Most organizations today claim to "pay for performance." Belief in the meaningful linkage of an employee's work contribution, management's performance evaluation of the employee, and related compensation decisions is virtually universal. The concepts, tools and management's intentions are terrific - the problem is widespread failure in execution. A lack of necessary skills, knowledge, management support and personal priorities, to say nothing of the discomfort most people experience when giving and receiving feedback, are mighty forces inhibiting this critical process. Failure to set goals, provide ongoing feedback and summary evaluations generally results in employees "not knowing where they stand" - the central tenant of effective management according to Jack Welch, previous CEO of GE.

Very often, the accuracy of employee performance evaluations and the validity of associated pay actions are viewed skeptically, if not cynically, by employees and managers alike. Formal research and observation of real organization behavior indicate that managers and employees alike view performance management as a low priority, an unpleasant task to be avoided, or both. In truth, goal setting, coaching, and evaluation sessions are commonly late, rushed, incomplete or omitted altogether.

Many observers note that at the core of the failure of performance evaluations is the unavoidable conflict between the organization's approach and the employee's perception. Employers typically set percentage limits on the number of "Poor", "Good", "Better" and "Best" employees while more than 80 percent of U.S. workers rate their own performance as exceeding the "norm" or average performance of peers. This makes sense because who among us is motivated by being judged to be "Average," "Adequate," "3," "Meets Expectations," or other terms used to label those in the middle of the bell curve. Performance management, as practiced by many fine organizations and managers, is continually questioned and criticized because of this fundamental and inescapable conflict of self-assessment and organizational judgment. What can employees and management do about a process that is frequently unsatisfactory and so immune to improvement?

Research of high performance organizations and management behaviors provides the essential characteristics of effective performance management techniques and practices.

Widespread Understanding of Company Direction and Goals
With a clear view of the organization's direction and objectives, managers and employees can align their own efforts and goals to the overarching priorities.

Balanced and Diverse Goals
Performance goals reflect a mix of "what" is to be achieved and "how" it is to be achieved including such factors as financial results, quality, innovation, customer satisfaction, employee satisfaction and organizational strength.

Performance Management is Key
It is not optional, trivial or easy to do. Good employee and business management is good performance management. Make good performance management a highly valued, even critical trait.

Continuously Train How to Give and Receive Feedback
Seems too obvious but gaining skill and confidence in giving and receiving feedback is central to performance management effectiveness.

Focus on Development, Not Judgment
"It's about human nature dummy!" If most employees were not insecure before now, the recent three-year economy has made job security "Job No. 1" in employees' minds. Keep focused on employee development and improvement, not criticism and judgment.

Lead by Example
Managers and employees will almost always mimic the behavior of the boss. Performance management starts with the CEO doing a good job with the top tier of executives. It will cascade very naturally from there. It will fail for certain if "performance management" is deemed to be good for the masses but unnecessary for top management.

"Watch Your Language!"
Animals and entertainers perform - employees contribute! Several successful and bold companies have abandoned ratings altogether. A leading professional services company issues performance assessments at new hire orientation. All new hires are told during orientation they are considered a "Full Contributor" unless their work warrants a reassessment. Should the volume or quality of their contribution to business results or work environment decline significantly for a sustained period, they are reclassified as "Requiring Development." A three to six month Development Period is instituted. Failure to restore their "Full Contributor" status typically results in termination of employment. Gracious, clear, and deliberate! Employees are not humiliated or "marked" for failure. Treated like adults, employees are not likely to disappoint.

Whether you're the employer or the employee, it's worth the time to take a step back, look around, and assess whether your performance plan really works. Look for ways to make it better and watch contributions improve.

- Bill Coleman, Senior Vice President of Compensation