Q&A: Performance Management Programs

Q: We are rolling out a new performance management program. Is there one that you prefer?

A: While I don’t have a specific program to recommend, I will confess that I remain underwhelmed with the vast majority of them. The annual process of setting goals and then reviewing goal accomplishments 12 months later is fraught with challenges. Annual conversations are hardly sufficient to truly manage performance. Often times the goals change throughout the year but usually the performance goals don’t, meaning that employees are evaluated based on out-of-date criteria. And there is always the problem with recency errors – we forget about the accomplishments or failures early in the 12 month period and put added weight on the performance in the months and weeks leading up to the annual review.

Instead, I prefer quarterly goals that require ongoing feedback and communication. And if you want to tie performance to some sort of incentive pay, be sure:

• The criteria upon which the incentive pay is based is transparent and understood by the employee
• The employee legitimately has the ability to affect results
• The incentives are aligned to the employee’s unique motivators
• The program is easy to administer
• The financial incentive is meaningful

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