Performance Management Program - Guidelines for Chief Executive
Officers of Crown Corporations
Management Priorities and Senior Personnel Secretariat
Privy Council Office
March 2003
Purpose
The purpose of this document is to provide an overview of the Performance
Management Program for Chief Executive Officers (CEOs) of Crown corporations.
All documentation and forms mentioned in this guide (Performance Agreement
and Evaluation Form, these guidelines, etc...) are available on the Privy
Council Office Web site at http://www.pco-bcp.gc.ca/performance-rendement.
Program Objective
The objective of the Performance Management Program is:
- to encourage excellent performance by recognizing and rewarding the
achievement of results that are linked to corporate plans and government
objectives and the demonstration of leadership competencies, values and
ethics; and
- to provide a framework within which a consistent and equitable approach to
performance management can be applied.
Compensation Plan
In March 2000, the government accepted the recommendations contained in the Second
Report of the Advisory Committee on Senior Level Retention and
Compensation. As a result, a new compensation plan for CEOs of Crown
corporations was subsequently introduced.
The plan consists of a job rate for fully satisfactory performance as well as
variable cash compensation (termed "at risk pay") based on corporate
and individual achievements against targets.
An effective performance management program is integral to the success of the
compensation plan.
Performance Management Program Components
The Statement of Objectives
The statement of objectives is a mutual understanding between the CEO of the
Crown corporation and the Board of Directors (under the direction of the Chair)
as to what is expected for the performance cycle. It is comprised of ongoing
objectives, key objectives and performance measures.
- Ongoing objectives are the expectations that do not usually
change from year to year. They reflect core accountabilities such as
financial management, human resources management, business planning, policy
development and program delivery. The successful performance of these
objectives results in movement through the salary range.
- Key objectives are priority areas of focus in the
performance cycle that are linked to corporate plans and government
objectives. They are challenging ("stretching") but achievable
with effort. They are also results-oriented, measurable and achievable
through the individual’s own influence and control. The successful
performance of these objectives forms the basis of at risk pay.
- Performance measures are observations or data that determine
and define if and how well the objectives are met, including the
demonstration of leadership competencies, values and ethics.
The statement of objectives can be in whatever form the Board considers
appropriate and these guidelines are not intended to change current practices
for establishing annual objectives with the CEO. However, mandatory requirements
of the Performance Management Program include:
- objectives must be established for the CEO and these must be in writing;
- objectives must be measurable; and
- the Board must identify and agree on those challenging objectives which
will be linked to at risk pay.
An example of a form that can be used for the statement of objectives as well
as the performance evaluation at the end of the cycle is available on the Privy
Council Office Web site.
Performance Ratings
Performance is reviewed against the achievement of the statement of
objectives and a rating is proposed as follows:
Did not achieve the expectations set out in the statement of objectives.
Has succeeded in achieving the expectations set out in the statement of
objectives.
Has gone beyond the expectations set out in the statement of objectives, in
areas of significance.
Pay Implementation
In implementing in-range salary increases and at risk payments, the salary
used as the base for calculations is that in effect on the last day of the
performance cycle.
Movement through the salary range is earned through the achievement of ongoing
objectives. Normal progression for successful performance is
5% per year. Higher or lower percentages may be approved based on
the degree of performance against expectations. Normally, no in-range increase
would be given for a "did not meet" performance.
This lump sum payment, which is re-earned each year, is based on the
achievement of key objectives. This payment does not increase an
individual’s base salary. At risk payments can be earned regardless of an
individual’s position in the salary range, however, the ongoing
objectives must be successfully met in order to be eligible.
The highest percentage for at risk pay is reserved for performance at the
"surpassed" level.
To be eligible for performance pay, incumbents appointed by the Governor in
Council must normally hold their positions for at least six (6) consecutive
months in the performance cycle. This period allows the incumbent sufficient
time to achieve measurable results.
If the period covered by the performance evaluation is less than 12 months
(full performance cycle), then the performance pay, is prorated.
At risk pay provides the opportunity to earn lump sum amounts as follows:
Performance Rating |
Groups 1 to 5
% of salary |
Groups 6 to 8
% of salary |
Group 9
% of salary
|
Group 10
% of salary |
Did not meet |
0 % |
0 % |
0 % |
0 % |
Succeeded |
5 % |
7.5 % |
10 % |
12.5 % |
Succeeded + |
7.5 % |
11.25 % |
15 % |
18.75 % |
Surpassed |
10 %
maximum |
15 %
maximum |
20 %
maximum |
25 %
maximum |
NOTE: See Annex A for the allocation of Crown corporations to groups.
PROCESS
- In advance of the performance cycle, the Board of Directors and the CEO
agree on a written statement of objectives. The Board may choose its own
annual cycle (e.g., calendar year, fiscal year, anniversary of date of
appointment). A copy of the signed statement of objectives is forwarded by
the Chair to the responsible minister for comments, with a copy to the
portfolio deputy minister for information.
- At the end of the performance cycle, the Board reviews the CEO’s
performance against the statement of objectives and:
- recommends a percentage for salary movement within the range (when not at
the maximum) based on achievement of ongoing objectives;
- recommends a performance rating based on achievement of key
objectives as well as a percentage for the at risk pay lump sum
amount; and
- provides an assessment of performance to support the recommendations.
- This information is forwarded to the minister for support, with a copy to
the portfolio deputy minister and the Privy Council Office for information.
- Once the Board receives the minister’s support, the Board’s
recommendations (with the minister’s comments) are forwarded to the
Assistant Secretary to the Cabinet (Management Priorities and Senior
Personnel), Privy Council Office. To the extent possible, differences of
opinion should be resolved before the recommendations are forwarded to the
Privy Council Office.
- In summary, the complete submission consists of a written evaluation which
supports and justifies the Board of Directors’ recommendations on the
performance of the CEO. In addition, the following information is required:
- the exact period for which the performance has been evaluated;
- the overall performance rating for achieving the objectives (did not
meet, succeeded, surpassed);
- the recommended performance awards (in-range salary increase and pay
at risk);
- the support of the responsible minister.
- Recommendations on the performance of CEOs are submitted to the Governor
in Council, through the Clerk of the Privy Council, for approval. An Order
in Council authorizing payment is issued. The Chair is notified directly.
- Performance feedback to the CEO is the responsibility of the Board and is
an essential element of the Performance Management Program.
ANNEX A
Group 1
Atlantic Pilotage Authority
Blue Water Bridge Authority
Great Lakes Pilotage Authority
Group 2
Canadian Race Relations Foundation
Enterprise Cape Breton Corporation
Laurentian Pilotage Authority
Pacific Pilotage Authority
Group 3
Defence Construction (1951) Limited
Federal Bridge Corporation
Freshwater Fish Marketing Corporation
Standards Council of Canada
Group 4
Canadian Dairy Commission
Canadian Film Development Corporation
Canadian Museum of Nature
National Arts Centre Corporation
National Gallery of Canada
National Museum of Science and Technology Corporation
Group 5
Canada Council
Canada Lands Company Limited
Canadian Commercial Corporation
Canadian Museum of Civilization Corporation
Canadian Tourism Commission
Marine Atlantic Incorporated
National Capital Commission
Group 6
Canada Deposit Insurance Corporation
Canadian Air Transport Security Authority
Cape Breton Development Corporation
International Development Research Centre
Group 7
Business Development Bank of Canada
Export Development Canada
Farm Credit Canada
Royal Canadian Mint
Via Rail Canada Incorporated
Group 8
Atomic Energy of Canada Limited
Canada Mortgage and Housing Corporation
Group 9
Canadian Broadcasting Corporation
Group 10
Canada Post Corporation
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