Performance Management: It’s Not Just About the Performance Review

As a recruiter at OpenView, my favorite part of a phone interview is when the conversation shifts to letting the candidate ask me questions.  It’s the part of the interview that can really help me to understand what’s important to the candidate (and if they really want the job I am peddling).  I’ve interviewed hundreds of candidates and answered thousand of questions – many about compensation (argh) and even more on team size and company culture (thank you!).  But there is one question that really gets me excited about who I’m speaking with, and sadly, I’ve only heard it about 10 times.  So, when a candidate asks, “What achievements or metrics will make this person successful in their first year?”  I get pumped!  These are the candidates that our portfolio companies want to hire.  Like the expansion stage companies that we invest in, I know this is a candidate who is serious about their career, achieving goals, and managing their success.

It’s also safe to assume these motivated candidates are the employees that are driven to be the top performers in their organization.  They want to understand what they will be measured on or against, expect to receive feedback on their performance and want to be supported (by resources, mentorship, etc) in achieving their goals.  What these to-be-employees are asking for are the cornerstones of a concept called “performance management.”  Ultimately, managing the performance of an employee should begin during the first interview and it should not end until the employee leaves the organization.

I like to think of performance management as a continuous process of improvement.  On a more granular level, it is the day-to-day process of guiding an employee and team in the desired direction that will achieve individual goals that support the organization’s strategic objectives.  Make no mistake – making the commitment to manage performance is not easy!  It is time-consuming and, to make a true organizational impact, requires the dedication of all of your managers.  However, the benefits are totally worth it!  Companies that have a performance management system see major rewards in regards to financials, customer satisfaction and quality of products or services.  Believe it or not, it can also be a company’s greatest tool in attracting and retaining top performers.

RainmakerThinking is a consulting firm that specializes in developing training programs for young talent and managers.  They outlined four basic management principles to address what they call the “Under-management Epidemic.”  But what these principles really address are the guts of a performance management system: define, facilitate and encourage performance.  In order to be successful, performance management requires the following four basic principles of management are done well and often:

1. Communicating regular statements of performance expectations and responsibilities through the definition of measurable goals and deadlines.
2. Regular monitoring, evaluation and documentation of work completed.
3. Clear and open feedback on performance and guidance for improvement.
4. Rewards (and penalties) distributed fairly based on the set of expectations.

At OpenView, the companies in our portfolio are smaller organizations (50-100 employees) and are undergoing outstanding growth; often times they are planning to nearly double their staff in the next 1-2 years.  If you are the leader of a smaller organization, like the expansion stage companies in our portfolio, now is the time to implement a performance management system across your organization.  As your organization grows, it will not only be a challenge to get all of your managers on board, but you could also miss out on developing and retaining the top talent that you will need to remain competitive.

Are your managers committed to improving performance with their direct reports?  How have you implemented a performance management program, beyond the annual review?