Performance Management
Last updated
Last updated
Performance management refers to the ongoing process of maximising the contribution employees make to a company. It focuses on sustaining and enhancing employee performance according to company goals and objectives. Rather than being a single task, it encompasses a range of activities within a larger framework. Performance management activities can vary across companies but typically involve:
Objectives Planning Establish objectives for individuals and teams, helping them understand their role in achieving the organisation's mission and strategy.
Performance Monitoring and Development Improve performance of employees, teams and, the wider organisation. Provide ongoing feedback and coaching, track progress, and offer development opportunities.
Accountability, Reviewing and Rewarding Ensure accountability by linking performance to rewards, career development, and addressing challenges through mechanisms such as performance improvement plans (PIPs), or, if necessary, contract termination.
Managers need to use tools like OKRs, feedback mechanisms (360-degree reviews), and formal performance reviews to track and enhance performance. They should offer continuous support through coaching and mentoring and link performance to appropriate rewards or consequences. Formal tools like PIPs, when necessary, help manage underperformance, ensuring a structured and fair process for improvement.
This stage focuses on setting clear goals and expectations for both individuals and teams, ensuring alignment with the organisation’s broader mission and strategy. It provides the foundation for effective performance management.
Managerial Tasks and Tools
Goal Setting: Work with employees to create SMART (Specific, Measurable, Achievable, Relevant, Time-bound) goals.
Aligning Objectives: Ensure that employee and team objectives are aligned with the company's strategic priorities.
OKRs (Objectives and Key Results): Define both high-level objectives and the measurable key results that will indicate success. Collaborate with employees to set measurable objectives and key results that align with company strategy. Use tools like Lattice or 15Five to track and monitor OKRs. OKRs are a great tool to ensure that employees know what they are working towards and how to measure their progress. Regularly review OKRs to ensure alignment with strategic goals. “OKR” stands for Objectives and Key Results. OKRs are an effective goal-setting and leadership tool for communicating what you want to accomplish and what milestones you’ll need to meet in order to accomplish it. OKRs are used by some of the world’s leading organisations to set and enact their strategies. In this article we’ll define an OKR, look at how they’re used and provide some examples of OKRs. A collaborative goal-setting methodology used by teams and individuals to set challenging, ambitious goals with measurable results. OKRs are how you track progress, create alignment, and encourage engagement around measurable goals. Book Recommendation: “Measure What Matters: How Google, Bono, and the Gates Foundation Rock the World with OKRs” by John Doerr
Balanced Scorecard: Apply this methodology to align goals across financial, customer, internal processes, and learning/growth perspectives.
Action Planning: Develop step-by-step action plans with employees to meet objectives.
Role Clarity and Team Charters: Ensure that every employee understands their role in the team and how it contributes to the organisation’s broader objectives. Document roles and team goals using team charters.
Goal-Setting Software: Tools like Lattice, 15Five, or CultureAmp allow managers to track and visualise goals, helping to ensure alignment and progress.
This stage is about tracking progress, providing feedback, and developing employees to meet their goals. It’s an ongoing process of communication and support.
Managerial Tasks and Tools
Continuous Feedback: Provide regular, constructive feedback to help employees stay on track or make course corrections. Use both formal and informal feedback sessions. Tools like Workday or BambooHR help in delivering structured feedback.
Coaching and Mentoring: Offer guidance and development opportunities, helping employees improve their skills and achieve their potential. Use the GROW model (Goal, Reality, Options, Way Forward) to guide development conversations. Identify areas for improvement and help employees explore their own solutions.
Tracking OKRs and KPIs: Regularly monitor progress against key results and adjust objectives if necessary. Tools like 15Five or CultureAmp can help track progress.
Regular One-on-One Meetings: Scheduling weekly or bi-weekly one-on-one sessions allows managers to address performance issues early and provide real-time feedback. Hold weekly or bi-weekly one-to-ones to address any performance concerns early and provide ongoing support and real-time feedback.
360-Degree Feedback: Implement multisource feedback to get a holistic view of employee performance from peers, managers, and subordinates.
Identifying Development Needs: Work with employees to identify areas for improvement or growth and set up training or development opportunities. Use Learning Management Systems (LMS) like Coursera for Business or Udemy to provide employees with training opportunities.
Pulse Surveys: Use quick, frequent surveys to gauge employee engagement, morale, and any areas where they need more support
Performance Management Software: Tools like Workday, BambooHR, or Trakstar can help with tracking progress, delivering feedback, and conducting performance reviews.
This stage is where performance is formally evaluated, and employees are held accountable for their progress. It’s also where rewards, career development opportunities, and, if necessary, corrective actions are implemented.
Managerial Tasks and Tools
Formal Performance Reviews: Conduct comprehensive annual, mid-year or quarterly performance appraisals to compare actual performance with set objectives and to discuss progress, challenges, and future goals. Tools like Trakstar or Workday help structure these reviews.
Rewarding Performance: Link performance to rewards, including bonuses, promotions, or salary increases. Use compensation management tools like PayScale or CompTrak.
Addressing Underperformance: If employees aren’t meeting expectations, develop a plan to help them improve. For employees falling significantly short of expectations, implement Performance Improvement Plans (PIPs) to outline clear steps, timelines, and expectations for improvement.
Recognition Platforms: Tools like Bonusly or Kudos allow managers to offer regular recognition to employees for outstanding performance.
9-Box Grid: Utilise this talent management tool to evaluate employees’ performance and potential, helping guide decisions on promotions, development, or succession planning.
Managing Consequences: When improvement plans don’t yield results, address ongoing underperformance with clear consequences, including contract termination if necessary.
Career Development Discussions: Offer high performers the opportunity for career growth through stretch assignments, promotions, or learning opportunities.
Succession Planning: Identify and prepare high-performing employees for future leadership roles.
Shreyas Doshi wrote the following on X
As performance review season gets underway in many places now & through Q4, here’s a rough model to help you think about how you are perceived in almost every mid-sized to large company.
Your work is generally observed and perceived by others along the following 3 dimensions:
Content: this is about the insights & ideas you have, the proposals you make, how you solve problems, the things you ship, the metrics you move in the short-term, the business impact you create in the long-term, etc.
Confidence: this is about the image you project as you do your work, do you seem to have things under control, do you seem to be able to tackle tough tasks, how you communicate, do you come across as “leadership material”, are your peers and people above / below in the hierarchy confident in you, etc.
Context: this is about your sensibility around your company’s implicit culture, how you adapt your approach to your org’s power structure, that important exec’s quirks & preferences, general biases of important peers & stakeholders, etc.
Now, here are some crucial observations to consider as you think about how you’re perceived and how that affects your odds of getting promoted:
A) In most companies, if you are extremely good at just 1 of these and average / below average at the other 2, you are going to “get stuck” beyond certain levels (usually Manager / Sr. Manager will be your ceiling).
This is unfortunately the cause of a lot persistent frustration for otherwise-talented people who are GREAT at Content, but repeatedly get passed over for promotion to higher levels.
They don't understand why this keeps happening. And usually no one explains to them the perception side of things i.e. no one explains that it is usually because they are not projecting as much Confidence as they ought to for the next level and they are not as attuned to the Context of the org & the company [1].
B) To have a chance of getting Director / VP level scope, you must be very good at a minimum of 2 of these and you must not suck at the 3rd one.
And btw, this is how you get different types of leaders at the mid / upper management level of a company.
e.g. a leader who spikes on Content + Context but not on Confidence is going to have a VERY different style than a leader who spikes on Confidence + Context but not on Content.
This observation alone will explain a lot of confusing promotions, where someone seems not competent-enough to be a senior leader, but yet they somehow are the one chosen for the VP job [3].
C) Employees who get promoted to and show longevity at the highest levels (Executive / CEO) in top tier companies tend to be very good at all 3, especially Context.
Last but not the least: as with any model, this is by no means a perfect predictor of how things will always work everywhere. But hopefully this helps clarify some perpetually confusing things that happen in our career & in the careers of people around us.
~ Footnotes:
If you haven’t already noticed, everything here - Content, Confidence, Context - is about how you are perceived i.e. how Optics plays a role in who gets ahead in midsized & large companies.
Now naturally, no company will ever admit or explicitly tell you that this is directionally how things work. They will point to the career ladder and give you some technical reason why the committee’s interpretation was that you did not fulfill one or more of the promo criteria.
[1] This is not to say that this is right. IMO it is quite wrong. However, me just saying THIS IS WRONG isn’t going to change the long-held opinions and dogmas of the members of your org’s promo committee in November 2024 or January 2025.
[2] In an ideal world, it’s your true Impact & your Execution that should dictate how you get recognized & rewarded.
Unfortunately though, in any sufficiently large group of humans the idea of “just do good work and let your work speak for itself” doesn’t work optimally. In good companies it will work for you early on, but even in those companies it will stop working at some point, at some level.
When you reach that level, it is fine to decide to opt out of this game (I did that at some point, just before I started this next chapter of my career). But if you do that, be clear on the reasons why you’re doing it so you can remain steadfast while others seem to be playing silly games to get ahead.
And even if you want to opt-out at some point, the onus is on you to make sure you’re able to create the life you want to create for yourself from that point forward.
[3] This is very likely the most interesting observation in this post for those of you who pay attention to why certain people get promoted / selected for certain senior roles.
While vertical promotions are often the default, lateral moves can be just as valuable. By understanding both options, you can make more informed decisions about your team's promotions and ensure that they are aligned with both individual career goals and the overall objectives of the organisation.
What it is: This is the traditional promotion path. It involves moving an employee to a higher-level position within the company. Think of it like climbing a ladder.
Benefits for the employee: Increased salary, more responsibilities, and often, a larger team to manage.
Benefits for the manager: A stronger leadership team, improved morale, and a clear path for career advancement within the organization.
What it is: This is a more modern approach. It involves moving an employee to a different role at the same level of responsibility. Think of it like moving from one room to another on the same floor.
Benefits for the employee: Exposure to new departments or projects, opportunities to learn new skills, and potentially, a change of pace.
Benefits for the manager: Increased team flexibility, improved knowledge sharing, and reduced risk of burnout among employees.
Promoting someone laterally, rather than vertically, can be a strategic decision driven by various factors. Sometimes, a manager recognises that an employee has already mastered their current role, but moving them upwards might not be the best next step for their development or for the needs of the organisation. Instead, a lateral move can expose them to different areas of the business, broadening their skills and knowledge in a way that a vertical promotion might not. It also offers the employee a new challenge without the pressure of jumping into a higher-level leadership position prematurely.
Additionally, lateral moves can be an opportunity to groom someone for a future vertical promotion by giving them a chance to expand their experience, work with new teams, or take on a different set of responsibilities. This can strengthen their abilities and prepare them more thoroughly for a future role that requires a wider perspective.
From the business side, a lateral promotion can help address gaps in other teams or departments without losing a valuable employee's expertise. It allows an organisation to be more flexible with talent, ensuring the right people are in the right places to contribute where they're needed most, while also keeping the employee engaged and motivated.
