Printer Friendly Version                                    Back to Capsules    Performance Management Performance management is a key element of every manager's job. Many companies - small as well as large - try to oversee and improve productivity through a system of meetings and work evaluations known commonly as "performance management" or "performance evaluations." The purpose is to provide a forum for the employee and manager to discuss career goals and expectations. It lets the employee know where he or she stands, provides recognition for a job well done, and offers an opportunity for the manager and employee to work together to improve job performance. Know the Pitfalls Before trying such a system, it's important to know the pitfalls. First of all, you need a management team that is capable of honestly telling employees the truth about their performance. Performance management has also been questioned because it brings together in one process two contradictory processes: learning and evaluation. It is hard for employees to be honest about weaknesses - which is necessary for improvement - at a time when they are being evaluated. As well, there are signs that many performance management systems are vague and imprecise, with employees leaving the session no clearer about their work and its relationship to corporate goals than when they started. And too many supervisors treat it as a useless form-filling exercise, to be forgotten as soon as it is completed. But many companies have success with performance management, using it to align employees with goals and to improve retention of staff through the regular discussions between employees and their managers. Be Clear on Your Goals In introducing a performance evaluation system, it's important to be clear at the outset about your objectives. Do you intend to combine the assessment with salary and bonuses, or separate them? Will you use it as the foundation for a systematic training and development effort? Another big issue will be how frequently performance appraisals are held. They have to be frequent enough so that employees don't forget what they promised to achieve yet not so frequent that they become a burden for all involved. Many companies use 360-degree evaluations, in which a person is assessed by people who work with him or her, not just supervisors. Another important element to consider is whether the evaluation is for a knowledge worker or somebody doing a more traditional job, since the ability to manage - and evaluate - performance will be very different. Setting New Goals Before the meeting both manager and employee should have separately put some thought into evaluating performance in the most recent period, what would be reasonable objectives for the coming period, and what training and development is needed to ensure employee growth and the achievement of targets. Employees should consider questions like: What are your job responsibilities now? Have they changed? Is that good or bad? What have been your significant accomplishments? What are your career objectives? To what extent have you achieved them? How could your job be improved? Who could help this happen? The meeting itself should be a dialogue, as those issues are explored. Perhaps the most important part of the review is the conclusion. The employee and employer should agree on new objectives and expectations - preferably measurable ones - and decide what to accomplish before the next review. There is no set formula for how frequently to hold the meetings. Many companies confine themselves to one session annually, but that may not be often enough for the employee to receive feedback and be reminded of the agreed-upon goals. One suggestion is that in companies with less than 50 employees, sessions should be held at least twice per year while in companies with significantly less than 50 the sessions might be once a quarter. Performance management can be very tricky and some small businesses shy away from trying such a system. But improving performance can't be left to happenstance and properly done performance management can be an effective vehicle for a small business. If you would like more information on Performance Management, please contact us.