The CEOs guide to performance management
Updated: May 10, 2020
What is performance management?
Performance management is the act of continuously ensuring your company, teams, and individuals are aligned with your overall strategic objectives. It used to be common for a company to set goals across the organization at the beginning of the year and then do a performance review with each employee at the end of the year. This process has evolved dramatically.
So, what’s wrong with running an annual goal-setting process at the beginning of the year and doing performance reviews at the end of the year?
Rating each employee’s performance on a standardized scale then reviewing those results with each employee is awfully time-consuming.
Most businesses are evolving so quickly and doing so much blocking and tackling that goals set at the beginning of the year often decrease in priority or completely change.
Personal development feedback and career development guidance are often coupled together with performance conversations—too infrequently and not in the moment of need or greatest impact.
Employee ratings are often too subjective and left to the devices of a sole manager; some rate easier or harder than others.
It’s difficult to map each and every employee’s work directly to the company’s current objectives, i.e., operations department employees and customer acquisition objectives.
Merit increases in compensation or promotions are often tied to the performance of objectives that an employee had little to do with.
Because there is an entire year’s worth of data and experiences to consider, the focus becomes more about following the company’s set performance management process versus the actual quality of the employee’s performance evaluation.
What is performance management?
Objectives and key results—or OKRs—can be traced back to the 1970s when they were first used by Andy Grove, co-founder and then CEO of Intel. They’ve experienced a resurgence recently thanks to the book “Measure What Matters” by John Doer.
Establishing the right OKRs in the right way is critical to running a sound performance management program. Although it’s not necessary to have OKRs that cascade from the top down to the very bottom of your organization, your department or team OKRs should support your company’s OKRs.
OKRs should serve as a guide. They are not a to-do list or project planning document. OKRs are supposed to allow your business to be ambitious. If all of your OKRs seem 100% attainable, you’re probably not thinking big enough.
Download the templates below to define your objectives and team results.
Running a performance management meeting process
The beauty of establishing and following a performance management process that’s based on OKRs is that your team members should be able to spend more time working toward set objectives and less time planning and following a rigorous process. Here’s an example of the meeting cadence for PI’s sales and marketing team:
Strategic planning to outline OKRs across the following year
Quarterly (beginning of the quarter)
Department-wide meeting to review OKRs and how the team is tracking
Monthly (end of the month)
Metrics review: Review key performance indicators and trends in relation to annual targets
Team sprint planning: Collaboratively set team OKRs and assign tasks for the following month
Sprint retrospectives: Review team progress made over the last sprint and any modifications going forward
Personal development: Each team lead meets 1-on-1 with each direct report to talk specifically about their direct report’s personal development, career aspirations, and tracking against set goals
Team leads meeting: Team leads update each other on what went on last week and what’s happening this coming week
Weekly team meeting: Review last week’s performance, tracking month-to-date, and address any issues that have come up
1-on-1 Meetings: Each team lead meets 1-on-1 with each of their direct reports to review weekly progress, address issues, and give real-time feedback
Daily or as determined by team lead
Team stand-up: Quick 10-minute check-in
The new age of performance management
Performance management is no longer a once-a-year endeavor. Instead, it’s about continually assessing how your employees are performing compared to expectations.
Use the templates provided to support your employees in their personal and professional development, then watch how they increase engagement and productivity.