Building a Performance Management Program for Organizations

Introduction and Purpose of the Performance Management Program

The purpose of a performance management program (PMP) is to align the motives of the employee with those of the organization so that employees are encouraged to work for the good of the organization. Objectives are formulated that are in line with those of the employee, a system of rewards and consequences is established that appeals to the employee, and a system of monitoring and work appraisal — formalized together with the employee — is put in place.

The PMP is strategic in that the organization's goals are clearly aligned with those of the individual, with both moving in the same direction. Plans are outlined, a strategy is set, and manager and employee collaboratively work towards accomplishing that strategy.

The PMP is likewise administrative in that clear communication must be established at the outset and maintained throughout between administrator and employee. Implementing and maintaining goals involves establishing clear, specific expectations and continuously reviewing those expectations so that the administrative functions of the organization are kept on track and accomplished. One of the important functions of the PMP is to enable managers to control tasks and projects within the organization so that it continues moving in the desired direction.

The PMP is also developmental in that the administrator and employee are involved in a continuous loop of performance, review, evaluation, and assistance aimed at meeting organizational goals. In doing so, the individual is likewise progressing towards his or her own goals. A state of continuous learning is therefore embedded in the process, along with ongoing progress, since goals are contrasted against and modified according to benchmarks in order to drive improvement and ensure forward movement.

Performance Measurement Criteria

In order to be as effective as possible, the PMP must adhere to certain criteria. These measurements gauge whether the individual is following the agreed-upon contract according to benchmark characteristics or initially established objectives. The criteria must be valid, reliable, and acceptable.

The criteria must measure what they claim to measure. For instance, if the goal is for a worker to perform excellent work, the term "excellent" must be concisely and clearly defined. Specificity is essential. In this way, the criteria, if actualized, will genuinely meet the stated objective.

The criteria must remain consistent from situation to situation. If, for example, a worker is expected to demonstrate "excellent behavior," the expectations of that excellence must be applied consistently — placing on the employee demands that are achievable and not irrational or arbitrarily changing.

Before the program begins, work criteria and expectations will be established collaboratively with employees. Job expectations and descriptions will be clarified. It must be ensured that workers understand the criteria and agree to abide by them.

Performance Measurement System and Business Strategy Linkage

An effective PMP must focus employees' attention on what matters most to success. Measures are identified, targets and thresholds are established, and baseline and benchmarking data is set.

Since business success depends on customer satisfaction, one of the prime characteristics to be measured is excellent customer service. Employee contentment is equally important, as content employees produce quality work. Therefore, the satisfaction of employees, the quality of the work environment, and the level of their interaction with peers will also be assessed. Finally, general performance and adherence to rules will be reviewed.

The following metrics will be considered: sales increases, customer satisfaction surveys, employee satisfaction surveys, attitude and feedback at regular meetings, and the general environment in the workplace — such as the level of small talk and greetings among employees, between employees and customers, and between managers and employees. Reduced absenteeism is another effective metric, as is an R&D effectiveness index.

The employee's performance will be measured, as will his or her attitude toward and treatment of customers. The employee's treatment of co-workers will also be assessed, along with adherence to rules. Finally, the quality of the work environment and elements of employee satisfaction will be reviewed.