Bringing your performance management system to life

The trouble with a lot of performance systems is that they are very static in nature. In fact, in far too many organizations, when people refer to performance management (and the ‘system’) they are referring to the annual performance review that everyone dreads; however, therein lies the problem with the ‘system.’ What is important to note and accept is that performance management is not meant to be an act or an event. Performance management is certainly not a one-time happening or something that gets a check in the box for doing it or completing it. Performance management needs to be a system, and by system, according to the dictionary meaning, it is “a group of related parts that move or work together.” The key words here are “move” and “work together.” A system needs to be ever moving, working together and hopefully evolving. The performance system at your organization needs to be alive enough to be able to do this.

So to start, let’s agree that the annual review process is NOT ‘the’ performance system. The annual review is an outcome or product of your system. It is a tool, a way of measuring and gauging performance, but it should not be an all-encompassing event. Now that we have (hopefully) agreed on that, we can look at what you need to do to bring your own performance management system alive. First of all, let’s start thinking of performance management as being cyclical and fluid in nature. It (performance management) needs to always be happening, each piece of it needs to fit with each another and it needs to be ever evolving and moving forward. The last item to clarify, and hopefully agree on, is that we have to start thinking of performance management as both constructive AND positive in nature. Meaning, if your system is alive and working well, when someone refers to performance management, it doesn’t automatically mean poor performance or managing someone out the door. Organizations with weak performance systems typically have an organizational culture that refers to “performance management” as one where managers only deal with poor performance (when it occurs) (i.e. being managed out), or worse yet, the culture is one where there is no performance management of any type. That is, all employees are treated the same regardless of what they do, how they perform etc.

In order to bring your system alive, and perhaps remedy some of the challenges mentioned above, you need to embed the management of performance into your organizational culture and DNA. It needs to be a way of life at your company. Here is what you need to be doing:

1. Make coaching conversations part of everyday life – managers should always be talking to their people. Coaching needs to be an ongoing event and part of life at your organization. Coaching for performance improvement, coaching for skills and knowledge development and coaching to support learnings. These are all key elements of laying the foundation for your performance management system and bringing it to life.

2. Bring your goals to life – any effective system starts with organizational goals that feed department goals that lead into individual goals. These goals need to be in alignment and serve as the foundational discussions for your coaching – see point #1. Employees need goals, they need to have metrics/KPI’s by which they are measured and these goals and objectives need to be referenced and referred to all year long. Essentially, as a manager, they are your “playbook” for managing your staff.

3. Development plans are critical – a big part of any performance system is development plans. These plans could be to develop knowledge, skills and abilities to do the current job or perhaps the development plan is to prepare an employee for a future role. Either way, they are a critical part of the performance system. Development plans need to be jointly developed by the manager and employee and then agreed upon as the way ahead. Much the same as the goals, they need to be referenced, discussed and progress measured throughout the year. A development plan is not meant to sit on a piece of paper and then, you guessed it, referred to only during the annual performance review. You need to make these discussions active and ongoing in order to bring performance management alive.

4. Align your rewards systems with your performance system – the achievement of goals, objectives and individual/team successes needs to recognized and rewarded. If employees are delivering on what is expected of them and more, you can enhance/acknowledge these achievements and augment your performance system by delivering appropriate levels of reward and recognition. Simply put, effective goal setting and coaching is supported by a strong rewards system. Recognition, when part of your culture, coupled with the application of rewards augments the recognition given and highlights the performance elements.

5. Pay for performance – at the end of the day, employees need to be pay paid for the results (performance) that they deliver. Effective pay strategies have two elements – one is the external equity side or market pay, the other is ensuring you have a merit pay approach that rewards your best performers. In many merit pay strategies, the top performers often earn 2x more (merit increase) than what the mean level of performance is provided.

These five core elements, when in place and utilized to their fullest, will help bring your organization’s performance management system alive. An “alive” system is one where all these pillars are in alignment and support and feed into each other. If your managers understand and buy into this type of system, you can rest assured that your employees will follow suit. The payoff in the end is worth it as it ultimately leads to higher levels of engagement, an ability to attract and retain top talent and it will also reflect positively on your overall employment brand. As always, I welcome your comments and feedback.

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