This guide is part of a progression set comprised of Core, Advanced, and Emerging Performance Management practices.

What it is

Performance management engages employees and their managers in the annual process of planning critical work efforts and developmental activities, evaluating the extent to which those goals are met, and making decisions regarding associated pay changes earned because of that performance and growth. The process is generally collaborative, with the employee providing input on proposed performance goals, professional developmental plans, and actual performance or results achieved at the end of the performance period. Managers then comment on the employee’s input, providing an additional perspective to reach alignment. Managers subsequently make compensation decisions based on the extent to which the employee met or exceeded the performance goals, professional growth plans, and contribution expectations set out at the beginning of the performance period/year.   

Practices at this level involve a formal goal-setting process related directly to the job requirements, followed by those directly aligned with departmental or higher-order business goals, and then by those that guide the employee’s growth and development for the year or performance period. A formal and standardized process and schedule for a common evaluation cycle is defined for all employees and managers to adhere to, enabling a well-planned and orchestrated process for all employees. Standardized performance evaluation criteria and measurement standards are established, such that all employees are evaluated on the same type of criteria regardless of role, with a structured format for documentation and process execution defined and communicated to all employees and managers. Integration with compensation decisions is created, with clear steps articulated for how such decisions will be made for each employee.   

Why use it

Performance management guides and directs employees regarding the standards they are meant to meet or exceed to achieve larger organizational goals and objectives. It is a formalized process of planning and post-performance assessment, where individual employees are evaluated against standards and each other for fairly and evenly administered rewards (e.g., compensation). It is designed to help employees meet their performance goals while guiding the development of their skills and capabilities that will prepare them for successively more demanding roles in the future.  

Performance management provides context for an individual employee’s execution of daily tasks, long-term projects, and contributions to the organization’s success. It creates a common language and set of expectations for the employee and functional manager so that performance direction can be best provided. It defines varying performance levels in a more quantifiable manner, allowing for more objective discussions and comparisons of employees in the same or similar jobs. It creates clarity around not only what is to be accomplished (tasks) during the year but also how one can best go about producing the necessary output (e.g., competencies, priority behaviors) and how unique contributions (e.g., special projects or community/peer support) can add to the value of an employee. It also uncovers data on skill and capability strengths and weaknesses that managers can use to identify education and development activities for employees to undertake as they refine performance against standards for the current role while building those suitable for future roles.

Outcomes

Adopting the practices at this level creates a formalized, structured, and repeatable process that brings fair and equitable assessments and decisions for evaluating individual performance across the enterprise. It develops the ability to align stated performance standards and requirements with actual performance and guide individual performance toward larger organizational goals. It provides a consistent and reliable timeframe and process that employees and managers can plan and prepare for throughout the year. It establishes standardized criteria categories that naturally differ between functions and roles and create a reliable and easily understood expectation for task, project, and developmental goal achievement. These include guidance for managers on how and when to deliver feedback on job performance and professional growth and make recommendations/decisions related to basic compensation placement and advancement.

Practice guides at this level

Setting performance and developmental goals that guide annual performance direction.

Defining and planning what is to be achieved by an individual in the coming performance period, typically a business year.     

Defining the performance process for structured and reliable evaluation cycles.

Creating a standardized process is the start of developing a performance evaluation cycle that is fair and equitable for all employees.   

Rating employee performance and competencies fairly and equitably.

Evaluating employees on the quality of their performance against multiple criteria including individual task execution and contributions to the role they occupy.

Providing feedback to support employee growth, productivity, and improvement.

Conducting manager-employee performance discussions, providing observations, areas of opportunity, and ultimately the outcomes of the formal evaluation.

Making compensation decisions that align with observed performance.

Connecting performance management and compensation decisions by breaking down the elements of a rewards and recognition program and targeting different types of compensation for different kinds of achievements.