If you manage people, you need to have some performance management training under your belt. While you can get that in many universities or professional organizations, performance management is not that hard, and you can probably get all the information you need in this article. Of course, this is not a replacement for a fully-fledged performance management training, but with this article alone you can start functioning as a manager.
Performance Management Training
What is Performance Management?
Before we start, I want to set clear expectations on what you can get out of this guide. The only way to do it is to clarify what I mean with performance management, so that you know what this training will teach you. So, let’s start with a simple definition.
Performance management is ensuring each individual in your team contributes to the team’s goals as expected, and make sure contributions increase over time.
To say it in simple terms, it is ensuring your team does well what it is supposed to do, and becomes better and better at it with time. This means recognizing who is doing particularly well, keep them motivated, reward them, identify underperformers, help them get back on track, or ultimately remove them from the team.
Performance management is both about managing the performance of the individuals, as well as managing the performance of the team as a whole. If you have any direct report, you need to know how to do this well. And this is where this performance management training kicks in.
What are the Components of Performance Management?
Overall, performance management is about ensuring performance is up to standard. Yet, this high-level achievement is supported by other smaller components of performance management. As we will see, they are all interlinked, so you need to do all of them well to ensure performance keeps improving.
- Defining success – If you want to know if you are succeeding, you need to know what success looks like in the first place. This is crucial for performance management.
- Measurement – How can you measure the performance is moving the needle in the direction of the success as defined in the previous step?
- Appraisal – Understanding how close (or far) you are getting to success is a first step, but not enough. You need to evaluate this and convey the information to everyone working, so they know if they are on track as well.
- Coaching – Performance will not be good all the time, or with all employees. How do you bring someone who is underperforming back to the bar? When do you decide it is time to remove them from the organization? How do you ensure your top performers remain motivated and push to do more?
In this performance management training, we will see how to do all these things.
Performance Management Training in Practice
1. Define success
The first step in our performance management training is to define success. Here, you want to define success at all levels: individual, team, and organization. Let’s work backward from the organizational success, which is what drives everything else.
Imagine your organization, the entire company, is tasked to realize a new big web app to sell products online that is expected to increase sales by 20%, and this is to be done this year. That is the organizational goal, and all teams in the company will do their share of work to support this. Since you are in the security team, your job as a team is to create an audit system that detects malicious interactions with the app. That is the team goal.
Now, every individual in the team will have her own goal supporting this: there will be the database guy tasked to create a resilient database, the software engineer who must create a piece of code to call a human when something is wrong, and so on.
If you run the company, it may be worth to start by defining customer success, and then define your organizational success based on that, and only consequently team success and individual success. A success definition, or “definition of done” should be a paragraph that answers two questions:
- How do we (unquestionably) know we are done?
- How do we know this moves us closer to the high-level goal?
Do this exercise for goals at every level, and always keep an eye on two levels at a time. When you are defining team goals, keep an eye on organizational goals. When you are crafting the individual goals, involve the individual who will deliver them and keep an eye on team goals.
Once this is clear, you can move to the next part of performance management, which is measurement. That has two parts: defining how to measure, which is part of defining success, and performing the measurement.
2. Measure performance
You must be able to measure performance at every level: organizational, team, and individual. That performance should have a unit and a scale, that is, “we are 50k$ short in revenue” is a good measurement, while “we are not yet done with this project” is not.
Measuring performance has two parts: deciding what to measure and how, and perform the actual measurement. As you can imagine, the first part is the hardest: once you define what you want to measure and how, doing that will be easy.
Everything can be measured with at least some degree of accuracy, but identifying how is not easy. This is probably the hardest part of the whole performance management training, but if you get this right everything else will run so smoothly. Measurement is a whole science, and we cannot address everything in this article, but a must-read is How to Measure Everything.
To define a measurement, you should answer the following questions:
- Why is this relevant? (e.g., does this really correlate with the success I am trying to measure?)
- How, at a practical level, will I be executing the measurement?
- How often will I measure?
- Is there some random error intrinsic in my measure? (Yes, there will always be some) How much?
- Is there some bias/am I favoring some datapoints over others?
Defining that a measurement is relevant is the first step. For example, if your goal is to measure if people are actually returning to the office, a great measure would be to count the hours spent per day that you can extract from the badge system. But imagine you do not have a badge system, another measurement could be the amount of toilet paper resupply (the more the resupply, the more people are spending time at the office).
This of course is imprecise and less ideal, but it will show you the trend (more time at the office or not), so it is relevant.
When thinking about what to measure, do not put yourself any constraint. Then, once you have defined what you would like to measure, think about practical ways to do that. If you cannot measure that directly, maybe there is some proxy you can look at (such as in the toilet paper example).
Collect datapoints of this measurement consistently over time.
3. Evaluate performance (Appraisal)
This is the easiest step in performance management training. If you know what success looks like and you have a metric to measure it, then just by looking at the value of that metric you can tell if you are having the target performance. So, knowing how well (or bad) you are doing is not a problem anymore.
The key component of appraisal is conveying the evaluation to the person being evaluated. That is not that easy because it can be emotionally challenging (especially in case of poor performance), it is naturally bound to conflict (there will be disagreement around how good the performance was), and there is no guarantee you message will get across.
As everything else around this performance management training, the advice is to prepare in advance. Collect your metric, compare it to your benchmark, and write down the points you want to communicate to your employee in advance. One important point here is to split appraisal from coaching. That is, meet to discuss performance, but do not talk about ways to improve it or change it at the same time.
This is because, as humans, we are less receptive to feedback after we have “been judged”. This is true even if performance is already good and you want to share tips on how to do better. So, have a meeting for performance appraisal, and one week later or so a separate coaching session (to define the coaching strategy and the improvement points, actual coaching typically requires more sessions).
4. Coaching
Coaching is the best part of this performance management training, because it is what drives people to become better and better over time. This is where you have the most human interactions in regard to performance management, and thus it is bound to give many satisfactions.
The idea behind coaching for performance management training is simple: people will get better over time on their own if they know what success looks like and they are measured, but coaching can make them better faster. This is intuitive: if you have a number to look at (your performance metric) and a target to reach, you can make a random change in the way you work and see if that moves your metric closer to the target. So, over time, you will become better and better.
But random changes (which are driven by good intentions, but they are often random) are not the most effective way to move forward, especially at the individual level. Coaching is about giving a hint and early feedback to each of your employees so that they can move their metrics toward the target faster.
Coaching must be individual, tailored to the needs in terms of shortfalls, skills, and ambitions of every team member. It cannot be a “class”, it must be performed individually (otherwise it would be training, not coaching). Even more important, you should coach everyone, no matter the performance. Of course, the way you coach an under-performer is different from the way you coach a top performer.
But everyone needs to be coached because everyone can increase their performance by some amount. Coaching should be future-oriented and not backward looking, focusing on what can be done well in upcoming projects, tasks, or initiatives. Here are some tips for coaching:
- Perform coaching in one-on-ones (weekly meetings between manager and employee).
- Do that in small steps, focusing on small things a person can do this or next week to improve performance in a given dimension.
- Provide candid early feedback “I liked the meeting notes you sent – I did not like it took 5 days to see them out, people were waiting on them”.
- Review metrics periodically to ensure they are moving in the direction you want.
When do you fire someone?
Before concluding this performance management training, I wanted to touch briefly on what to do if performance is beyond repair and does not improve. At some point, companies or managers will decide a work relationship is no longer worth investment. This is where you start to hear about termination, reduction-in-force, attrition, etc.
I prefer to call these things with their proper name, at the cost of being a little blunt: when is performance bad enough to justify firing someone?
The answer to this question is tricky and depends on many factors. In a nutshell, it is about evaluating all the costs of keeping the person onboard versus the benefits of firing them. There might be some ethical and moral implications here, but this is not the subject of this article. This performance management training is all about understanding when the performance is so bad that investing in making it better makes no sense.
I can raise one point on the morality of layoffs: if you do not keep your team or company competitive, it will be eaten by the competition, and you will be out of business at some point (forced to lay off many more people). Of course, kicking someone out of his job is never ideal, but it may be the least of evils in the long term.
But the focus here is not about firing in itself, it is about understanding when it is no longer worth spending time and effort on improving performance. This, indeed, is part of the performance management training.
Your first attempt should always be to try improving performance, often through coaching and setting clear (and maybe narrower, more precise) expectations. But, at some point, you may realize even those efforts yield no result. When considering if to terminate someone, you should consider the level of performance reached, the trend (is it growing, and how fast?) and the cost to sustain this trend. Compare all this to a benchmark than you have, and you should have a clear indicator on when it is time to fire.
This may sound a little abstract, but an example will clarify. Imagine an employee costs you 50k$ in salary per year, and you expect to make 80k$ in revenue for each employee you have. To get the employee up to speed, you invest 10k$ when onboarding them, and employees leave the company after an average of 1 year. This means the total cost of the average employee is 60k$, and the revenue generate is 80k$, so you have a 20k$ margin.
Now imagine you have an underperforming employee that is generating only 30k$, much less than the expected 80. You can spend up to 20k in coaching to bring him up to the target revenue and you will be on par. This means that every dollar spent on coaching must yield 2.5 dollars in revenue or more (you spend 20k to generate at least 50k, 50/20 = 2.5).
Of course, all this math is simple enough when you have the numbers. Most employees do not directly contribute to a revenue amount, so you need to make estimates, and furthermore you need to make estimates on how short of their performance they are. But, if you set up the proper measurement system in place, you will be good to go.
Performance Management Training Summary
Managing performance takes practice, and it is a soft skill that you will learn with time. This performance management training should act as a guideline to make you start working in the right direction. First, define the success criteria and how to measure if you are successful, continuously perform measurements and appraisals, communicate what you see to employees, and coach to improve performance.
Referent power will help you in this journey, so continue by reading this guide.
