How to do performance management right

My first job was at South African Breweries in 1995. Bright-eyed and eager to learn, I joined the operations team at a distribution centre. On the first day, after my manager explained the scope of the job, he said: “Here’s the goal template. I need you to think about your goals for this year, fill them in and have them ready for discussion next week.”

Performance management in SABMiller was legendary. In the 1990’s they were one of the first organisations in South Africa to adopt this process. I was lucky to have been schooled in this way of thinking because it set the tone for my working life. Not a year went by without setting goals, reviewing them and evaluating performance. At the end of my career at SABMiller, some 22 years later, I was in charge of the performance management training for employees and managers. Now, as I run my own business, focusing on goals is part of the DNA.

Here are a couple of things that I learned on how to make it work.

If the goal does not support the strategy, don’t do it. Every goal should be able to be clearly linked back to how it will achieve the company’s strategy. And the operative word is clearly. If the link is tenuous, don’t do it. If the link is non-existent, don’t do it. If it’s merely a nice to have, don’t do it. Resources like money and time are too valuable to spend on aspects that won’t move the company forward. Be ruthless and cut these goals out.
Employees should own their goals. On average, every team would have at least one day annually to set goals, and many teams allocated 2 days. This time spent was crucial because it took time for employees to “wrestle” with their goals. Writing their own goals ensured that they bought in rather than just receiving it from higher up. Of course, the goals were aligned with departmental and organisational goals, but having employees write their own goals empowers them and ensures commitment.
The indicators must drive the right behaviour. It’s easy to grab the most visible indicator that you can think of. But ask yourself whether it will really show that the goal had been achieved in the right way. What behaviour will it drive? If the indicator focuses on achieving the goal no matter what, it may tempt employees to employ unethical means to achieve the goal. Always ask: what is the quality requirement?
Have a calibration process that is transparent and credible. Unfortunately, there is still mistrust between employees and management in many firms. A process for sense-checking performance scores should be transparent and well-communicated. If employees believe that they are treated fairly, they will support the process and do their best to perform. Even invite employees to the calibration sessions to show how they are run (with the appropriate consideration for confidentiality).