Most of us are used to thinking of performance management focused on the employee, rather than the organization, groups, etc. Therefore, when first reviewing the steps to develop a performance plan, it may be best to use the example of employee performance management as done below. The reader should keep in mind that these steps might be followed in performance efforts focused on the entire organization or some subsystem of the organization.
In the example below, the focus -- or domain -- of the performance management process is an employee. The employee is a machine operator; consequently, application of performance management in this example is rather straightforward for clarity in the example. Most applications are not this straightforward.
1. Review organizational goals to associate preferred organizational results in terms of units of performance, that is, quantity, quality, cost or timeliness
Organizational goals are often established during strategic planning. Performance management translates these goals to results, which typically are described in terms of quantity, quality, timeliness or cost. Results are the primary products or services desired from the focus of the performance process. Examples are a percentage increase in sales, extent of impact on a certain community, etc. Goals should be "SMART" (an acronym), that is, specific, measurable, acceptable, realistic to achieve and time-bound with a deadline. For example, an overall goal may be to increase the organization's profit by 30% by the end of the next fiscal year. An associated strategy (or sub-goal), among others, may be to increase profit of the Catalog Department by 50% over the next fiscal year.
2. Specify desired results for the domain -- as guidance, focus on results needed by other domains (e.g., to internal or external customers)
For example, the operator's results are high-quality, printed images for the internal customer, the Catalog Department. This aspect of performance management is sometimes called "goal setting", particularly when the focus of the performance process is on employees. Goals should be "SMART" and challenging.
3. Ensure the domain's desired results directly contribute to the organization's results
Aligning results with organizational results is another unique aspect of performance management process. Do the employee's results directly contribute to the results of the organization? What organizational goals? How? For example, do the prints directly contribute to the desired profit increase of 50% of the Catalog Department? How? Is there anything else the operator could be doing that would be more productive for this goal? Should a job analysis be done to verify efficiency?
4. Weight, or prioritize, the domain's desired results
A weight, or prioritization, is often in the form of percentage-time-spent, or a numeric ranking with "1" as the highest. For example, the employee's results might be weighted as follows:
a) 80% of his time over an 8-hour period, Monday through Friday over the next fiscal year, to be spent running the machine
b)10% of this time in training
c)10% of this time in a Quality Circle.
5. Identify first-level measures to evaluate if and how well the domain's desired results were achieved
Measures provide information to evaluate accomplishment of results. Measures are usually specified in terms of quantity, quality, timeliness or cost. For example, measures for the operator might be the number of prints over some time interval, a certain grade on a test during his training and attendance recorded on attendance sheets to his Quality Circle. Identifying which measures to take is often the toughest part of the performance management process. You have to look at the appropriate level or domain in the organization, its desired results, and consider what are the most valid, reliable and practical measurements to use. With complex and rapidly changing domains, it often helps to identify outcome and driver measures, and patterns of effects. More about these terms in Performance Measurement, which is also referenced back in Basic Overview of Performance Management.)
6. Identify more specific measures for each first-level measure if necessary
For example, regarding the operator's measure for operating his machine, he may have to produce at least 500 high-quality prints an hour for eight hours, Monday through Friday during the fiscal year. High-quality means no smears or tears. The Director of the Catalog Department evaluates whether the operator made this goal or not.
7. Identify standards for evaluating how well the domain's desired results were achieved
Standards specify how well a result should be achieved. For example, the operator "meets expectations" if the Director of the Catalog Department agrees that the operator produced 500 high-quality prints an hour for eight hours, Monday through Friday during the fiscal year. If he produces 600, he "exceeds expectations", 700 is "superior performance", 400 is "does not meet expectation", etc.
8. Document a performance plan -- including desired results, measures and standards
The performance plan describes the domain's preferred results, how results tie back to the organization's results, weighting of results, how results will be measured and what standards are used to evaluate results. Developing the plan is often the responsibility of the head of the domain (in this example, the employee's supervisor). However, the plan should be developed as much as possible with participants in the domain.
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