How do you create effective performance management?

It is easy to say what SMART means, it is very difficult to write meaningful goals that link what people do back to the organisation strategy. Start by thinking about what the major strategic objectives mean to your colleague. For example, most organisations have a strategic objective around customer service, but what does it mean? For finance people it might be the least possible service for the lowest possible cost, for marketing it might mean an award winning service model, for operations it might mean a practical system of handling returns. But because customer service cannot be all those things at the same time, meaningless goals are written. So start turning strategy into action from the top, and don't obsess about SMART.

Goal setting is certainly important, but when you decided to implement a performance management program, start with evaluating your current culture. Culture is everything for any organization. If you have a great culture, where people feel valued, are engaged, and perform great work, it is easy to incorporate a performance management program to improve individual and team results. However, if the culture is poor or toxic, any attempt to really engage your team is doomed to failure. As Peter Drucker said, "Culture eats strategy for breakfast." Point well made.

If you've provided a 30/60/90 day plan, ensure that your performance review aligns closely to it. It helps employees stay on track of what will be evaluated. Additionally, ensure that expectations surrounding project management tools are consistent across everyone within your organization, especially when there are cross-functional projects to tackle. Should expectations change, be sure to communicate to all parties that would be impacted.

A blank sheet of paper is a good performance appraisal 'form'. As long as managers are trained in how to define and deliver good feedback. I would advise against using 360 degree feedback as part of the appraisal as it carries lots of potential for bias.

The vast majority of feedback should be specific praise for work done well. Catch people doing something right, ensure they understand what it is that is right (a simple 'good job!' doesn't tell people how to replicate their success), and encourage them to do more of it. Then when you may have to give feedback about something that isn't going so well. your colleague is much more likely to listen and reflect on what you say.

Again, this is all easy to say, and very difficult to do. A lot of research has shown that performance related pay rarely succeeds in driving higher organisation performance (see my white paper on the subject). And what exactly does it mean to say that rewards should reflect values and culture. At the very least, employees should know clearly how their pay is calculated, be confident that they are paid fairly in comparison to other employees, and that options for variable reward will be openly and honestly handled.

Truly supporting employee development and growth is really one of the most important differences between organizations that retain their top talent and those that don’t. Employees at every level of an organization want to feel like there is an opportunity for them to grow and become better at what they do. So if long enough time passes, and they don’t see that desire actually come to fruition, it can be a major trigger for them to want to work elsewhere. Organizations should see spending on employee development and growth as an investment and not just a cost. Of course, different sizes of organizations are going to have different sized budgets for this purpose, but each senior management should allocate what they’re able to.

If there is a pattern arising miscommunication regarding performance management, find the thread tying this pattern together. It is likely the root of a problem that needs to be resolved, as soon as possible. Having a regular cadence evaluating performance normalizes these conversations that can be uncomfortable for some. The points addressed during performance evaluations should not be a surprise to your employee. Managers/supervisors conducting these conversations need to have a sense of accountability to deliver feedback as soon as possible.

I think it's important to consider the company's culture before choosing the best performance evaluation methodology. Wrong choices can be detrimental and lead to a lot of frustration for those involved. Goals also need to be realistic. When the company has well-defined competencies for each position, the performance evaluation process becomes much easier. I believe that mapping competencies should be the first step to take.

I'd like to add the importance of training people, especially the leadership team, highlighting the purpose of the performance appraisal. There's is no point in having a very good and structured process if your leadership team doesn't follow it, because they don't see the value. It has to do also with culture, so it's essencial that the senior leadership team follows the process, puts efforts in assessments and gives meaningful feedback to their team, so that they would be a role model to be followed. And don't forget, the process tends to get better each time, so don't expect the first time you put it in place to be the best possible.