I'm often asked what performance management is, and why I'm such a strong advocate for it.

Let's start the discussion with an example from Benton Toups, an attorney who specializes in employment law:
 
John Doe, who worked at a manufacturing company, suffered a workplace injury and also complained about racially insensitive comments, all around the same time. After that, his performance dropped considerably, and he was prone to tardiness, absenteeism, et cetera. His supervisor, however, didn’t document any of this and continued to give the guy good performance reviews because he was scared of a claim of retaliation if he didn’t. There came a point, however, where upper management couldn’t look past the employee’s poor performance and attendance, and he was terminated. He then filed a retaliation lawsuit, alleging he was fired because he complained of race discrimination and was injured on the job. There was a months-long track record of poor performance, tardiness and absenteeism between his reports of discrimination and workplace injury and his termination, but since none of that was documented, it became a difficult case to defend, and the company ended up paying to settle it.
 
As illustrated by this case study, which describes a situation that is painfully familiar to many readers, performance management systems are often under-utilized and also misused. In fact, in many organizations, poorly implemented performance management systems can do more harm than good, as was demonstrated by this legal case. In failing to accurately document the employee’s performance for fear of a retaliation claim, the company bought itself a retaliation claim. And more importantly, the manager did not provide the candid feedback the employee needed to act upon.  If the manager had coached the employee, instead of ignoring unacceptable behavior, the employee may have become a much better performer.

If you don't have the crucial conversations with your employees, you can't expect them to improve
 
In addition to an increased risk of litigation, there are several other detrimental outcomes of poorly implemented performance management systems, including employee burnout and job dissatisfaction, damaged relationships and increased turnover. In addition, there is a large opportunity cost because poorly implemented systems waste time and resources, including time and money.
 
Before implementing a performance management system, there needs to be a clear definition of performance management. Performance management is a “continuous process of identifying, measuring and developing the performance of individuals and teams and aligning performance with the strategic goals of the organization.” Note that the key components of this definition are that this is a continuous process and that there is an alignment with strategic goals. If a manager fills out a form once a year because this is a requirement of the “HR cops,” then this is certainly not a continuous process. Also, evaluating employee performance (that is, performance appraisal) without clear considerations of the extent to which an individual is contributing to unit and organizational performance and about how performance will improve in the future, is also not consistent with this definition of performance management.
 
I encourage you to visit PerformanceCulture.com to learn how you can implement performance management within your organization.

The Cornerstone Business Advisors team includes former C-Level executives, successful entrepreneurs and advisors who offer unmatched experience in delivering advanced, custom-tailored, results-oriented solutions for business leaders. Cornerstone has worked with hundreds of companies that range from fast-growth start-ups to Fortune 500 corporations. It developed the Performance Culture System™ to help clients implement best practices and drive high performance throughout their organization. For more information, visit www.PerformanceCulture.com or email [email protected].