In today’s work environment, where layoffs or restructurings have become commonplace, it is more important than ever that firms find ways increase communication with employees. One way to do this is through an effective performance management process. Performance management is about clearly communicating job functions and performance expectations to employees, and providing frequent feedback regarding their performance. Many contractors have employees spread out in multiple geographic locations, making regular and formal communications are even more important. 

An annual appraisal form does not constitute a performance management process. In many instances, the form is a stand-alone document with no other purpose than to provide a rating. Many managers do not receive training about how to coach employees, deliver feedback, etc. Often, managers see annual appraisals as an interruption of their work, a necessary evil. In an environment where managers and employees alike question the value of the form, it is not unusual to see a high volume of late appraisals. Unfortunately, late appraisals signal to employees a lopsided working relationship with their managers; employees have to complete work on time, but managers do not care enough about employees to deliver reviews on time.  

Performance management, if done right, is a continuous process that will drive the following changes throughout the organization:

• Establish a culture of accountability
• Strengthen the relationship between manager and employee
• Influence employee job performance
• Provide a strong link between pay and performance
• Facilitate employee development and career planning

 Ideally, performance management fosters a partnership between management and employees, with all levels of the organization committed to the process. Performance management plans encourage two-way communication, which helps contractors remove barriers that prevent employees from performing at higher levels. Exhibit 1 shows advantages to the organization in implementing effective performance management plans. 

Exhibit 1: Advantages of Performance Management Plans

When considering implementing performance management, contractors should have reasonable expectations of the process. Performance management will:

• Drive changes in behavior over time
• Require management’s commitment
• Require that management invest time and effort
• Take time for the culture to embrace

 Performance management will NOT:

• Happen overnight
• Be effective if viewed only as an annual form
• Be successful if the process has no credibility with managers and/or employees.

The process of implementing performance management is as varied as the organization itself. Therefore, the steps presented below are in no particular order (unless specified in the discussion of a particular step). The term “job” used throughout this article refers to employment positions.   

Job Descriptions

An effective performance management process involves developing detailed job descriptions. A job description should summarize and describe what the company expects of an employee performing that role. A job description should include the following:

• Information about work the employee is expected to perform
• A list of common tasks to the position
• The knowledge, skills and abilities (KSAs) incumbents should currently have or should gain during their employment
• Minimum education and experience levels
• Any required or preferred certifications
• A description of the working environment
• Reporting relationships

Clearly defined job descriptions help employees understand their roles and clarify titles. Maintaining current and accurate job descriptions reinforces manager communications and ensures that employees and managers are on the same page. Job descriptions serve two purposes: communicating job functions to existing employees and providing employees across the organization with information about other roles in the company, which assists in career planning. This is important when helping rising stars navigate the organization. Appendix A shows an example of a job description.   

One of the most common concerns contractors have about writing job descriptions is how to make them fit a job with all its variations. For instance, the duties performed by a project manager on one project may be different from the tasks the same project manager might perform on another. The key is to identify the core tasks performed by the role, not the incumbent, regardless of the project. The job description should focus on the most important aspects of the job.  

Writing job descriptions for all jobs at once can be a daunting task and can involve different levels of complexity, depending on the size of the organization. At one extreme, a firm could conduct job analyses for every position. A job analysis involves interviewing a representative sample of incumbents in each job and developing descriptions. A more common method is for managers to write the descriptions and vet them with incumbents and subordinate managers. Either way, this is not a minor undertaking, and contractors should plan accordingly.  

The Scorecard (Annual Review Form)

Companies should not start building the scorecard until after job descriptions have been finalized. Doing otherwise might result in performance measures being inconsistent with the tasks and KSAs required for the job. The format of the form is not as important as the measures. Some firms use a mix of core values and job-specific performance measures, others use core competencies and job-specific competencies, others might focus on goals and results, or a mix of these might be appropriate.

Regardless of the types of measures used, there are some important considerations when establishing performance measures. A manager’s ability to evaluate an employee’s performance is only as good as the measures. This is the primary reason why using the same measures for all jobs is ineffective. Managers will be more likely to provide honest assessments of employee performance when the measures are tailored to each job. Typically, if a manager cannot justify or explain a less than positive rating, he or she will simply give an average rating. Using job-specific performance measures enables managers to be more effective communicators. Additionally, job-specific measures clarify the differences between jobs in a job family. For instance, ABC Construction utilizes estimator I, estimator II, and senior estimator positions. The job-specific performance factors clarify the differences in skill, knowledge and experience required for the various levels. As employees move up through the levels, employees understand the levels of performance expected at each level. 

Managers should review and clarify performance factors with each employee at the start of each performance cycle so that they understand against which criteria their performance will be measured. Appendix B shows an example of a section of a scorecard with performance factors.  

 As mentioned earlier, scorecards typically include company-wide measures as well. These measures are the same for every employee, whether construction executive or clerk. For example, core values represent the company’s culture and establish ground rules around how the organization and its employees conduct themselves. Clear and concise core values ensure that all employees are being evaluated on the same measures, which drives a collective consciousness around these measures. This focus helps guide the business to achieve its goals and create a brand name in the industry that others respect. Appendix C shows an example of a section of scorecard with core values. 

Effective scorecards also include a personal goal section that allows managers to provide employees with feedback on past goals, enabling development of future goals. Whereas the company-wide and job-specific measures might be competency or behavioral based (or a mix thereof), personal goals are where managers and employees focus on results. Although these too can be behavioral or competency-based, typically this is where specific results are enumerated. The most effective goal-setting process encourages managers and employees to work together in setting goals.  

Self-evaluation forms

An effective performance management process encourages two-way communication between employees and managers. A key tool for driving this is the self-evaluation form. The self-evaluation form allows employees to present their perspective on their performance, the company’s performance as well as any barriers to their performance, on record. It is best if that this form does not mirror the scorecard, but instead asks general questions about key areas of the job. Unlike the job-specific performance metrics, this form does not need to be job specific. Typical self-evaluation topics include goals; desired training and development; areas where the company can help employees to better perform in their roles; areas where they think they excel or need improvement; etc. Self evaluations provide a means of open communication between employee and manager, because not only is the employee is able to express his or her needs, but the manager and employee can discuss the goals they both created for the employee and determine the right path together.  

For companies with or striving for a pay-for-performance culture, an additional step in the performance management process involves tying pay to performance. This can be done through both annual base pay increases and bonus payouts. Utilizing the annual performance rating to determine payouts is an effective way  to tie performance directly to pay. Employees will clearly understand how payouts are determined, and this link will compel managers to be as accurate as possible when assigning ratings. 

The success and effectiveness of any performance management process is achieved through communications and training around the process. Training for managers might include tracking and measuring performance, conducting employee feedback sessions, and business writing. Training for employees might include business writing (for the self-evaluation) and communication skills.  

Managers and employees need to have buy-in of the performance management process for it to be effective. Frequent communication to all involved goes a long way toward ensuring manager and employee acceptance. As part of the communication process, employees should be involved in the plan design and rollout process. Include managers and employees in the development and communications, as well as employees from multiple areas of the company. For instance, once managers complete the job descriptions and scorecards, distribute them to lower level managers for them to discuss with employees. Include operations, estimating, finance and business development employees in this review. This step goes a long way toward getting buy-in before launching the process.  

Effective performance management processes are the hallmarks of best-in-class employers. These plans foster an open environment and cooperation in the workplace, clarify company expectations of employees, reinforce the company’s strategy through clear communication of core values and increase employee accountability by providing a clear tie of pay to performance. Such processes can help companies to identify and eliminate poor performers and nurture and support future stars. Effective performance management plans are not quick or easy to implement, but if done right, will result in increased morale, increased performance across the organization, and improved retention and recruiting rates. 

Appendix A - Sample Job Description

Appendix B - Performance Factor Scorecard Example

Appendix C - Core Value Scorecard Example

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