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I. PURPOSE

A. The North Carolina Office of State Personnel (OSP) shall use a performance management process to ensure that:

1. Employees’ work efforts contribute to the achievement of OSP’s mission, vision, and strategic and operational goals, and that employees’ actions are consistent with OSP values
2. OSP employees develop and thus become more effective in carrying out their responsibilities and better position themselves to advance in their careers if they so choose and the opportunity affords itself

B. The process defined in this policy will be considered effective if:

1. Employees have clear performance expectations
2. Employees are aware, throughout the performance cycle, of how effectively they are performing their jobs
3. Employees are afforded the opportunity to develop
4. Unsatisfactory performance is quickly addressed and corrected
5. OSP values are consistently practiced by all employees
6. The work of OSP gets effectively accomplished

C. This policy applies to all permanent employees, including probationary and time-limited employees, and to exempt employees as well as those subject to the State Personnel Act.

II. THE PERFORMANCE MANAGEMENT PROCESS

A. The OSP performance cycle

The OSP performance cycleincludes the following phases: (1) performance planning, (2) ongoing management of performance (including an interim review, employee development, and addressing poor performance), and (3) a final, end-of-cycle performance review.

B. Performance Planning

1. In the performance planning phase, supervisors shall discuss and arrive at a mutual understanding with their employees of what is expected of the employees during the coming year; how those expectations align to OSP’s mission, vision, and strategic and operational goals; and how OSP’s values apply to the specific work the employees will be performing
2. Disagreements concerning expectations shall be resolved by the next-level manager.
3. Expectations shall be documented on a standard OSP work plan form.
4. The work plan shall be signed and dated by the employee, supervisor, and next-level manager. The supervisor shall provide copies of the work plan to the employee and the OSP human resource manager.
5. Work plans shall be posted in a location designated by the State Personnel Director. The ability of supervisors and employees to see what is expected of each other and how their own expectations relate to others’ expectations as well as align to OSP’s strategic goals facilitates communication and coordination and is essential to effective management.

C. Ongoing Management of Performance

1. Employees shall be responsible for tracking their progress toward meeting expectations and shall submit periodic status reports. Format and frequency of status reports shall be set by the Director and/or Deputy Director.
2. The essence of effective performance management is frequent and candid discussions between supervisors and employees focusing on progress toward meeting expectations, including what is going well and what challenges are being encountered. The nature and frequency of these discussions depend on the nature of the work. It is therefore left to supervisors’ discretion as to how, and how often, these discussions will be conducted.
3. If expectations change significantly during the performance cycle, supervisors shall see that adjustments are made to employees’ work plans. Revisions shall be discussed, signed, and dated by supervisors and employees.

D. Interim Review

1. Supervisors shall conduct interim performance reviews with their employees at mid-cycle. This review shall be documented on a standard interim review form (a separate document from the work plan), signed and dated by supervisor, next-level manager, and employee, and a copy submitted to the OSP human resources manager.
2. The interim review enables supervisors to address performance deficiencies with employees and identify steps to be taken to gain the knowledge or skill needed to overcome the deficiencies during the remainder of the performance cycle. The interim review is equally important as a means for supervisors to recognize employee successes and reinforce effective performance.

E. Employee Development

1. Supervisors are encouraged to conduct and document at least one career or development planning discussion with their employees annually. Documentation may be realized by completing and having both employee and supervisor sign and date an individual development plan.

2. The purpose of career or development planning discussions is to help employees:
• Keep up with the knowledge and skill requirements of their current positions
• Strengthen certain knowledge or skill areas so they may enhance their current performance
• Capitalize on existing strengths that may currently be underutilized
• Acquire new knowledge and build new skills to prepare for taking on new roles
• Explore longer term career aspirations and steps they may take to accumulate the appropriate knowledge, skills, and experiences so that they may realize their career goals
3. Developmental and career goals should not be set as performance expectations or included on employees’ work plans. Nor should completion of development plans be included as part of an employee’s performance review.

F. Addressing “Unsatisfactory” or “Below Good” Performance

1. “Unsatisfactory” or “below good” job performance is individual performance that fails to meet expectations. The supervisor shall determine if an employee’s performance is failing to meet expectations. The supervisor’s determination should be reasonable, proper, and factually supported. The supervisor may make this determination based on any of the following factors:
   • Unacceptable progress toward meeting work plan expectations
   • Ineffectively performing (or not performing) an important area of responsibility defined in employee’s job description
   • Any similar factors that compel the supervisor to conclude that an employee’s performance is “unsatisfactory” or “below good”
2. Supervisors shall address “unsatisfactory” or “below good” job performance within 10 days of becoming aware of a performance issue. Failure to do so shall constitute “below good” performance on the part of the supervisor and shall be reflected on the supervisor’s performance review.
3. Supervisors shall discuss “unsatisfactory” or “below good” job performance with their employees in private, one-on-one discussions. Supervisors shall cover the following points in these discussions:
   • Describe the performance issue and clarify the facts of the case
   • Restate the performance expectations and specifically describe the level of performance that will be required to meet expectations
   • Agree on the actions the employee will take to improve performance, including target date for the improvement to be achieved
   • State the consequences of failure to improve
   • Agree on the resources and support to be provided (if any)
   • Set a date to follow-up on the employee’s progress
4. Supervisors shall use the corrective action plan format to document the points covered, information that emerged, and commitments made in the discussion.
5. A corrective action plan shall be considered successfully completed only when the employee’s actual performance has improved to the point where expectations are being met. If the “unsatisfactory” or “below good” job performance is not improved in a reasonable time or if it is significantly serious, the supervisor shall initiate disciplinary action in accordance with the Disciplinary Action, Suspension and Dismissal policy.
6. The desired outcome of supervisors’ addressing their employees’ “unsatisfactory” or “below good” performance is an improvement in employee performance. Should performance not improve, however, supervisors shall be diligent in accurately documenting the performance information and discussions so that appropriate disciplinary actions, up to and including dismissal, may be taken and supported.

G. Performance Review

1. At the completion of a performance cycle, supervisors shall evaluate employees’ individual performance in order to provide:
• Employees with feedback summarizing their performance over the cycle
• An overall performance rating as required by GS 126-7 to receive annual salary adjustments granted by the legislature
• Documented performance information to be used as input to future personnel decisions
2. Documentation of the performance review shall be made using the confidential performance review sections of employees’ work plans.
3. Supervisors are encouraged to involve their employees in collecting the information needed to document employees’ performance during the year in review.
4. Supervisors shall assign an overall rating that fairly reflects and is clearly supported by the documented performance information and observations regarding employees’ adherence to OSP values. Overall ratings shall be made using the state’s five-level rating scale.
5. Next-level managers shall examine performance reviews before they are finalized and discussed with employees. Involvement of the next-level manager is intended to ensure consistency in performance ratings.
6. Performance discussions between supervisors and employees shall be conducted one-on-one, in private. In the discussion, the supervisor should review the overall rating and discuss the information and observations that determined that rating.
7. If an employee receives an overall performance rating below the “good” level, the supervisor shall initiate a corrective action plan and, if warranted, may initiate disciplinary action.
8. The supervisor, next-level manager, and employee shall sign and date the review.
   • Supervisor’s signature indicates that the supervisor assumes responsibility for the accuracy of the review
   • Next-level manager’s signature indicates concurrence with the review and that the overall rating is consistent with the ratings received by other employees within the next-level manager’s span of control
   • Employee’s signature confirms that the supervisor has discussed the review with the employee.
9. If an employee refuses to sign the appraisal, the supervisor shall note the refusal and request a witness (most appropriately the next-level manager) to verify the employee’s refusal to sign.
10. Employees have the right to appeal their overall performance rating through the Performance Pay Dispute Resolution policy.

III. ADMINISTRATION

A. Timelines and Transitions

1. The OSP human resources manager shall announce the key dates for the upcoming performance cycle by June 1 each year:
   • Deadline for supervisors to complete and post employees’ work plans.
   • Deadline for interim reviews to be completed and submitted to the OSP human resources manager.
   • Deadline for completed performance reviews to be submitted to the OSP human resources manager.
2. Supervisors shall establish work plans for new employees within 30 calendar days from the date of transfer or date of employment.
3. Probationary employees shall receive at least a “good” performance rating and the completed review submitted to the human resources manager before moving into permanent status.
4. The OSP human resources manager shall be responsible for seeing that all OSP employees’ final performance ratings are entered into BEACON at the designated time each year.
5. If an employee is on probationary status at the time the performance cycle ends, an appraisal is not required and “insufficient time” shall be entered into BEACON.
6. When an employee transfers from OSP to another agency, the supervisor shall complete an overall performance review prior to the transfer. A copy of the signed review shall be sent to the receiving agency prior to the employee’s first day with the receiving agency.
7. When there is a change in supervisors during the performance cycle, the next-level manager is responsible for ensuring consistency.
8. When an employee separates from state government, the supervisor shall submit a performance review to the OSP human resources manager prior to the separation.
9. Performance appraisal information is one consideration used in making personnel decisions such as promotion, demotion, disciplinary action, performance salary increase, and reduction-in-force. Such decisions shall be supported by current performance reviews on file. A “current performance review” is one that has been completed within the last 12 months.

B. Sanctions

1. No employee shall be penalized or excluded from consideration for a performance salary increase because a supervisor has not followed the performance management process.
2. Failure of a supervisor to carry out the performance management process in accordance with this policy shall be addressed as a performance deficiency. It can result in one or more of the following:
   • Coaching from the next-level manager to determine the cause of the deficiency and implementation of a corrective action plan
   • Participating in skills enhancement training as part of the improvement plan
   • Monitoring of progress by the next-level manager towards improving implementation of performance management
   • Issuing of appropriate disciplinary warnings, if necessary, up to and including dismissal, in accordance with the Disciplinary Action, Suspension and Dismissal policy

C. Access to Completed Reviews

1. Performance reviews, when completed, shall be treated confidentially. Copies of the completed review shall be provided to the employee and to the OSP human resource manager. (Note: A work plan is not confidential. It becomes confidential only when the performance review sections of the form are completed, that is, when ratings are entered and the form is signed and dated.)
2. A copy of the completed review shall be filed and retained at OSP for three years and then destroyed. Completed reviews are confidential and are not subject to public access.
3. Performance review information shall be used to influence personnel decisions such as selection, promotion, discipline, training opportunities, performance increases, and reduction in force. Accordingly, reviews shall be made available to the appropriate decision makers.

IV. PERFORMANCE MANAGEMENT AND PAY ADVISORY COMMITTEE

A. OSP shall establish a Performance Management and Pay Advisory Committee to “ensure that salary increases and awards are made in an equitable manner” (GS 126-7(c)(7a).

B. The Committee shall have a minimum of five members with equal representation of nonsupervisory, supervisory, and management employees and the Committee shall elect its own chair.

C. The Committee shall be responsible for reviewing the following:

1. Agency salary increase and award policies to determine whether the statute and guidelines promulgated by the State Personnel Commission have been adhered to
2. Agency training and education programs to determine whether all employees receive appropriate information and training
3. Performance ratings within the agency to determine whether an equitable distribution has been made

D. The Committee shall meet at least two times a year and submit a written report following each meeting to the State Personnel Director. The report shall include recommendations for changes and corrections in the administration of the performance management system.