A strategic and integrated process of setting, tracking and measuring individual performance objectives against organizational goals and competencies to develop the capabilities of individuals and teams to deliver sustained success to organizations.

There are many words to describe the act of sitting down with an employee and providing feedback. Some synonyms for performance review and performance appraisal are:

• employee review
• annual review
• annual performance review
• performance evaluation
• employee evaluation

Using words like 'appraisal' and 'evaluation' may not resonate well with employees. Terms that promote collaboration help to work towards a performance management practice that is productive and positive.

One purpose is for employees to better understand what is expected of them. When employees are clear on what they should be doing, how they should be doing it, and know how to assess whether it was done well, they will spend less time asking their manager questions that they can easily answer themselves. Thus, this results in managers having to spend less time micro-managing their employees.

Another purpose is to create the conditions for goal setting, communication and feedback opportunities. Taking a proactive approach leads to increased productivity as employee behaviors are reinforced through ongoing feedback. This also reduces the likelihood that feedback will be a surprise for the employee as well as minimizes having to deal with issues after the fact.

An effective performance management program:

• Provides critical data for supporting fact based decision making -
  Performance data is a key input to a wide range of organizational decisions and provides important data to assess the effectiveness and validity of personnel decisions (i.e., selection, training, etc)
• Aligns team and individual behaviors and competencies with the organization's to drive strategy execution –
  ultimately employee behavior drives value for the organization. An effective performance management system ensures that the right behaviors are measured and rewarded
• Retains top talent by systematically evaluating and effectively rewarding high performance –
  High performance and high potential employees need to see a continued link between their contribution and rewards
• Enhances the attachment that employees feel towards the organization –
  employee perceptions of the fairness of a performance management system can affect employee perceptions of a broad range of organizational practices
• Utilizes technology to create efficiencies, track critical data, and ensure consistency –
  while technology is a commodity, the right technology can make performance management less about the process and forms and more about developing people
• Links to the broader talent management system –
  PM data and outputs should be linked to other programs such as assessment, succession, learning/development, and compensation.

Companies should adopt Performance Management for various reasons:

• A need to drive better decisions about talent
• Pending merger/acquisition
• Business turnaround
• Company reorganization/strategy re-alignment
• Culture change
• Organization is addressing "Total Rewards", specifically compensation
• Current Performance Management process viewed as ineffective, outdated or inefficient
• High turnover
• Difficulty in attracting qualified candidates
• Difficulty in differentiating performance
• Integrated HR strategy
• New HRIS implementation

The following seven steps need to be addressed when improving a Performance Management System:

• Ensure Executive Support
  Having the CEO and/or Executive Committee as champions of the performance management program will greatly increase the chances of the program being embraced by the organization.
• Include Employees and Managers in the Design or Redesign Process
  Programs which are designed in backrooms or behind closed doors are often out-of-touch and lack buy-in from the rank and file.
• Invest in training Managers in Performance Management Skills
  Many times problems with a performance management program are not in the design of the program but the inability of managers to effectively implement or administer the system.
• Discuss Performance Management as a Manager's Goal and Job Responsibility
  Manager's must own the activity and view it as a tool to improve the performance of their work group.
• Review the Performance Management System Annually
  Carefully planned enhancements will allow the system to be continually improved or modified to meet changing organizational needs.
• Link improved Employee Performance and Increased Customer Satisfaction
  By providing employees with better information on performance expectations, strengths, and development needs, the performance management program can improve the organization's customer service.
• Consider the Culture, Structure and Work Force when Designing the Performance Management System
  Other cultures may not be as familiar with the concepts of individual performance management as North-American based organizations. This should be consider when designing and implementing global performance management programs.

Performance management sometimes fails for many reasons:

• believing performance management is about filling out forms
• focusing on blaming employees rather than helping employees and working together
• focusing on the past, rather than anticipating problems and focusing on the present or future
• doing performance appraisals TO employees rather than WITH them
• spending too much time appraising, and not enough time during the year planning and communicating
• making it a once a year event
• using poor and misleading tools, forms and software
• expecting performance management to achieve too many different, and often competing purposes and functions

BARS is a way of looking at focusing on behaviors rather than vague and difficult to measure employee characteristics such as personality and vague work habits. Focusing on the tasks that an employee has to do as part of their job, one can use BARS as a way to clearly define the behaviors needed to accomplish the task successfully. For example:

• answers the phone within 4 rings
• asks “is there anything else I can help you with today”

Yes, doing performance management properly can help protect companies from claims that the company may have discriminated against them by virtue of being "protected class" -- a visible minority, or suffering from a disability. Having proper documentation can help the company defend themselves against any accusation or even charges if they go to court.

The effects of poor communication during performance management on how employees behave can be quite negative and disruptive to an organization. The following is a list of some of the consequences of poorly communicating employee performance to the employee:

• Employees become hesitant to work with their manager.
• Employees argue and reject their manager's opinions and input.
• Employees file more grievances related to performance issues.
• Employees don't keep their manager informed and avoid talking to their manager.
• Employees do their best to hide their deficiencies or performance difficulties.
• Employees refuse to take responsibility.

In other words, when managers communicate poorly about performance, during the performance management process, the managers create huge problems for themselves.