A Model Performance Management Process

Although performance management processes vary from organization to organization, best practice studies and professional publications show that essentially all systems contain variations of the eight steps shown in Figure 4.1. A common element of effective systems is that they contain well-articulated processes and roles for accomplishing performance management, with clear accountabilities for managers and employees. This helps ensure that employees are treated in a fair and equitable manner, which is especially important when performance management is used for decision making. 

Before discussing each step in detail, there are some important caveats about the process to recognize. It is :

Targeted to individuals, not teams 

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While team performance is critical in many organizations, the predominant need and vast majority of performance management systems provide evaluations of individuals, which are required for decision making and development. Thus, although there are needs for team based performance management in some contexts, these will not be addressed here.

Most relevant for non executives 

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While many of the same principles discussed in this book apply to executive performance management, there are unique aspects of executive evaluation that are beyond the scope of this book.

Not sufficient for handling disciplinary issues or serious performance problems 

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While the performance management approach discussed here helps identify employees who are performing below standards, most organizations initiate a separate process with employees who consistently fail to meet standards. This involves putting employees on a formal performance improvement plan or opportunity period, where their specific deficiencies are documented, needed improvements are specified in detail, and timelines are provided within which performance targets must be met. Initiating formal opportunity periods is serious and is often a precursor to performancebased terminations. Although signifi cant and consequential, this process falls outside of typical performance management activities and will not be treated in depth here.

The eight steps of the performance management process are discussed next, with a focus on the best practices associated with each. While the best practices oftentimes sound straightforward, they can present signifi cant implementation challenges. Accordingly, the realities surrounding what it really takes to implement them well are highlighted throughout the discussion.

To illustrate important concepts concretely, examples are provided from a technology development firm’s actual performance management system. The system included a competency model and result soriented objectives for each employee. The examples that are presented focus on the job of Human Resources professional – a job that most people have encountered and understand – and the “Planning Work” and “Collaboration with Others” competencies that appear in the model in Figure 4.2.

One best practice that has been advocated recently in state of the art performance management systems is to establish a hierarchy of goals where goals at each organizational level support goals directly relevant to the next level. By showing how the work performed across the organization fi ts together, it is more likely that everyone will be working in alignment to support the organization’s strategic direction and critical priorities.

Figure 4.3 shows four levels of goals, which is typical in many organizations, although there can be more or fewer levels. Looking at the connecting symbols, not every goal applies to all levels. For example, only three of the five organizational goals apply to Administrative Division. Likewise, only two of the Administrative Division’s 

goals apply to the Human Resources Department. Finally, in this example, the person’s individual performance objectives support only one of the department’s goals. It is extremely unlikely that an individual’s performance objectives will relate to every goal at every level in the organization. What is shown in Figure 4.3 is much more typical, where an individual’s objectives will support only a few higher level goals. While the value of developing and linking goals at different levels is intuitively appealing and sensible, the reality is that the process of deve. 

One of the challenges in setting cascading goals is that it can be difficult to see relationships between high level and sometimes lofty organizational goals and the work done by individuals. To remedy this, organizational goals need to be translated into more refined goals at the division, department, and individual levels. Doing this thoughtfully and correctly is time consuming and difficult, especially if managers are not accustomed to thinking about these linkages. As a result, the process typically requires a series of meetings :

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First, executives develop division goals that align with the organizational goals. 

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Next, mid level managers develop department goals that align with the division goals. 

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Finally, department goals are cascaded down to individuals.

The bottom line is that implementation of cascading goals requires time, effort, and considerable hand holding, at least initially, to ensure that the cascading is done well.

The performance management cycle typically begins with a discussion of what is expected of employees in terms of results and behaviors. This step is important because it helps employees understand what they need to do and requires articulating evaluation standards, which increases the transparency and fairness of the process.

Behavioral and results expectations should be tied to the organization’s strategic direction and goals.2 In fact, if developed and implemented properly, performance management systems drive employees to engage in behavior and achieve results that facilitate meeting organizational goals. Behavioral expectations are frequently communicated through the use of performance standards that are aligned with the organization’s core values and strategic direction. These standards are discussed with employees at the beginning of the rating cycle and used as a basis for systematically evaluating behavioral performance.

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