Aligning Employee Performance to Organization Performance and MVVs
Most successful organizations have transitioned from the traditional employee appraisal process to the more enterprising performance management process that ties employee performance to organizational performance through its mission, vision and values. Management teams have discovered that when they do not deploy cascading goals from the executive suite to divisions, departments and individual employees, the organization experiences a misalignment with their overall goals. This misalignment results in unclear goals at the department and employee level. Without that “clear line of sight” organizations struggle with managing accountability, department and workforce redundancies and general conflicting activities. Managers fall prey to the “nice guy, bad year” syndrome – rewarding underperforming employees with satisfactory ratings because priorities change mid-year that are not reflected in the employees’ performance plan. Employees lose sight of how they are supporting the organization or affecting the mission and vision of the company in a positive way. All of this impacts the overall performance of the organization, as well as of the individual. For the individual employee, in many cases, this results in reduced employee engagement because the employee does not understand how he or she fits into the big picture.
Management teams have learned the importance of cascading goals to assure successful goal attainment and increased employee engagement. It is not enough to simply conduct the annual strategic planning session and share these goals via corporate communications or team meetings. Organizations must align and cascade goals throughout the company to drive transparency, manage progress toward goals on a continuous basis, and evaluate overall strategy with individual performance. These five steps provide a guide on how to cascade organizational goals, align them with your performance management process, and create a relevant employee development plan that is connected to business strategy.
1. Developing Corporate Goals
Corporate goals are developed prior to the beginning of the fiscal year at a strategy session attended by senior management. The goals define what the organization wants to accomplish in the coming fiscal year. For most organizations running on a calendar year, these planning sessions occur in the summer or early fall. These overall corporate goals are based on the organization’s strategic plan, and are the guardrails that guide the organization to achieve its mission. Generally, organizations will limit their overall corporate goals to between three and five, which allows the team to maintain focus.
The foundation of the goals are the mission and vision of the organization. Also, in this day and age, many companies have begun to incorporate their values into this planning stage. The goals are defined in terms of the company’s mission i.e., what we do; its vision, i.e., for whom or why we do it; and, its values, i.e., how it will be done through the behaviors that reflect the values of the organization. For example, a company may have a corporate goal to “increase revenue by $100M in the next fiscal year by expanding into new markets and doing so by upholding the values of the organization” or “increase overall efficiency while maintaining product/service quality and doing so by upholding the values of the organization.” These are specific and easy to understand goals that can be adapted across the organization.
2. Aligning Goals and Establishing High-Level Metrics
Once the organization sets its top-level business goals, it can begin to cascade the goals to the specific business units, divisions and departments. At this point, higher-level managers are in conversation with middle and frontline managers to develop goals and objectives that will support the overall goals and objectives of the organization. Senior leaders of the respective business units or divisions would develop strategic requirements that are tied directly to each of the corporate goals.
Continuing with the above examples, each leader would determine how his/her sector of the organization would support the “increase in revenue” and “increase in efficiency,” as well as define the values to be upheld for each goal. In addition to the defined objectives, timelines and metrics for measuring success would be established to assure objectives could be tracked.
It is suggested that once the leaders of the business units or divisions have established their specific goals and objectives, a meeting among these leaders be held to discuss them in an open forum to identify if there is any misalignment of goals or duplication of effort. The most common errors that occur during this phase are goals that lack specificity, metrics to measure success or identified timeframes. By collaborating, cross-functional areas within the organization can eliminate possible issues sooner rather than later.
3. Cascading Goals through the Organization
Now that goals are established at the corporate, business unit and divisional level, managers within the departments can begin to cascade these goals to the groups, teams and individuals under their supervision. At this point, managers can inform their employees of the overall corporate goals and how their business unit or division plans to support the goals. By cascading goals, managers are helping employees understand:
- The activities the organization is focusing its attention on
- How their work will contribute to the successful achievement of the goals
- How they will exhibit behaviors that support the corporate values
- The importance and impact their individual work has to the bottom line
This action is enabling employees to make the connection between their goals, the department goals and the overall corporate goals.
4. Goal Setting
To ensure managers are driving company-wide transparency and to increase commitment and engagement, as they are informing employees about the goals, they should also be gathering input about how these goals can be supported through the day-to-day activities the employees complete. This is part of the individual employee goal setting process, which is a collaboration between the employee and manager. Asking the employee to establish goals they would like to accomplish that align with what the department is trying to accomplish is the best initial approach to the goal setting event.
Once the employee has established his/her individual set of goals, the manager should review and discuss the goals with the individual. This way the manager can be assured the goals are challenging enough to attain and can ensure there is mutual commitment to achieving them. Within the goal set, there should be “stretch goals” particularly for those who are seeking development and advancement.
Most goal sets will include both short- and long-term activities. Establishing, monitoring and updating goals are an important part of the Talent Management process, thus there needs to be a metric put into place for each activity. Also, when creating goals, people should be mindful of the fact that business circumstances may change, which will require an adjustment to the goals currently defined.
5. Managing Goals and Performance
To do this effectively employee performance is tied to the achievement of the goals. The performance components are measured in quantifiable terms to be most effective. Measures are the yardsticks used to determine the success of the accomplishment the employee produced. Some examples of useful measures include:
- Cost effectiveness
Employees should track and evaluate each goal against the specific measures defined. Also, it is imperative that the metrics be reviewed frequently and goals evaluated continuously throughout the performance period. Managers should periodically “touch base” throughout the performance period with each employee. Prompt and continuous feedback is essential for a successful performance management program. Letting the employee know how he or she is doing on a frequent basis will enable the employee to take corrective action to improve when underperforming or increase performance when performing at an expected level. The entire process culminates in the annual appraisal conversation, which becomes a “non-event” for the employee and manager if there was continuous feedback and corrective action throughout the performance period.
The entire performance management process serves as the foundation for the employees’ professional and personal development. Having a systemic process provides employees and management with the understanding of potential talent gaps and provides an avenue for linking development plans to fill specific skill or performance gaps. This assists the organization with workforce planning, as well as employee engagement. Both of these can have a positive impact on the organizations bottom line.