4 Steps for Effective Performance Management

Establishing and facilitating effective performance management is an important role and responsibility of Human Resources (HR) as it is regulating performance management. Creating the space where your team can produce excellent results and perform to the best of its abilities is no easy task, but with the right approach, you can make it work. Effective performance management is more than designing and rolling out a classic objective setting and performance review process. It is about purpose, direction, aligned priorities, leadership, interpersonal relationships, constructive feedback, and collaboration.

Managing by Objectives (MBO) has by this time become an integral part of our managerial process. However, reviewing its effectiveness we see that in many companies, the typical MBO approach perpetuates and intensifies disconnection and distrust between a manager and team members. As currently practiced in many organizations, it really becomes just a ritual – a ‚ticking the box‘ exercise. 

Obviously, somewhere between the conceptual idea of MBO and its execution, something has seriously gone wrong. The honorable intent of MBO is to follow the Frederick Taylor tradition of a more rational management process. This includes who should do what, who has control over the process, and how compensation is to be related directly to individual achievement. The MBO process is an effort to be fair and reasonable, to predict performance and judge it more carefully, and presumably to provide individuals with an opportunity to be self-motivating by setting their own objectives. 

So what can you do, if your organization is trapped in a ticking the box ritual and your team members don’t care for or find value in the objective setting and performance review process, considering the exercise a paper process? How can you bring relevance and value to MBO procedures? Whatever obstacles you may be facing, we have some tips to make performance management meaningful. Consider the following 4 steps for effective performance management:

1. PEOPLE: Setting clear and aligned Direction and Priorities 

Your team members cannot meet your performance expectations or company goals if they are not clearly outlined, making this the first step toward effective performance management. Sometimes companies are not as clear as they could be when outlining the company objectives and priorities. Often, team members do not come forward to ask follow-up questions when they are confused or unclear about something. Preempt this pitfall by being as clear and communicative as you can possibly be.

You can define and outline a strategy road map by visualization – creating a chart and posting it within the office, by holding meetings, and One-2-Ones. When you are outlining direction and priorities, repeat the message so that it sinks in, so that employees have a reference, and most importantly, follow up with meetings to check in on progress.

A common root cause of frustration setting objectives is a lack of alignment of priorities among head of departments. Did you have a chance to align the priorities of your team with your peer leaders? Having conflicting priorities across functions can easily lead to clashes – particularly on cross-functional collaboration.  

2. PROCESS: Use Peer Reviews and Mid-Term Reviews

Another great way to foster effective performance management is to utilize peer reviews, based on the 360-degree approach. Peer reviews – formal or informal- are useful because they allow staff members to praise other colleagues and highlight positive aspects of their performance, as well as point out where improvements can be made.

This exercise helps team members to work together, build better communication, and assess where they can improve themselves while watching their colleagues. There does need to be some coordination or HR facilitation  of this process, and all peer reviews should be processed to ensure that no claims, concerns, praises, or other comments go unnoticed or unaddressed.

One of the main criticism of MBO is that annual ceremonies don’t fit anymore into a dynamic and fast changing environment. Objectives which have been agreed 12 months ago are often not relevant anymore. Without regular review, leaders and their teams would fly blind. Projects which have been agreed might have been put on hold, new initiatives have been put on the agenda after the yearly objectives have been set. A typical symptom of this is an increasing activism shortly before a performance review. Regular mid term review help to keep the objectives relevant and meaningful.  

3. CULTURE: Establish a Culture of Constructive Feedback and Widen Horizon from What to How
While clearly communicating company, team and individual objectives is an essential step for any organization, communication alone is not going to get the trick done. You will also need to check in with you teams and team members periodically not only to measure progress but also to provide endorsing or correcting feedback.
Good performance feedback reinforces by acknowledging strong results and positive behaviors while showing opportunity areas with a clear path for improvement. This type of feedback cannot wait until HR kicks off an annual review cycle. Instead, it should be given in real time and integrated into the organizational culture.

Timely performance feedback is the best way to affirm your employees and their work while also shaping their work effectively. If you have a performance software now, it should be able to help you collect frequent feedback. If not, free tools like Google forms, survey monkey, or even just a basic e-mail request will get you pretty far.

Most annual objective setting and review processes are limiting the review of objectives on the WHAT has been  achieved, not HOW they have been achieved. This can trigger contra-productive, undesired behavior. A project manager should not only be evaluated on what his project has been achieved (time, cost, quality), but also how the project has been initiated, planned and implemented (e.g. stakeholder and customer management, team leadership) 

4. SYSTEM: User-friendly Performance Management Software

If you are not already using a performance management software, it may be time to consider trying it out. If you do already use one and it’s not saving you any time, your team complains about it, or it has low staff acceptance, it may be obsolete and in need of an upgrade. Performance management software can really streamline your performance management activities, making it imperative that you either begin using system support or at least begin looking to upgrade your currently used system.

A good performance management IT system is one that offers both traditional MBI reviews and 360s, is user-friendly, has an easy-to-use dashboard interface, allows for actionable reporting and, of course, fosters staff development. The app will help you and your team staying on top of things so that your team is running smoothly and efficiently at all times. Some useful examples of more modern performance management software can be provided upon request.

Keep Momentum by Updates on Outcomes, Results and Impact

Setting aside time to meet with your team and reviewing how things are going with your set objectives are important to keep the momentum. These meetings can be held weekly, monthly, or as often as you see fit. When holding these meetings, be sure to have a clear idea of what you want to cover. 

Some topics may include:

  • Sharing/praising achievements and talking about areas that need changes or further work  
  • Recognizing those team members actively meeting their objectives or milestones with rewards or incentives
  • Discussing plans for the near future
  • Discussing data trends: revenue, customer satisfaction, resource utilization, etc.
  • Following Up on Peer Reviews

Important: You should never meet just for meeting’s sake. You want to have something relevant to address and something worthwhile to talk about. If you feel things are going smoothly, employees are receiving performance feedback and acting accordingly, and the company overall is on a positive road, meetings may be held less frequently and treated as checkpoints throughout the year.

These four steps for effective performance management may seem simple, but they can work wonders when implemented into your team’s day-to-day life. Leadership should be about the people involved. Making the most of their abilities, recognizing where they shine, encouraging them where they need to adjust, and respecting them as full team members, not just cogs, are really how you can create the right work environment for success – and how you can give relevance to your companies dusty MBO process.

I hope you find these lessons learnt helpful. What you can see here again is the importance of ensuring that PEOPLE, PROCESS, CULTURE and SYSTEMS and in sync.