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Individual Performance Review

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ndIvIdual Performance revIew (IPr)
Guidelines for Supervisors and employees
September 2011

Human Resources

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Table of conTenTS

Individual Performance Review (IPR) Guidelines Definition of Terms CHaPTeR 1: Goals How it works CHaPTeR 2: RevIew How it works n Preparing for the meeting n In the meeting n after the meeting CHaPTeR 3: aPPRaIsal (YeaR-enD aPPRaIsal) How it works n Preparing for the meeting n In the meeting n after the meeting CHaPTeR 4: PeRfoRmanCe RankInG How it works n Preparing for the ranking panel n ranking panel session CHaPTeR 5: ouTComes How it works n Preparing for the discussion n discussion n Performance share nomination n Pay outcomes appendix - factors affecting Performance Ranking

3 4 5 5 6 6 6 6 6 7 7 7 7 7 8 8 8 8 9 9 9 9 10 10 11

within the objectives of simplifying and standardising Hr processes across the Shell Group, these global guidelines are distributed for adoption by Shell Group companies. any resulting changes to current practices may require, in some locations, compliance checks with local legislation and/or consultation with employee representative bodies. no rights can be derived from this guide and the process described within is not contractually binding in relation to terms and conditions of employment or agreements with Trade unions or Staff councils. This guide is intended for managers and employees of the Shell Group and is consequently for internal Shell use only.

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IndIvIdual Performance revIew (IPr) GuIdelIneS
Shell is committed to creating and maintaining a high performance culture. our strategic aim is to become the world’s most competitive and innovative energy company. To achieve this we must commit to developing and supporting our employees, while rewarding their contributions. The IPr process is designed to support our high performance culture. It facilitates discussions between supervisors and employees that will result in: Setting goals (Goals). conducting a mid-year review of performance to-date (review). n Providing feedback throughout the year and in the year-end appraisal discussion (appraisal). n reinforcing performance with appropriate reward outcomes (outcomes). n n

These milestones must be supported by supervisor and employee discussions throughout the year. Supervisors and employees both play a role in making this work: n n

employees need to understand how they can individually contribute to improve results in their part of the business. Supervisors need to ensure that the process is implemented effectively and that it helps motivate employees to achieve business success.

These guidelines outline our common process for appraising performance across Shell, and support employees and supervisors in navigating the IPr process. In addition to these guidelines, Shell has a number of tools to ensure performance reviews are implemented effectively and efficiently, which can be found in Hr online.

Goals Goal setting

RevIew mid-year progress review

aPPRaIsal Year-end appraisal

ouTComes rewarding performance

January/february

mid-year

Year-end

following January/february

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defInITIon of TermS
DEFINITION OF TERMS

Business goals

Targets that reflect business priorities which you are expected to deliver over the next 12 months. Goals and Performance appraisal. This is the document you use to record your goals, progress and feedback over the course of the year. The GPa should be completed in Hr online. In non-Hr online locations, employees should use the standard GPa template in a word document. Goals that reflect key development actions you should focus on. The Individual development Plan should focus on your developmental goals for this assignment and capture development needed for next role. The development goals should connect to opportunities for development on the job. The Individual Performance factor. The factor given to each individual every year as an outcome of the GPa and subsequent performance ranking process. The IPf has a range of 0 to 1.5 and is determined against the performance ranking criteria as compared with the relevant ranking population. It is a measure of relative performance and not an absolute judgement. Individual Performance review. This is the process for managing employees’ performance and development, and recognising and rewarding the contribution that each of us makes to Shell’s business success. Performance Share Plan. employees can be nominated to be awarded performance shares. These are discretionary and nominations only become final after confirmation by the rdS board. General criteria which are the same for all ranking groups to ensure employees are compared within a common framework. employees who have been grouped together for the purpose of comparing performance. each group is unique in terms of its composition. Panel composed of supervisors and an Hr facilitator whose role it is to rank employees and decide on IPfs and Performance Shares nominations. Panel members have a key role in ensuring feedback on IPfs and Performance Shares can be given in a way that helps each person understand how decisions were arrived at. Specific, measurable, achievable, relevant, Time-framed. The goals you set with your supervisor towards the beginning of each year should be ‘SmarT’.

GPa

Individual development goals IDP

IPf

IPR

PsP

Ranking criteria

Ranking group

Ranking panel

smaRT

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cHaPTer 1: GoalS managing performance is a continuous process, with setting goals being the first phase. The purpose of setting goals is for supervisors and employees to define tasks and targets which will drive individual and business performance and which will be used to evaluate performance throughout the year.

HOW IT WORKS
Supervisors and employees meet to define goals (January and february). at the beginning of the year, supervisors and employees meet to discuss and set goals for the year. when defining goals, supervisors and employees need to: n n

ensure goals are SmarT: Specific, measurable, achievable, relevant, Time-framed consider the general criteria used for performance ranking. The Group ranking criteria are determined as follows: n Individual performance against agreed targets, as recorded in the GPa n demonstrated behaviours in support of the code of conduct, core values, Shell General business Principles, behavioural Imperatives n contribution to business goals/priorities

Goals should be recorded in the GPa and should reflect Shell’s business priorities and the employee’s role in achieving them. employees should ensure that their goals are aligned with the business or departmental plan. In addition to the business goals, d&I goals are required for employees at letter category and above. HSSe specific targets should be included as required by business or job. In addition, compliance with applicable laws and regulations, including anti-bribery, corruption and anti-trust legislation, is a requirement for all Shell employees. employees should discuss with their supervisors whether they need specific goals covering these areas. employees need to record goals in their GPa as soon as possible after the goal setting discussion or, at the latest, by the end of february. It is mandatory that GPas are completed in Hr online in order to ensure transparency between supervisors and employees, avoid ‘surprises’ at year end and ensure Shell maintains central records of appraisals for compliance purposes. for countries where Hr online is not available the GPa should be recorded using the standard word template. Individual Development Goals These should be recorded in the IdP as a result of the integrated discussion on performance, competence and development planning as part of the year-end appraisal discussion. as on-the-job learning provides the best opportunities for individuals to gain knowledge and develop, performance goals should be connected to delivering business results and to developing the employee. as part of the year-end discussion, supervisors should identify opportunities for the employee to learn and develop through the day-to-day work.

IndIvIdual Performance revIew (IPr)

cHaPTer 2: revIew
In addition to ongoing feedback throughout the year, a mid-year meeting is used to review performance to date. The purpose of this review is to: review performance to date against the targets agreed in the Goals and Performance appraisal (GPa). agree any changes to the GPa for the remaining part of the year. follow up on developmental actions agreed in the Individual development Plan (IdP). discuss competencies and update in Hr online as appropriate. Identify new opportunities for the employee to learn through day-to-day work.

mid-year reviews should supplement ongoing feedback and regular coaching.
HOW IT WORKS
Preparing for the meeting n employees carry out a self assessment of progress against GPa targets. Supervisors review employee performance to date. In the meeting between 1 June and 31 august, supervisors and employees meet to discuss:

Performance against GPa targets and the behavioural Imperatives. learnings in the year so far and future day-to-day learning opportunities. Identify performance improvements and development actions. discuss how the supervisor can help the employee to achieve the agreed goals. agree on changes to the GPa, if any.

After the meeting employees record any changes to the GPa and IdP in Hr online. non-Hr online countries should use the standard GPa template in a word document.

IndIvIdual Performance revIew (IPr)

cHaPTer 3: aPPraISal
The IPr process supports ongoing feedback throughout the year. However a key milestone in the process is the year-end appraisal discussion between employees and supervisors. The purpose of the year-end appraisal is to review the past year, evaluate employee progress, and consider results and behaviours.

HOW IT WORKS between 1 october and 31 december, employees and supervisors hold the year-end performance appraisal discussion. It is important that this meeting takes place prior to the performance ranking session. Preparing for the meeting n employees should review their GPa and identify examples of results and behaviours which support targets. n Supervisors are responsible for gathering feedback from the employees’ customers and other key stakeholders. n Supervisors should also gather feedback from the previous supervisor for employees who have changed roles during the year. In the meeting The appraisal discussion should focus on:

delivery against GPa targets. contribution to the business. core values and behavioural Imperatives. feedback from customers and stakeholders. competence assessment. Progress made against development goals. development planning.

After the meeting employees and supervisors need to complete the following as soon as possible after the meeting or latest by the end of January:

employees should update the GPa, IdP and competence profile to reflect any changes agreed. Supervisors should record the performance summary in the GPa. The performance summary reflects the supervisor’s views and should be balanced, covering both positive and negative aspects of the performance. Gaps and areas for improvement should be clearly identified. In case of disagreement, the employee can have this noted in the summary. Supervisors need to finalise the GPa by pressing the ‘finalise’ button in Hr online - this closes out and archives that year’s performance record. Supervisors need to confirm updates to IdP and competence profile in Hr online.

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cHaPTer 4: Performance rankInG
The next step in the IPr process is performance ranking and assigning employees an Individual Performance factor (IPf). The purpose is to establish the link between relative levels of performance and rewards, in order to distribute rewards appropriately. This is done through a transparent process which compares and ranks performance of employees in a relevant group. each employee is then assigned an IPf which determines the reward the employee will receive. In a ‘pay for performance’ culture, as we have in Shell, it is necessary to distribute more pay to higher performers and the IPr process ensures this happens in a transparent manner.

HOW IT WORKS
Performance ranking takes place in november and december. The ranking panel, which consists of a group of supervisors directly responsible for employees who are in the ranking group and an Hr facilitator, meet to: n n n n

compare and evaluate performance of employees in a relevant employee group (i.e. ranking group). rank the employees within this group based on their relative performance. assign each employee an IPf based on how they were ranked. decide on nominations for the Performance Share Plan (PSP).

Preparing for the ranking panel n Supervisors should review employees’ GPas and should make preliminary assessments of IPfs as initial input into the ranking session. These preliminary IPfs should not be discussed with employees. n Supervisors also need to take into account how employees perform compared to the Group ranking criteria. a supervisor will need to provide clear examples of performance against the Group ranking criteria. Ranking panel session n The Hr facilitator should begin the session by reviewing the purpose of the session, roles and ranking criteria. The Hr facilitator should present the preliminary IPfs determined by the supervisors.

The panel should then test and refine the preliminary IPf assessments by discussing the relative performance of the employees. The Group ranking criteria should be used to reach a holistic judgement of performance of individuals relative to the ranking population. There is no need to establish a rank order (1st, 2nd, 3rd, etc) because this will not affect any eventual compensation received by employees. once the employees are ranked, an IPf is assigned to each employee:

IPfs will range from 0.0 to 1.5. The IPf average for each ranking group must not be higher than 1.03. IPfs must be expressed in one decimal point (e.g. 0.9 is permitted, 0.95 is not).

distribution percentages of any kind (i.e. ‘forced’, ‘expected’, etc.) will not be used. The process concludes once the panel believes it has tested its conclusions sufficiently, is satisfied with the overall ranking result, and has checked that the average of IPfs in a ranking population is not higher than 1.03. In addition, PSP nominations are discussed and decided.

for further considerations when determining IPfs, see the appendix.

IndIvIdual Performance revIew (IPr)

cHaPTer 5: ouTcomeS
The last step in the IPr process involves a discussion regarding IPr outcomes. The purpose of this discussion is for the supervisor to communicate the IPr outcomes and how they were determined.

HOW IT WORKS
This discussion should occur between mid-January and mid-february. The current supervisor of the employee (as of mid-January) should have this discussion with the employee. employees who have recently transferred may wish to contact the supervisor who conducted their ranking for additional feedback. Preparing for the discussion Supervisors can access IPr outcomes via the manager tab in Hr online. IPfs and PSP data are available from mid-January. for employees in non-Hr online countries, Hr will provide confirmation of results to supervisors. Supervisors should prepare for the discussion using the following tools, all available on Hr online:

IPf and PSP results. IPf distribution graph for each business. PSP award sizes template. PSP background info. brief Guide to Global Pay Policy.

Discussion Supervisors should outline the following in the discussion:

explain Shell’s high performance culture and how the IPr process supports and rewards performance. communicate the IPf and provide context, stressing that it is a measure established relative to other employees’ performance in order to distribute a limited amount of money. employees must understand that their rankings are based on a comparison of their performance with the performance of other employees in their ranking group. communicate the PSP nomination where applicable. review the specifics of the ranking panel:

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