3 Building Blocks to Make Your Performance Management System Work

(First of a 3-part series on Performance Management)

Every ending signifies a new beginning, and hopefully, a better one.  As we turn a new leaf and do a final check on our year-end / start-of-the-year lists, we find ourselves attending to housekeeping tasks for our organizations.  And at the heart of our people processes this time of the year is the Performance Management System.

Performance Management System Defined

Performance Management System refers to a whole range of processes that align employee and organization targets, growth and development needs.  It is an end to end cycle that facilitates not only employee performance alone, but also continuous development and improvement, in which the ultimate desired outcome is a highly engaged and performing workforce contributing to the Company’s overall stability and success.

For the longest time though, Performance Management System has been taken to directly mean the Performance Appraisal, and for understandable reasons.  For one, the year-end Performance Appraisal process may have been inadvertently labeled by some as Performance Management System – of which Performance Appraisal is just one feature.  Or, either for lack of helpful tools or other limitations, teams just preferred to keep it simple and focused on year-end appraisals alone while opting to drop all other supposedly equally significant aspects of a good Performance Management System.

In fact, trailblazers have now renamed it as Continuous Performance Management System, to further emphasize how this very crucial process for managers and employees, and the organization as a whole, is not only a year-end one-time thing.  This shifts the focus from just mere accountability and to get to tick off to-do’s and milestones, to on-going learning, development and improvement.  To finally veer away and go beyond being past-focused and punitive, to instead being proactively corrective and empowering.  It is an on-going cycle throughout the employee’s career, embedded in any successful organization’s blueprint and culture.

The 3 Building Blocks

So, what makes a good and complete (and Continuous) Performance Management System?  It is indeed possible to keep it simple and still effective – here we identify 3 Building Blocks to a Performance Management System that works:

  1. Performance Evaluation: Going Back to Basics
  2. Performance Development – The Individual Development Plan: Cultivating Potential
  3. Performance Improvement: Reframing the PIP Paradigm

Performance Evaluation: Going Back to Basics

All developmental initiatives, career pathing and succession planning will not be possible without the first and basic step that is the Performance Evaluation process.  Also known as your Performance Appraisal or Performance Review, this first building block focuses on the relatively short-term and immediate deliverables within an identified review period, usually a year.

An effective Performance Evaluation comprises of the following important steps:

  • Planning

Setting your SMART Goals, Objectives, Expectations and Key Results – and any other tools that may be helpful; identifying all these fall under this first step in Performance Evaluation.  Alignment is the operative word when defining this part.  Organizations should be transparent and cascade these items to their managers and employees, who then draft their own and define how they will support and concretely contribute according to their respective job roles and functions.

  • Implementation and Monitoring

Having defined key planning items, employees now put these into action alongside regular reviews and guidance from their managers.  Depending on the identified goals and targets, monitoring frequency will need to be adjusted to be able to promptly track progress.  This will allow for necessary adjustments or to be able to offer the help needed, as the work year and other possibly unexpected factors unfold.

  • Evaluation and Feedback: Regular, Mid-Year and Year-End

Direct Manager feedback, as well as peer and client feedback (i.e. 360°) should be sought for a holistic view of the employee’s performance.  A one-time year-end assessment and sit down is not ideal in that more often than not, employees are caught off guard on goals that were misunderstood, expectations that were apparently not aligned, and many other misinterpretations and misperceptions – forgotten milestones too, that could have been easily avoided with regular catch-ups.  Both formal and informal feedback sessions will help contribute to more productive year-end discussions, allowing for more in-depth and strategic reviews.

Next Steps

A clearly defined Performance Evaluation will set the pace for an effective Performance Management System.  Discussions and outcomes from this process will provide valuable inputs for the next two building blocks which we will discuss in the succeeding articles of this series.