Performance management is vital. Whether you are still using annual reviews, or your organization is using the continual coaching model, managing employee performance is the only way to ensure that they receive the feedback required to optimize their performance. However, it’s not enough to make sure that each employee is doing his or her job to the best of their abilities.

There’s more to it than providing the training, tools, knowledge, and budget for employees to accomplish their duties. You also need to align those efforts with your organization’s business strategy. How do you do that, though? It’s not as hard as you might think.

How to Align Performance Management with Business Strategy

Define Your Plan

The first step in alignment is ensuring that you have an overarching business strategy in the first place. What do you want to achieve within your business or organization? This is your “big picture” goal, so it’s ok if it seems unachievable at the moment or if it doesn’t fall into the SMART framework.

Set Targets

Once you have your overall business plan, it’s time to set targets for each area of the company. These targets need to reflect the action or achievement that the individual area or department needs to accomplish to align with the plan we just discussed. For instance, you might need to improve customer service, in which case the customer service manager would need to hit one or more targets related to that goal, such as:

  • Reduce phone hold times
  • Increase customer satisfaction levels with the service delivered
  • Reduce call time overall

If improving customer service and satisfaction is one of your primary business goals, you may also set targets for the production manager. The team might need to achieve targeted improvements such as:

  • Reduced errors in production
  • Improved build quality
  • Improved material quality

Each department would have a set of targets relevant to the overall business plan. Once you get to this point, you can begin to work in employee-specific goals within performance management.

Breaking Down the Bigger Picture

Once you’ve set targets for each department, it then becomes that department manager’s responsibility to break things down into manageable chunks for the employees. This is called “cascading”, and it involves studying the larger targets and then creating tailored objectives that relate to each employee’s duties, responsibilities, and skills.

Ultimately, every employee in the company should be tasked with something that ultimately goes toward meeting the organization’s business goal. With that being said, not all objectives are created equal. They need to be properly measured, distributed, quantified, and defined. When doing this, follow these guidelines:

Is It Realistic?

Double-check that the targets set are realistic and achievable. If they aren’t, they likely need to be further broken down into their constituent components. You also need to ensure that employees have the resources (time, budget, training, etc.) to hit those targets.

Is It Clear?

Make sure that the objectives set for employees are clearly defined. You also need to ensure that the value to the business is also clearly communicated. How does an employee’s objective tie into the department’s goal? How does that tie into achieving the business objective? Connect the dots for employees.

Is It Documented?

Don’t leave room for miscommunication or misunderstanding. Document the objective being set for each employee. Ensure that everyone is on the same page and document the objective, the timeframe for reaching it, and any other relevant points.

Are They On Board?

Make sure that the employee is on board with everything. You need to get buy-in, or agreement, for every goal that you set. You can discuss your plan all you want, but if you fail to get employees to buy-in, you’ll ultimately fail to reach those goals. To get them on board, you will need to have a mutually agreed-upon plan that illustrates the employee’s responsibilities concerning the objectives.

Track and Discuss

It’s not enough to set objectives and targets. You can’t just drop a strategy on employees (or entire departments, for that matter) and then expect things to go smoothly. People get off track. Things happen to derail progress.

You must track progress and make time to discuss everything with employees. For some people, this might seem familiar. If you’ve been following the continual coaching model, then you already know what this is all about. However, if that’s a new concept for you, then a bit of explanation is necessary.

Going Beyond the Annual Review

If you’ve been following the annual review model of performance management, it’s time to throw it out. You cannot sit down with an employee one time per year and expect to hit your business objectives. It just doesn’t work that way.

Instead, you need regular sit-downs with employees. You need to create a conversation surrounding their targets, responsibilities, performance, challenges, and how you can support them in reaching the goals you’ve set. How often should you do this? As often as necessary.

There is no one-size-fits-all schedule. For some, it might be once per month. For others, it could be bi-weekly or even weekly. Figure out what is needed for each employee and then create a personalized coaching plan to support their efforts (and thereby your business objectives).

While you’re coaching and communicating, it’s worth noting that the focus should not be strictly on past performance. Breaking out of the annual review mode helps, but you also need to put some focus on future behavior. Discuss future goals and what the employee can do to reach them. Recognize targets they’ve met and celebrate their successes with them.

In Conclusion

Ultimately, aligning performance management with business strategy requires that you take a segmented approach. Determine your overall business strategy, and then break it down by department. Each of those targets must be further subdivided and parceled out to employees. Make sure everyone understands how their responsibilities connect to and support progress toward the ultimate goal, though, and ensure that you’re willing and able to conduct regular sit-downs with all employees.