The big idea
Performance management works when it is a year-long conversation between partners, not a once-a-year verdict.
In 60 seconds
- Performance management has two jobs: good decisions about people, and the development of people. Blending them is the hard part.
- A results-based system runs in five phases: plan, execute, monitor and develop, appraise, and review with feedback.
- Most performance problems come from unclear goals, missing support or the wrong consequences, not a lack of effort.
Do this: use the SMARTEST Goal Builder below to draft one goal with someone you lead, then decide together how you will know it is working.
How performance communication works
Performance communication
Results-based performance management: appraisal and development.
A human-centered leadership approach to setting goals, giving feedback and growing people.Michael Lane Morris, PhD
Today
My role and your role.
My role
- Give an overview of effective performance management
- Identify best practices
- Facilitate our conversation on the topic
Your role
- Put the content in your own context
- Transfer it to your team
- Apply it in your next performance conversation
Defining human-centered leadership
The process of inspiring and mobilizing people to co-creatively tackle tough challenges and do things that matter.
Michael Lane Morris and Jules Morris
The Creative Alliances System
Performance conversations are partnerships.
How this topic fits the Creative Alliances System
- Bonds: Collaborative Partnerships. Goal and task agreement, shared responsibility, mutual feedback and a results orientation are the heart of performance planning and review.
- Communication, the bridge. Ongoing feedback, coaching and casual learning conversations carry trust between people, the work and the results. Performance communication is this bridge in action.
- Tasks & Tools. Monitoring and development is Experiment and Flourish: try, learn and improve, and grow people along the way.
- Goals it fuels. Efficiency (doing things right) and Effectiveness (doing the right things and making a difference), raising the bar for Excellence.
Text version of this diagram
- Bonds are how we feel together. This session lives in Collaborative Partnerships: realistic expectations, shared responsibility, mutual feedback, results orientation, and goal and task agreement.
- Communication is the facilitation dimension that carries trust, ideas and feedback between bonds, tasks and goals. Performance conversations are communication at its most consequential.
- Goals are what we come to know and achieve. Collaborative Partnerships fuel Efficiency, and good results fuel Effectiveness, all turning around Excellence.
Performance management and appraisal
“You cannot mandate productivity; you must provide the tools to let people become their best.”
Steve Jobs (attributed)
Performance management today
Why it is the Achilles heel of management.
- Highly personalReviews touch identity, pay and pride all at once.
- ThreateningBoth people often walk in braced for conflict.
- Candor is rareManagers hold back the honest feedback people need to improve.
- Skills are thinMany managers were never taught how to discuss performance or coach.
What employees tell us
Most reviews do not inspire anyone.
Text version of this diagram
- 14% of employees strongly agree their performance reviews inspire them to improve.
- 2 in 10 strongly agree their performance is managed in a way that motivates them.
- 26% strongly agree their reviews are accurate, and 29% that they are fair.
- About 3 in 10 strongly agree their manager involves them in setting goals. Those who are involved are four times more likely to be engaged.
Watch
The annual review, as seen on The Office.
A short clip to open the conversation. What goes wrong when a review is all ritual and no relationship?
How performance management systems add value
Two ways: better decisions and better people.
Key decision-making and employee development. Every system has to serve both.
Two purposes of performance management
Every system serves two purposes.
Key decision-making
- Supports retention and promotion
- Goals established and measured
- Fairly distributes merit and compensation
- Succession planning
- Confirms selection decisions
- Legal defense for decisions
- Revenue, productivity and cost containment
- Clarifies job responsibilities and expectations
Employee development
- Positive, growth-oriented feedback
- Motivates superior performance
- Counsels and corrects poor performance
- Encourages mentoring and coaching
- Identifies training and development needs
- Improves communication
- Maximizes and realizes employee potential
- Succession planning
The big challenge
Blending the two is hard.
“It is hard to blend healthy conversations around wants and needs.”
A decision-making approach
- Too lenient: ratings get inflated
- Too focused on rewards and recognition
A development approach
- Too variable: strengths and potential differ person to person
- Too need-based, and not focused on performance
What is a results-based performance management system?
It measures and grows three things.
Results-based performance management
Implementing a results-based system
A five-phase cycle.
Text version of this diagram
- Phase 1, performance planning: set job-based performance objectives, and establish and communicate performance standards.
- Phase 2, execution: perform, achieve and stretch.
- Phase 3, monitor and develop: ongoing feedback, encouragement, coaching, mentoring and training, all year long.
- Phase 4, appraisal: formally rate progress toward the objectives, with employee and manager both taking part.
- Phase 5, review and feedback: set the meeting, review the year, and reinforce with rewards and recognition.
Keep it simple
Five stages are better than seven.
Every extra step is another place for the process to stall. A simple cycle people use beats a perfect one they skip.
Meanwhile, in the office
Keep it simple.
Text version of this diagram
- Panel 1: the horned goat proudly unrolls a new review process with fifteen steps.
- Panel 2: the Pekin duck, tangled in it, says, by step 9, I forgot what I did all year.
- Panel 3: the goat says, let’s keep it to five.
Phase 1: Performance planning
Plan it together.
“The dance”: managers and employees are involved in every phase of the process.
Key criteriaWhat performance matters most?
Comprehensive and fairDoes it cover the whole job, fairly?
Goals and strengthsBuild on what people do best.
Every levelIndividual, team, department and organization.
Meanwhile, in the office
Vague goals, vague results.
Text version of this diagram
- Panel 1: the Highland coo boss says, your goal this year: do better.
- Panel 2: the Nubian goat asks, better at what?
- Panel 3: alone at her desk, she wonders how she will ever know she hit it.
The importance of setting performance objectives
A clear target changes everything.
DirectionA clear target to aim for.
ContributionA sense that my work makes a difference.
ConversationOngoing communication between supervisor and team member.
ClarityA chance to clarify expectations.
PrideAchievement that builds pride and self-esteem.
Metrics for performance objectives
Seven ways to measure the work.
- ImpactWhat difference did the work make?
- QualityHow good was it?
- QuantityHow much got done?
- TimelinessWas it on time?
- Cost effectivenessWas it worth what it cost?
- Manner of performanceHow was it done, and how did it treat people?
- Adherence to proceduresDid it follow the agreed process?
Getting SMART with goals
Good performance objectives are SMART.
- SpecificAdequate detail.
- MeasurableClear criteria for measurement.
- AchievableNot too easy, not too hard.
- Relevant and realisticSensible and practical.
- Time-boundA specific deadline.
SMART goals are good, but not best
Only 14% say their goals will help them achieve great things.
Goals that are merely achievable rarely stretch anyone. People who set difficult goals were 34% more likely to love their jobs.
Leadership IQ survey of 3,995 employees, 2020. Are SMART goals dumb?
SMART vs. SMARTEST goals
From good goals to best goals.
Text version of this diagram
- SMART: specific, measurable, achievable, realistic, time-bound.
- SMARTEST adds strategic (aligned and critical to future success), meaningful (to me and to leaders, customers and colleagues), action-oriented (symbolic and substantive actions), results-oriented (metric-directed and metric-driven), time-bound (a due date), engaging (head, heart and hands), supported (by others, the organization, culture and leadership) and transformational (strength-based stretching of new knowledge, skills and attitudes).
Establishing clear, fair goals
Four questions to agree on first.
What is the employee to accomplish, and how will they positively influence others?
Competencies and expectations
What behaviors count?
Behaviors
Under what conditions are they to achieve it?
Conditions
What standards count, and what ratings will be used?
Rating criteria
The organizational resource support system
Goals need support to succeed.
Top leadership
A management team that backs the goals.
Knowledge, skills, attitudes
What people need to bring.
Budget
Money to do the work.
Time
Room on the calendar.
Authority
Permission to decide and act.
Relationships
The people who can help.
Technology
The tools for the job.
Photo by @campaign_creators on Unsplash
Performance improvement
Find the root cause first.
Text version of this diagram
- When a performance problem exists, the supervisor or manager must determine the root cause before addressing it.
- Ability: if they cannot do it, train and educate.
- Environment: if the setting gets in the way, remove obstacles.
- Motivation: if they do not want to, align feedback.
- Fit: if it is the wrong role, transition.
16 reasons employees fail to execute
Most performance problems are not about effort.
They don’t know, or don’t agree
- Don’t know why they should do it
- Don’t know how
- Don’t know they are supposed to
- Think your way will not work
- Think their way is better
- Think something else is more important
- No positive consequence for doing it
- Actually think they are doing it
Consequences and limits get in the way
- Rewarded for not doing it
- Punished for doing it
- Anticipate negative consequences
- No negative consequence for poor performance
- Beyond their control
- Personal limitations prevent them
- Personal, private problems
- Nobody could do it
Based on Ferdinand F. Fournies, Why Employees Don’t Do What They’re Supposed to Do and What to Do About It.
Example: performance competencies, behaviors and weights
Weight what matters most.
Text version of this diagram
- Technical skills, 50%: product knowledge 25% and customer evaluations 25%.
- Human relations skills, 25%: coaching 20% and delegation 5%.
- Conceptual skills, 20%: decision making 10% and strategic planning 10%.
- Professionalism and collegiality, 5%.
Collaboration assessment matrix
What collegiality looks like.
- CollaboratingCollaborating with others. Stepping up when needed. Performing tasks for the good of the group.
- Following throughFollowing through on professional tasks. Meeting deadlines. Carrying out all relevant responsibilities.
- RespectingRespecting the unit’s decision-making processes. Communicating respectfully. Relating to others in ways that are constructive, supportive and professional.
Adapted from Cipriano and Buller’s collegiality assessment matrix.
Performance ratings and clear definitions
Define every level before you rate.
| Outstanding (excellent) | More than expected (very good) | Expected (good) | Less than expected (fair) | Unsatisfactory (poor) | |
|---|---|---|---|---|---|
| Behavior | Far exceeds expectations | Exceeds expectations | Meets expectations | Falls short of expectations | Falls far short of expectations |
| Results | Highest impact | High impact | Moderate impact | Low impact | No or negative impact |
Write out what level 5, 4, 3, 2 and 1 behaviors look like for each competency.
Merit and performance-based salary adjustments
Tie pay to the rating, clearly.
| Rating | Merit or performance pay |
|---|---|
| Exceeds expectations | Eligible for significant adjustments |
| Meets expectations | Eligible for minimum adjustments |
| Needs improvement | Not eligible (improvement plan) |
| Unsatisfactory | Not eligible (improvement plan) |
Expected distributions and other forms of rating
Most people land in the middle.
Text version of this diagram
- Outstanding (also called exceptional, excellent or extraordinary): 5 to 10%.
- More than expected (exceeds expectations, above expectations, significantly exceeded): 20 to 25%.
- Expected (meets expectations, satisfactory, fully met): 60 to 65%.
- Less than expected (below expectations, marginal, needs improvement): 5 to 10%.
- Unsatisfactory (unacceptable): 0 to 5%.
Competencies and weighted performance behaviors
A simple scoring form.
| Human relations quality | Outstanding (5) | More than expected (4) | Expected (3) | Less than expected (2) | Unsatisfactory (1) |
|---|---|---|---|---|---|
| Facilitates employee learning (60%) | |||||
| Negotiation skills (20%) | |||||
| Exhibits interpersonal skills (20%) | |||||
| Total score |
Multiply each rating by its weight and add them up for the competency score.
Meanwhile, in the office
Measure what matters.
Text version of this diagram
- Panel 1: the donkey announces, we are measuring everything now!
- Panel 2: the hen asks, including whether it matters?
- Panel 3: beside his dashboard, the donkey admits that is not on the dashboard.
Phase 2: Performance execution
“Git-R-Done.”
The employeeFollows the game plan and achieves measurable results.
The supervisorBuilds an enriched culture that motivates and enhances success.
Clear the pathConfront and remove obstacles.
Feed it forwardSupportive feedback. Motivate, motivate, motivate.
Demotivation
People rarely quit all at once.
They pull back a little at a time: when goals feel pointless, feedback never comes, and good work goes unnoticed.
Meanwhile, in the office
Posters don’t motivate people.
Text version of this diagram
- Panel 1: the Highland coo boss says morale is low; time to motivate!
- Panel 2: he points proudly to a poster that says synergy.
- Panel 3: the chestnut horse says he would settle for knowing his work matters.
Phase 3: Monitor and develop
Coach all year, not once a year.
MeasureRegularly measure performance.
FeedbackTimely feedback, positive and negative.
CoachCoach and mentor.
GrowTurn the development plan into opportunities.
A note on timing
Document critical incidents as they happen. Address performance problems immediately: the appraisal interview is never the time to bring up a problem for the first time.
Monitoring performance
Watch the work as it happens.
- DailyMeasure performance continually. Many methods and systems can help.
- Critical incidentsDocument them when they happen, good and bad.
- Timely feedbackPositive and negative, close to the moment.
Monitoring performance goals
Track each competency’s goals.
| Competency | Goals | Performance results |
|---|---|---|
| Technical skills | Goal 1, Goal 2 | |
| Human relations skills | Goal 1, Goal 2 | |
| Conceptual skills | Goal 1, Goal 2 | |
| Collegiality and professionalism | Goal 1, Goal 2 |
Phase 4: Performance appraisal
Appraisal: an effort to determine worth.
Done well, it tells people what their contribution is worth to the team, and where they can grow next.
The 9-box grid
Performance today, potential tomorrow.
Text version of this diagram
- The grid crosses performance (results today) with potential (growth ahead), each rated low, moderate or high.
- High potential: enigma (low results), growth employee (solid results), future leader (top results).
- Moderate potential: dilemma, core employee, high-impact performer.
- Low potential: under-performer, effective employee, trusted professional.
Phase 4: Performance appraisal
Four factors to be aware of.
Evaluating how well the job has been done. Criteria used: calibrate, calibrate, calibrate!
- Job analysisJob analysis, description and assignment.
- Job contextThe conditions the work happens in.
- ExpectationsJob expectations and performance criteria.
- The job holderIssues the person brings to the role.
Common appraisal errors (1)
Bias hides in first impressions.
- Attractiveness effectAssuming attractive people are great performers.
- Attribution biasBlaming failures under the person’s control on outside causes.
- Central tendencyRating everyone in the middle of the scale.
- Initial impression errorA first impression, good or bad, that colors everything after it.
Common appraisal errors (2)
Bias hides in shortcuts.
Halo or horns effect
Rating someone the same on every trait.
High-potential error
Confusing future performance with current performance.
Negative or positive skew
Leniency: rating high to avoid conflict. Severity: rating low to punish, coerce or threaten.
Past performance error
Letting the past decide the present.
Photo by @silverkblack on Unsplash
Common appraisal errors (3)
Bias hides in comparisons.
- Recency effect“What have you done for me lately?”
- Similar-to-me effectRating someone favorably because they resemble you.
- Contrast effectRating people against each other, not the standard.
- StereotypingGeneralizing across groups and ignoring differences.
Phase 5: Performance review and feedback
A no-surprises conversation.
Measure contributionsWhat did this person add this year?
Open dialogueCommunication goes both ways.
No surprisesNothing new should come up for the first time here.
Plan growthPlan for growth and development.
Build commitmentLeave more committed than you came in.
Evaluating performance: the performance appraisal
What appraisals are for.
- Communication
- Rewards
- Careers
- Goals
- Decisions
Phase 5: Performance review and feedback
Discussion and feedback in two steps.
← Look back
- Review the year’s performance compared to the development plan.
- Identify successes and unrealized goals.
Look ahead →
- Set a date to create the plan for next year’s goals, objectives and development.
The employee’s role and the supervisor’s role
Both people prepare.
The employee
- Reports personal accomplishments
- Compares them with the original goals
- Identifies obstacles and solutions
- Completes a self-assessment
- Identifies next cycle’s goals
The supervisor
- Reviews the original goals
- Makes a preliminary assessment
- Discusses accomplishments (two or three core messages)
- Prepares the final assessment
- Consults administration
- Plans next cycle’s goals
Meanwhile, in the office
The self-appraisal problem.
Text version of this diagram
- Panel 1: the tabby cat says, time for your self-appraisal.
- Panel 2: the Sebastopol goose writes: strengths, everything; weakness, too humble.
- Panel 3: the cat says, let’s look at the evidence together.
Phase 5: The meeting
“Teeing it up.”
Performance review: meeting agenda
- WelcomePut the employee at ease.
- ImportanceSay why this meeting matters.
- Time frameAgree how long you have.
- Starting placeTell them where you are beginning.
- Kick-off statementOpen with one clear sentence.
- Invite them inAsk the employee to share their perceptions.
- Next meetingPlan the next planning meeting.
Providing effective feedback
Six moves for feedback that lands.
- 1SummarizeBriefly summarize the conversation’s direction.
- 2Start positiveProvide immediate positive feedback.
- 3StrengthsDiscuss two or three strengths to continue or enhance.
- 4ImprovementAreas for improvement. Ask: what could be done differently?
- 5DevelopmentExplore development needs. Ask: what resources do you need?
- 6HopeCongratulate, with an authentic statement of hope.
Meanwhile, at the talent show
Feedback that stings vs. feedback that lands.
Text version of this diagram
- Panel 1: the orange cat judge tells the Polish hen, that was dreadful. Next!
- Panel 2: the hen wonders, what do I do with that?
- Panel 3: the Medicine Hat horse says, strong voice; breathe on the high notes; try it again.
Watch clip 1 (opens in a new tab) Watch clip 2 (opens in a new tab)
Poor and infrequent feedback may lead to…
Silence has a cost.
- Lost focusLess focus on performance goals and expectations.
- Lower moraleDecreased motivation and lower morale.
- DisengagementDiscontent and disengagement.
- TurnoverUnexpected turnover.
Delivering tough messages
Say the hard thing, well.
Don’t waitThe longer it waits, the harder it gets.
Define your viewName the problem as you see it.
Evidence, not personFocus on the problem and the evidence, not the person.
Work togetherMove toward a solution together.
Effective development discussions
Build a vision together.
Tailor itTailor actions to the employee.
Create a visionPicture where they could go.
Plan and seizeBlend planning and opportunism.
Make learning the normSupport a learning- and development-oriented ethic in all action planning.
Using development to improve performance
Development is a performance tool.
- Coach and mentorOn improving performance and working more effectively, across the team and up and down.
- An individual planWork with each person to create an individualized development plan.
- TrainingProvide opportunities for training as needed.
Writing employee accomplishments
Write accomplishments that show impact.
- The objectiveDescribe key performance objectives and expected results.
- The contextInclude the context.
- The momentsDescribe critical incidents the employee handled.
- The impactDescribe the impact of the accomplishment, for the individual and the department.
Creating a developmental action plan
Make development specific.
| Development area | Specific actions | Completion date |
|---|---|---|
| Improve the feedback timeline | Return written assignments within two weeks. Consult a mentor for accountability. Write due dates on the calendar. | Next review cycle |
One row per development area. Specific actions, a real date, and someone to keep you honest.
Recognize and reward
Notice good work out loud.
Every dayA pat on the back, thank-you notes, recognition at meetings, a name in the monthly report.
FormalService awards, employee of the month, team nominations, a letter from a senior leader.
TangibleGift cards, a parking space, a “life saver” award.
Days that matterAdministrator’s Day and Boss’s Day.
Thank you, and good luck!
Performance management is a year-long conversation.
Plan together, coach all year, appraise fairly, and leave every review with a plan and a reason to hope.
Selected references and suggested readings
Where to read more.
For a detailed roadmap, start with Elaine Pulakos’s SHRM Foundation guide, Performance Management: A Roadmap for Developing, Implementing, and Evaluating Performance Management Systems (2007).
The full reading list
- Arvey, R. D., & Murphy, K. R. (1998). Performance evaluation in work settings. Annual Review of Psychology, 49, 141–168.
- Beatty, R. W., Baird, L. S., Schneier, E. C., & Shaw, D. G. (1995). Performance, measurement, management, and appraisal sourcebook. HRD Press.
- Cawley, B. D., Keeping, L. M., & Levy, P. E. (1998). Participation in the performance appraisal process and employee reactions. Journal of Applied Psychology, 83, 615–633.
- DeNisi, A. S., & Kluger, A. N. (2000). Feedback effectiveness: Can 360-degree appraisals be improved? Academy of Management Executive, 14, 129–139.
- Fournies, F. F. (2007). Why employees don’t do what they’re supposed to do and what to do about it. McGraw-Hill.
- Gallup. (2017). Re-engineering performance management. Gallup.
- Grote, D. (1996). The complete guide to performance appraisal. AMACOM.
- Locke, E. A., & Latham, G. P. (1990). A theory of goal setting and task performance. Prentice-Hall.
- Murphy, K. R., & Cleveland, J. N. (1995). Understanding performance appraisal. Sage.
- Pulakos, E. D. (2007). Performance management: A roadmap for developing, implementing, and evaluating performance management systems. SHRM Foundation.
- Pulakos, E. D., & Mueller-Hanson, R. A. (2015). Putting the “performance” back in performance management. SHRM and SIOP.
- Rodgers, R., & Hunter, J. E. (1991). Impact of management by objectives on organizational productivity. Journal of Applied Psychology, 76, 322–336.
- Spencer, L., & Spencer, S. (1993). Competence at work. Wiley.
- Waldman, D., & Atwater, L. E. (1998). The power of 360-degree feedback. Gulf Publishing.
Try it: SMARTEST Goal Builder
Goal-setting tool · Based on Lane Morris’s SMARTEST Goals
SMARTEST Goal Builder
Turn a rough goal into a SMARTEST goal. Answer eight short prompts, watch your goal statement come together, then copy or print it.
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- 2Build
- 3Share
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SMARTEST Goals framework by Michael Lane Morris, PhD.
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Part of Executive Education from the Human Centered Lab: workshops Jules Morris, PhD and Lane Morris, PhD lead for working professionals.
Frequently asked questions
What is a results-based performance management system?
A results-based performance management system sets clear, measurable objectives at the start of the cycle, then manages people against the results they achieve, the behaviors they use to get there, and their development. It replaces a once-a-year rating with a cycle of planning, execution, ongoing coaching, appraisal and feedback.
What are the five phases of performance management?
The five phases are performance planning, execution, monitoring and development, appraisal, and review and feedback. Monitoring and development is not a one-time step: coaching, feedback and training run all year, at the center of the cycle.
What is the difference between SMART and SMARTEST goals?
SMART goals are specific, measurable, achievable, realistic and time-bound. SMARTEST goals, as Lane Morris teaches them, are strategic, meaningful, action-oriented, results-oriented, time-bound, engaging, supported and transformational, so they stretch people and connect their work to what matters.
What are common performance appraisal errors?
Common errors include the halo or horns effect, central tendency, leniency and severity, recency, similar-to-me bias, contrast effects, first impressions, and stereotyping. Clear rating definitions and calibration across managers help reduce them.
Why do employees fail to do what they are supposed to do?
Most often because they do not know why or how, believe another way is better, or face the wrong consequences, such as being rewarded for not doing it. Ferdinand Fournies listed 16 reasons, and few of them are about effort. Find the root cause before you act.