effectiveness of a performance appraisal process and outcomes. Successfully implementing this requires a high degree of organizational alignment and due process.
Attachment 6.2a – Key Performance Appraisal Indicators
The following performance indicators may be used as input to the performance appraisal process for supply chain employees.
Organizational Alignment
- Demonstrates support for organizational core values and adheres to spirit of mission/vision statements, in particular towards improving patient care
- Understands the organization’s overall goals and structures
- Shows fiscal responsibility for the organization’s assets and funds
- Actively participates in cross-functional teams
- Brings an innovative approach to the organization, both challenging the organization to improve and suggesting efficiencies
Performance Measures
- [Personal objectives specific to each job role]
Behavioural Attributes
- Communicates effectively
- Demonstrates teamwork
- Manages relationships — for example, arranges and participates in meetings with other departments, customers and suppliers
- Demonstrates professionalism and respect for others
- Responds to change and adapts well to new processes
- Challenges ideas responsibly and appropriately
- Demonstrates leadership — for example, implementing new processes or leading practices
- Makes decisions affecting own area and provides input to support decision making in other areas
Technical Capabilities
- Plan-to-Pay processes — understands processes relevant to the role for the plan-to-pay cycle, including the knowledge of which tool to apply in specific instances
- Legal — understands the implications of different contract terms and conditions and the areas that require support from the legal team
- Negotiation skills — plans and manages negotiations in a structured and category-sensitive manner
- Contract management — understands the importance of contract and supplier management and of working with suppliers to establish key performance indicators and continuous improvement targets; liaises with stakeholders to ensure that their organizational needs are met
- Supply base analysis — evaluates suppliers to ensure appropriate alignment between supplier and client, consistent with the acquisition strategy
- Supply chain analysis — applies knowledge and awareness of supply chain processes to improve operations and reduce costs
- Risk management — manages contractual, reputation, ethical and other risks associated with the supply chain process with the aim of ensuring that undesirable consequences are mitigated
- Finance for supply chain — undertakes meaningful financial appraisal and assessment of suppliers and product costs; understands financial ratios and their ability to provide useful indicators of supplier performance
- Customer management — builds and manages appropriate internal relationships to ensure that the supply chain department fulfills the organizational needs
