Overcoming Challenges in Using Individual Objectives for Performance Management

There are several challenges associated with using individual objectives as the basis for performance management.

Inconsistency among managers can result in objectives that are too easy, unattainable, or unsystematic across individuals who occupy the same job. If managers are not trained to set objectives of similar difficulty and complexity for employees in the same job, one employee’s objective could be to perform a simple data collection task, while another’s in the same job could be to manage the design and implementation of a complex program evaluation process. If the overall impact and contribution of the results associated with these different objectives are not considered, the employee who executed a simple data collection task could be considered as performing equivalently to the employee who implemented a complex program evaluation process, simply because they both achieved their objectives. Thus, a key challenge is ensuring that fair, equitable, and job relevant objectives are set for all employees.

In highly routine and predictable jobs, it is sometimes possible to predefi ne a set of objectives that apply uniformly to all employees. This not only saves time that would otherwise be spent by each manager and staff member developing individual objectives, but it also ensures that all employees in the same job are held accountable for the same expectations and standards. When identical objectives apply to everyone in a job, job analysis procedures like those discussed in Chapter 6 can be used to defi ne these, ensuring their job relevance.

In many jobs, the objectives for different employees vary signifi cantly, depending on the nature of the individual’s duties and assignments. When it is not possible to use the same objectives for all employees, it is best to have supervisors develop individual objectives from validated tasks or work behaviors that have been identifi ed for the job. The objectives will need to contain more specifi c information than the tasks or work behaviors (e.g., what specifi c project, customer, product, etc. the employee is responsible for), as well as specifi c quality, quantity, and timeliness expectations. However, by starting with a list of validated tasks or work behaviors, the objectives developed for each employee can be linked to valid job content. As objectives are defined for employees holding similar or identical jobs, they can be compiled and reviewed across managers. This helps to ensure that similarly difficult and complex objectives are being set for individuals in the same job and level.

Even if training and examples are provided to help managers develop objectives, they will still be at least somewhat unique to each employee, in most cases. An issue then becomes how to evaluate the relative contribution of the myriad of results that different employees deliver. Given that some employees deliver higher impact results than others, it would not be fair to consider all employees who achieve their objectives as performing the same. An effective strategy that has been used in several public and private sector organizations to address this issue is to develop standards for evaluating the relative contribution of different results, in addition to evaluating whether or not timeliness, quality, quantity, or fi nancial measures were achieved. The use of individual performance objectives without this additional evaluation fails to differentiate between employees who are contributing more or less and for differentially rewarding them.5 An example of such standards is shown next.

Another challenge is that setting concrete objectives in advance can be difficult for jobs that are unpredictable or constantly changing. Consider the challenges in trying to develop specific objectives for R&D jobs where it is impossible to predict when meaningful discoveries will occur. An effective strategy for these types of jobs is to set shorter term objectives that are more predictable. Feedback can be given and interim appraisals conducted as employees reach key milestones during the rating period. In fact, given the fluid nature of many work environments, some experts have advocated not even trying to set longer term objectives, claiming that this is an exercise in futility, and instead recommended that the focus be on setting shorter term objectives as the work evolves.

A final challenge in setting objectives occurs when it is difficult to associate outcomes with a specific person’s effort, because the work is team focused or requires significant interdependence with others. In these circumstances, objectives should be set at the level where the key work products are produced. If jobs are so intertwined or dependent on a team, it may not be practical or appropriate to set individual objectives. Instead, objectives should be set at the higher group or team level.

Setting Objectives Collaboratively with Staff

The first performance conversation managers and employees should have at the beginning of the rating cycle is to identify the employee’s performance objectives. Both managers and employees need to do some advance planning for this discussion. The meeting should take place in private without interruption. It’s important that the meeting is a collaborative effort where employees participate and provide their input, so they will be committed to their goals. During the meeting, managers should discuss the department or office goals with employees and their ideas about the objectives the employee should achieve. Depending on the level of the employees and the type of work they are doing, it may be appropriate for employees to also discuss objectives they wish to achieve. During this conversation, there are several common questions that typically arise, which managers need to be prepared to address.

No more than three to five major objectives should be identified for each employee. Major objectives refer to key deliverables and significant projects or outcomes employees are expected to achieve. While it is frequently possible to set sub goals for major objectives and employees may wish to do this for their own planning purposes, it is not recommended that the objectives included in an employee’s performance plan contain this level of detail. Having a large number of narrow objectives at very specific levels of detail will be cumber some to manage and therefore are not recommended.

Once managers and employees have come to agreement on the employee’s objectives, a strategy that can facilitate employee ownership is to have employees prepare the wording of their objectives for their performance plans. Managers can then review and sign off on the final set of objectives. This not only helps to ensure mutual understanding of what is expected but also makes efficient use of managers’ time in executing the process with many direct reports.

During the rating period, managers and staff may need to revisit the objectives as unforeseen events occur that interfere with achieving them. Although objectives can be changed during the rating period, it is best to “freeze” them at least three months prior to when ratings will be made. A key concern in implementing a performance management system is ensuring that employees understand their expectations and are provided with sufficient time to achieve them. Last minute changes can lead to perceptions of “changing the rules at the 11th hour” and may lead employees to challenge their evaluations.

The Bottom Line

The development of individual performance objectives that drive key results can be an important and effective component of a performance management process. However, developing fair, job relevant, and useful objectives requires training and considerable effort on the part of managers, employees, and human resources staff. If organizational members are not committed to developing effective objectives and doing this consistently for all employees, individual objectives should not be included in the performance management process. Poorly developed objectives will not only be de-motivating to staff but can leave an organization vulnerable to potentially successful legal challenges. Thus, if there is unwillingness to devote the time, energy, and resources necessary to overcome the inherent challenges involved in developing good objectives and monitoring the effectiveness and completion of these, the best alternative is to include only behavioral performance standards in the system. The development of these is discussed next.

Practical Exercises