Do you want to lose 62 million dollars a year? Without implementing a performance management framework, that’s the average loss according to a recent survey. David Grossman reported in “The Cost of Poor Communications” that out of 400 companies with 100,000 employees each, he cited an average loss per company of $62.4 million per year because of inadequate communication to and between employees.
Although your company may be smaller in scale, putting a successful performance management framework in place ensures great communication within your organization and an understanding of how each employee plays a pivotal role in achieving company goals.
What is a performance management framework?
Before we talk specifics, let’s discuss what performance management is and what it is not. Performance management goes beyond simply reviewing your employees. It needs to be an ongoing process from when you first hire an employee to laying out their learning and development to preparing them to take on more advanced roles within your organization.
Employees need to feel appreciated and that their company cares about their career advancement. In return, managers get engaged and happy employees who want to perform and meet company goals. A performance management framework lays out a process so everyone is on the same page. Although there may be performance reviews at set intervals, performance management is a fluid and flexible framework that is always evolving. Everyone needs to understand the company mission, what the key objectives are, and what their role is in driving the company to success.
Formulating a plan
If you already have a performance management system in place, this is a good place to start. What is currently working and what is not working? You may want to survey both your employees and managers and gather feedback. If you perform employee exit reviews, look at why employees left. Was lack of advancement and/or poor communication cited often? How do stakeholders view your company’s success? Is customer feedback primarily positive? If not, what constructive criticism was given?
If your current system just needs to be tweaked, you can build off of it. However, if your system needs to be totally changed, there are some key questions to ask yourself.
What are the goals and mission?
In order to decide which direction to take, look at your company goals and mission statement. What are your learning objectives? Are these being met with your current performance management system? If not, you’ll need to make adjustments. It’s important that all employees and managers know these goals and how to meet each one within their departments. Your framework needs to be simple enough for all team members to understand it.
What are the expectations?
Once the goals are outlined and aligned with your performance management framework, you’ll need to decide what your expectations are going to be in order to meet these goals. What do managers need to do in order to motivate and encourage their teams? And what do employees need to do to meet deadlines and achieve goals? It’s important employees know what they are doing well and what they can improve on in a constructive way. Managers need to be trained in pointing out weaknesses and successes in a non-threatening manner. It’s also important to put actual timeframes on these expectations. That way it’s clear to employees that they have either achieved or have not achieved their objectives and it will make reviews easier.
How will you monitor progress?
Once the framework has been laid, build performance reviews throughout the year. Although performance reviews are usually given once a year, it may make more sense to have them more often when building a performance management framework. This is a great opportunity for managers to give feedback on goals and employees to weigh in on how they feel the process is working. If either managers or employees feel the process needs improvements, adjustments can be made.
It’s also important to make these reviews measurable. That way employees know what they should work on and why if a bonus for example was awarded, they received the amount they did. It’s also a chance for managers to give praise for jobs well done and discuss problems employees may be experiencing. Again, communication is key and the more consistent you are with discussing problems and solutions, the better your company culture will become.
What improvements will be made next year?
A lot of performance management systems fail because problems are never truly addressed. In order to be successful, you’ll need to sit down at the end of the year and evaluate how your program performed. Look at feedback from managers, employees, and human resources. Decide what can be tweaked for the next year and stand firm on implementing these changes.
Creating a performance management framework
After you’ve created an outline for your performance management framework, it’s time to put it into action. If you don’t have a performance management template or software, it’s smart to consider one.
Basically, performance management has shifted over time from a more pyramid approach, top-down organizational approach to more flat collaborative environment. Using a learning scorecard, this achieves this team mentality. Plus, it’s is a way for managers to strategically plan and then to communicate to employees how to achieve this plan. That way everyone knows their part in achieving the organizational goals and it minimizes poor communication and execution.
Key components of the framework
1. Add your company goals
Once you have defined your four areas of your balanced scorecard framework, it’s time to add your overall goals or mission for your company. Remember to keep in mind your four balanced scorecard components and how this mission relates to each one.
2. Create objectives
Next, create 10 to 15 objectives that help achieve the mission or strategy of your company. Remember to make these S.M.A.R.T. (specific, measurable, attainable, relevant, and timely.) Keep in mind that feedback you have gathered from stakeholders, employees, managers, and customers. Think about what strengths, weaknesses, opportunities, and competition are involved in each of these objectives.
After you have your objectives, what measures are needed for achieving each of these? Measures are a way to see if you are on track for achieving your objectives or not. Try to keep measures to no more than three per objective. If you find you have too many measures per objective, it may mean breaking an objective up into more objectives. Make sure these are written in a way that all employees understand what they mean. Again, communication is key.
The next step is assigning targets to each measure. These need to be achievable, but should also be a bit ambitious. Targets are the numbers and the percentages for measures. For example, increase by 10 percent per year or 30 per month.
Initiatives are your tactics or the way you achieve your targets. If these action items are carried out correctly, it will mean your objectives were successful. Make sure all initiatives have a start and end date. That way come review time or in employee meetings, it’s easy to tell where the bottlenecks are located and easier to correct.