Your growing company has finally decided that it needs to get serious about performance management. Now what?
Getting started is easier said than done. Everyone seems to have a different opinion of which "best practices" are actually best. Should you make feedback anonymous? How often should managers check in with their direct reports? Should your performance reviews use a rating system at all?
These questions are worth asking, but the debate can sometimes get in the way of rolling out a program. Here's how to get your performance management program off the ground.
HR teams can spend countless hours developing, implementing, and refining a performance management plan. But for the majority of companies, simply picking a "good enough" plan and rolling with it is a better use of time. After all, you can (and likely will) make adjustments later on. Here's a performance management plan that I believe would work for most companies.
- Hold performance reviews twice per year.
- Have every department run their reviews on the same schedule.
- Run 360-degree performance reviews, which include feedback from managers, direct reports, peers, and oneself. For peer reviews, ask employees to suggest 3–5 colleagues they've worked closely with.
- Ask 3-5 questions in your reviews. Find a balance between guiding the conversation and allowing people to share what's on their minds. For some sample questions, see here.
- Tie one of your performance review cycles to compensation. Everyone should know when this is coming so they don’t have to ask about raises throughout the year. This review cycle should have ratings or designations so you can have a quantitative basis to make decisions.
- Your other review cycle should be around career development and performance improvement. It’s an opportunity for employees to receive and give feedback without worrying about compensation. Managers should work with employees to build out an employee development plan.
- Weekly meetings between managers and their reports should be encouraged, if not required. They are a fundamental management tool.
- One-on-ones belong to employees. If they want to talk with their managers about any issues, big or small, that's their prerogative.
- These meetings are a good time for managers to bring up employee feedback, and vice versa.
- If employees don't have anything noteworthy to discuss, one-on-ones are a great time for managers to communicate information, recognize accomplishments, and help problem-solve.
- If there is pertinent but transactional information, it’s best to put this in writing before the meeting so the time can be spent on higher-level items.
- If employees would like to use an agenda, these should be filled out by the employee and supplemented by the manager.
- Give employees a way to share praise and feedback with one another.
- Praise can be public, but constructive feedback should be private.
- Surface this feedback during performance reviews to help jog reviewers’ memories and reduce recency bias.
- Set 2-4 company goals per quarter. Make these public to every employee. Talk about them at an all hands meeting at the start of every quarter.
- Ask departments and employees to set their own goals at the beginning of each quarter. For a little more context on goal setting, go here. You can go for SMART goals or OKRs.
- Divide goals into performance goals and development goals. Performance goals measure individual performance, like a sales quota. Development goals are about employees developing skills like time management.
- Discuss goals at the end of each quarter. Talk about what went well, what didn't, and how you might be able to set better goals next cycle.
- Don’t try to cascade every goal into a perfect tree. The juice isn’t worth the squeeze. Organizational goal setting should be about prioritization and expectation setting, not project planning and task management.
- Don’t tie goals directly to compensation. While you should discuss goals during performance reviews, there shouldn't be a one-to-one correlation. Revenue generating roles are a possible exception.
This is a basic framework for performance management that you can implement and iterate on. It’s a battle-tested plan that we have seen succeed at a lot of companies.
Refining Your Process
To improve your performance management process, start by asking yourself some basic questions about what you're trying to achieve.
- Are you trying to evaluate employees for promotions?
- Are you trying to increase employee engagement?
- Are you trying to nudge managers to give more feedback?
- Are you looking to give employees more recognition?
- Are you trying to make goal-setting a core practice at your company?
There's no right or wrong answer to any of these questions. Similarly, there's no one best approach to performance management. Every business is different, and your company's process will be uniquely its own.
If you're at a smaller company, you might be able to make quarterly reviews work. If your company is new to giving direct feedback, you can either anonymize peer and upward feedback or not share it with employees at all. If goal setting is too structured for your work culture, you can start with reviews and one-on-ones and see if adding goals later makes sense.
Performance management is one of the most important tools you have as a company to build a great team. The sooner you get started, the sooner you can start improving. See how Lattice makes it easy to get started with performance management by scheduling a demo.