Construction Business Owner, September 2007

Amidst a sea of policies, procedures, tactics and best practices, one of the most critical tools an organization must have in place is a credible performance evaluation system that will serve to increase productivity and efficiency, improve customer satisfaction and market share and increase employee commitment.

A survey of 203 top executives across all industries representing organizations in sales ranging from $27 million to $50 billion resulted in the following major findings (Towers Perrin 2002):

• Organizations in which employees are measurement-managed were identified as being in the top one-third of their industry (83 percent versus 52 percent).
• Employee performance measurement is the single most important measurement area that separates successful firms from less successful firms.
• High performance companies are more likely to directly link pay to the performance management process than lower performing companies.

It is essential for organizations to connect the strategy, vision and values of the organization to the work of teams and individuals. Team/departmental and individual goals need to measure both "what" is done (objectives) and "how" it is done (behaviors).  If the right model is implemented, then the organization will reinforce superior performance with financial awards allowing significant differentiation between high and low performers.

It's important to address a "best practice" performance management evaluation system that will ensure an organization's ability to attract, retain and motivate key talent in today's increasingly competitive marketplace. A performance evaluation program that is aligned with the organization's mission, vision and values will contain the following components:

(1) Behavioral attributes/values (the "how" of performance)

(2) Objectives (the "what" of performance)

(3) Development plan 

Behavioral Attributes

The first component of the performance evaluation system looks at behavioral attributes/values and addresses the manner, methods and behaviors through which objectives will be attained. Behavioral attributes are "how" results should be achieved to ensure short-term results are not achieved at the expense of long-term business results at the expense of our values, or the expense of employees or customers. Mastery of behavioral attributes is necessary for employees to be in alignment with their culture.  Some examples of behavioral attributes are:

(1) Flexibility/adaptability

(2) Communication

(3) Innovation

(4) Risk taking

(5) Technical expertise

(6) Developing others

(7) Teamwork 

These types of behavioral attributes would be the same for all employees in an organization; however, some may only be applicable at the management level (i.e., development of people or budgetary responsibilities).

Objectives

The second component of a performance evaluation system is objectives. The objectives are where the rubber meets the road. The objectives may be organizational, team/departmental, or individual. All objectives should follow SMART criteria:

(1) Specific

(2) Measurable

(3) Attainable

(4) Relevant

(5) Time-bound 

Specific criteria are the reason why the job exists. This is where you are focusing on the results. Measurable criteria are quantitative. The question that must be addressed is: "How will I know when I have reached the desired result?" Then, look at whether the objective is attainable: "Did we set realistic targets?" "Is there a reasonable chance targets will be achieved?" Next, consider relevance: "Is there a direct link to an employee's job that supports departmental/team objectives?" It is here where an organization must ask the question: "Is this task relevant to the department goals or the job?" 

The final set of criteria is referred to as time-bound. It is extremely important that companies establish specific due dates. If an objective is due to be achieved at the end of the year, then the organization must break it up into milestone dates where successes can be achieved along the way toward achievement of the overall goal. The question becomes: "When can these results be achieved?"

Development Plan

The final component of a performance evaluation system should include a development plan.  The development plan is critical for the development in an individual's current position, as well as the development for future career progression opportunities. The development plan should contain the following elements:

(1) Targeted development needs

(2) Action plan

(3) Target dates

(4) Completion dates

Employees should play an active role in their own development while organizations provide the environment, resources and ongoing coaching and feedback necessary for the employee's growth. With the coming workforce crisis, organizations will need to have a sufficient number of employees developed to take on higher levels of responsibilities as baby boomers begin to retire.

 

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