Crafting a Thoughtful Performance Management System

I recently asked a room full of managers representing dozens of organizations if they actually liked their own company’s performance management system. What do you think they said? 

Some of us may think of Performance Management as a rubber stamp on an annual review. We often don’t think of it as a living, breathing, system. Others of us may think of Performance Management as monitoring what we’re doing wrong. We may not think of it as monitoring and developing what we’re doing right. 

When an organization thoughtfully designs, implements, and continuously improves a performance management system, it should look like the graphic below, representing a continuous, living cycle. 

 

OBJECTIVE

Company objectives should be driven by the organization’s vision, mission, and values, and these objectives should cascade and influence manager and individual contributor objectives. Read more from Mary Ila on 6 Ways to Design Your Performance Management System Around Company Values. 

How are you writing company, department, and individual objectives? 

MONITOR

Progress towards objectives should be monitored regularly, and “regularly” should be a customized cadence that works for your organization. 

For the context of this post, let’s assume that formal performance reviews are held annually. We recommend formal and informal monitoring in addition to the annual review. This may look like an informal monthly one-on-one and a formal mid-year review with your direct supervisor. 

How are you effectively and regularly monitoring progress towards objectives? 

COACH

If there’s anything you take away from this light reading, I hope it’s that everyone needs coaching. High performers, low performers, and everyone in between. 

Coaching is critical to successful performance management systems. This is where we catch potential issues and allow time for correction before a formal review period ends. This is also where we acknowledge and reinforce positive behaviors and results in real-time instead of waiting for the formal review. 

How often are you coaching your direct reports? How often are you receiving coaching from a supervisor? Is the coaching meaningful? 

EVALUATE

The formal evaluation is an important element of any performance management system. It often drives rewards (stay tuned), succession planning, and development opportunities. All organizations should have a structured performance evaluation process that gauges the successful completion of objectives (or lack thereof) and sets the foundation for future objectives.

One of the most critical components of evaluation is that team members be made aware of the evaluation methods and criteria at the start of the evaluation period. In other words, if my performance is evaluated from January to December and my annual review is in December, I need to know by January at the latest what my objectives and expectations are for the upcoming year. I need to know what I’m going to be evaluated on. What chance do I have of performing well if I don’t know what I’m expected to do? 

When and how are you letting people know what methods and criteria will be used in their formal evaluations? 

REWARD

This is where we put our money where our mouths are. In order for a performance review to be effective, the rewards or incentives need to be clear, relevant, and meaningful. Employees want to know: “Why should I work hard to achieve goals? Why does it matter whether I score low or high on a review?” 

Do your policies clearly outline the rewards structure, including how rewards are determined? Are rewards actually relevant and meaningful to your employees? 

 

When I asked a room of nearly 50 managers if they truly liked their own organization’s performance management system, only 3 people said yes. What are you doing to help your own managers answer “Yes!” to that question?