Performance Management – The Basics

November 18th, 2015
Written by: Admin

A version of this article was originally prepared by TPO for one of its clients, an industry educational foundation. 

Performance management may just be the most widely researched and talked about human resource management topic. Yet, businesses large and small struggle mightily with performance management systems that deliver value – produce business results. A recent Society for Human Resource Management study found that an overwhelming majority of respondents (over 70%) reported that their performance management system did not effectively establish goals, provide meaningful feedback, or improve performance.  No wonder companies are jumping on the “abolish performance appraisals” band wagon.

Before getting too tempted to follow suit, let’s take a step back and explore the basics of performance management and what you can do to yield results by starting small and focused.

Why you should care about performance management

When done right, performance management:

• Generates higher levels of engagement, retention, and organizational performance.
• Becomes central to operating a company’s business.
• Optimizes company’s return on their investments – including human capital costs which can run more than 70% of company’s overall costs.
• Makes organizations work better – it builds more productive employees and more effective managers.
• Improves the success of recruiting, professional development, and rewards.

How you should think about performance management – it is all about you!

Performance management “done right” is as much of a mindset as it is a series of steps and activities. Traditional views of and approaches to performance management have failed – here are some new ones. Performance management done right:

• Is a core leadership role
• Focuses first on leadership/managerial behaviors – then the system to support them
• Can make a business impact – it will enhance the performance of your business
• Looks to the future, not the past – you hold the keys to the future

What you can do to start small and simply – the big three

There are three things you can do that hold real promise for increasing performance management effectiveness:

1.Provide a clear and vivid line of sight to your company strategy/mission/vision.

When employees have a line of sight to your company strategy, they can see the connection between their everyday work, and something larger: a satisfied customer, a growing customer base, a better process, etc. As a business owner, communicating the big picture – describing how the work of each member of your team relates to the overall mission of the company, is essential. Employees who understand the big picture deliver better results – are more committed and productive.

Here are some ways to start big picture conversations with your people. You fill in the blanks:

• Your job exists because __________.
• The work you do every day supports the business by __________.
• Here are the top three focus areas of the company this year and how what you do matters__________.
• When you meet our customer’s needs by __________, you help to achieve better business results for the company.
• Here is how your priorities align with the business priorities__________.

Result – Gets everyone moving in the same direction with confidence and that’s essential to your bottom line.

2.Clarify performance expectations – then do it over and over again

Clarifying performance expectations involves having routine, interactive discussions with your people to identify responsibilities, priorities, measurable goals, and a way to track performance.

Make sure that each of your team members understands what is expected – what it looks like when they perform their work to your standards by:

• Stating clearing your expectations for what works needs to get done AND how you expect it to get done. It is one thing to communicate that you expect an employee to be an expert at designing plumbing systems by developing a specific skill set, yet another to leave out the behaviors you expect – no leaving team members bodies in the wake!
• Describing what good and bad performance looks like.
• Telling them how they will be held accountable.
• Asking them to stay focused on scope of work, but to feel secure in identifying needs for change/improvement.
• Resetting expectations as your company’s needs and priorities change – it is a dynamic process.

Result – When your people know what is expected of them, they function more autonomously and with a stronger sense of ownership. You will also build stronger relationships with your people – they will respect you for being forthright

3. Make feedback on-going – part of your every day conversations

If you have formal performance reviews, waiting until they are conducted to provide feedback to your people is ineffective. If you do nothing else to improve performance management in your company, infuse giving feedback into your daily lives and not just any feedback.  There is strong evidence that the most productive feedback plays to employee’s strengths rather than their weaknesses.  It doesn’t mean that you never acknowledge weaknesses, you do.  Here is how:

• Identify your employee’s strengths.
• Involve your people in feedback – start by asking what they think is working well, not so well.
• Provide positive feedback on how your employees are using their strengths to deliver their work.
• Ask them how they think they can build on their strengths to make an even greater contribution.
• Focus weakness based feedback on knowledge and skills rather than talent and what you can do to help.
• Avoid making general statement like “good job”. Give specific and concrete examples of what they do that is good/great.

Result – Real- time feedback with practice will become intuitive and will make a business impact.

This article was intentionally silent on performance management as human resource practice. Concentrate first on establishing performance management as a set of leadership and employee behaviors – you will not be disappointed.