Essentials to Performance Management

Four important steps to improving employee performance

Performance management is ‘human resources-speak’ for the process of improving organizational effectiveness through individual performance improvements. Large corporations employ a cadre of experts to develop and manage key performance management programs in an effort to improve productivity and profitability. For the small business owner, failure to manage individual performance can mean business success or failure in very short order.

If you’re not ready to hire your own ‘cadre of experts,’ you can and should develop a good, workable performance management program for your company. Simply stated, performance management is the process in which the following questions are addressed:

What’s my Job? (Purpose)

Have you completed those job descriptions that your employees have been asking about? (Or does that project come just after completing your employee handbook?) It seems so simple. That is, until you open a management book and look under the chapter on ‘job descriptions.’ You learn there are people who make their life’s work out of writing job descriptions. There are ergonomic implications to your job descriptions. ADA and legal implications. What is a “bona fide occupational job requirement,” anyway?

STEP #1: In your own words, answer the question ‘What’s my job?’ for each of the job functions in your company. Give each job a title, and list the top five outcomes for which each job function (not the person in the job) is accountable. Try to stick with five. Any more and you’re getting too complicated, any less and you’re probably too narrow in your scope. Copy this and give it to everyone doing this same job function. Though it may seem trite, it’s a start. Most of all, your people will appreciate it.

What am I supposed to accomplish? (Direction)

This may be one of the most difficult aspects of performance management. It’s also the most important. Giving clear direction is about defining the ‘what’ to accomplish as well as the ‘how’ to accomplish goals. Goal setting requires you to define specific, measurable, and realistic outcomes to each person’s work performance. The sum of your people’s goals must add up to your own. That requires you to have first established a clear, well defined roadmap for your business. Assuming that’s been done…

STEP #2: Establish both quantitative as well as qualitative expectations for each of the five items listed on the job descriptions you (just) wrote. Define and describe the ‘what’ outcomes expected (transactions processed per hour, cars serviced per week, customer complaints below x% each month), as well as the ‘how’ outcomes expected (friendly, accurate, timely, organized, resourceful, creative, diligent) in attaining the outcome. Review this information with your employees. Make sure each person understands and agrees with your performance criteria.

One of the challenges to goal setting is that sometimes goals change, especially in an entrepreneurial environment. Make goal reviews a regular occurrence. There is no better formula for failure if you’ve shifted direction yet your staff remains on the same old course.

Am I doing a good job? (Feedback)

If goal setting is the most difficult aspect of performance management, performance appraisals are the most dreaded. When outcomes and performance criteria have been ill-defined, the ability to clearly and honestly give feedback on job performance is difficult.

Performance appraisals are traditionally:

  • an annual ritual when stress levels usually rise, hallways get more quiet, and the smell of ‘changes’ is in the air
  • the time when people pull out the goals they developed eleven months earlier and start to realize all the things they never got around to doing
  • the time supervisors finally develop the courage to unload the negative feedback that they’ve been saving up all year, waiting for the ‘right’ moment to discuss

STEP # 3: Pull out the ‘job description’ sheets for each employee and set them next to the goals you developed. Establish a letter grade next to each item on both sheets. Grade both the outcome (what) and the effort (how) separately. Do this at least four times per year. It takes away the drama, and keeps you and your team focused on what’s going on.

What’s in it for me? (Incentive)

Reward systems become ineffective, even discriminatory, when they are not clearly understood, not based upon some measurable criteria, and not equitably distributed. By establishing purpose, direction, and feedback with your employees, whatever reward, recognition, or incentive system you develop, will be much more effective and respected.

STEP # 4: Base your reward system on the measurements you’ve established. No more. No less. Celebrate successes, and confront failures quickly, honestly and professionally.

Think about it. If just two of your ten employees are underperforming their roles, that’s twenty percent of your workforce! Not even the largest corporations would stay in business for long if that were the case. Developing and working your own performance management process should be one of the most important business functions you perform. Your success is riding on each member of your team. Make sure your team is heading in the right direction.


Michael Tracy is owner and Managing Principal of OMNI Employment Management Services, LLC, located in Overland Park. OMNI is a human resources consulting and outsourcing firm.