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Revising Performance Goals in Times of Change


Have you found that since the GFC of 2008 your goals now tend to change part the way through a planning cycle, in response to unexpected turns in the economy? Do you then run into difficulties with your annual performance appraisal process? Nowadays employees are often working on new and different goals with altered performance criteria by the time appraisal time comes by. Performance appraisals can become even more contentious and stressful than they already are. If goals change mid-year, how does the part-achievement of a previously set annual target get assessed? How do we know what was achieved? What is measured? Is there some way of recognizing partial attainment of a goal that gets changed through no fault of the employee? If you have a performance incentive scheme in place, the likelihood of conflict increases significantly under such circumstances. Changing goals mid-course in a system designed for annual measurement is less than clever. The challenge is to keep the performance appraisal process clear and fair in these trying times. I have made my case before against the practice of linking monetary rewards to individual performance. In conditions of unavoidable changes in strategies and goals, I argue even more strongly against linking pay with performance. The situation is not as dire as one may think, however. Not all employees have goals that directly impact the corporate strategy. Rather, their efforts contribute to a result that delivers some fraction of the overall result. A delivery driver whose goal is to reduce fuel consumption by 8% contributes to the overall effectiveness of the company, but is unlikely to be affected by occasional adjustments to the corporate strategy. The same is true of, say, a training administrator whose goal is to improve the accuracy of a regular report. The concern here is more related to employees whose work contributes directly to the attainment of strategic goals: senior levels of management or staff in specialized functions of strategic importance, such as project managers, executives and heads of departments. Shifts in strategy trigger adjustment or change to their goals to suit the new circumstances. A system that provides for greater flexibility than the conventional annual process is required for this level. It includes the need to review any performance and pay link that may be in place now. This is an opportunity to assess the value of monetary reward for performance and possibly replacing it with something else completely. In choosing an alternate process, be sure to discuss your proposed changes and the reasons for them with affected employees - and seek their agreement. Performance management systems operate best in a high-trust environment. You might explore a range of options. For example, consider working out what proportion of the desired result had been attained at the time of making changes to the goals and base your rating on that. Another approach might be to adjust the rating period and the measure to be commensurate to the time required for the attainment of goals. The evaluation of project-based work should logically take place at the end of the project, assessing both individual and team contributions to the final result. Whatever is decided regarding the formal performance appraisal process and timing, never lose sight of the value of regular direct one-on-one communication between a manager, their direct reports and the team. The frequency of such sessions may vary, depending on the nature of the goal: it may be weekly or monthly. I would argue not to allow the interval to be longer than one month. Such meetings represent an ongoing conversation in which information is exchanged, problems identified and solutions crafted, with the important added benefit of engaging and motivating everyone. Yet, to be manageable in an already busy job, scheduling requires some forethought. One system I have come across is where the manager alternates between team and individual meetings every other week. How do you deal with the impact of the shifting macro-environment on your company's strategic goals and the knock-on effect on your performance appraisal processes? Do you have some lessons to share with us? We'd love to hear from you.

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