Roy's Blog

May 12, 2014

How to do performance plans in 5 easy steps

Do organizations need a performance planning system?

YES, if you want to create a pay-for-performance culture.

YES, if you want to align employee actions with the priorities of the organization.

YES, if you want performance to improve over time.

YES, if you want objectivity in how performance is evaluated.

NO, if you prefer subjectivity, no structure and dysfunction in the organization as everyone does their own thing.

For the “Yes’s” follow these 5 simple steps to build a performance management system that works.

1. Decide on the COMPONENTS of your plan. I suggest two: one for Corporate results; one for Personal results. I don’t agree with the 4-component “Balanced Scorecard” method; too complicated; too many messages to employees; too many objectives. Focus on the critical FEW rather than the possible MANY.

2. WEIGHT each component. I suggest 75% Corporate; 25% Personal. These can be adjusted but I recommend a strong incentive to hit corporate targets.

3. SET CORPORATE OBJECTIVES. These objectives will be shared with every employee. I suggest no more than 3 or 4 that represent the priorities of the company. Choose metrics that people feel they can influence as well. My fav’s: Top line revenue, operating earnings (EBITDA),  quality of service as perceived by the customer.

4. SET PERSONAL OBJECTIVES. Make them quantifiable (a due date to compete a task works); no more than 3; align with corporate strategic goals.

5. REVIEW progress toward objectives with employees quarterly; the “Performance Evaluation Meeting”.

There you go. Done.

Work with it and improve it as you go.

Cheers, Roy

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  • Posted 5.12.14 at 01:07 am by Roy Osing
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