Introduction

An effective Performance Development Process (PDP) is central to improving business performance. It’s about aligning employee effort with business plans so both the employee and the business succeed.

Remember that it’s the quality of the conversation that’s important – it’s not about ticking all the boxes on the form!

There are three phases to the process:

At annual review time, the Accountabilities, KPIs and Goals are agreed for the following 12 months.
During the year performance is regularly monitored against those goals.
At the end of year, the employee’s performance against the goals is reviewed

Accountabilities are the specific functions the role is expected to deliver. Key principles of accountability are:

It's about meeting commitments agreed upon by you and the employee.
It’s an obligation, not just something the employee will try to do.
There is no such thing as group or shared accountability – it’s between you and the employee.
Meeting accountabilities is only partially about results. It’s about adding value while delivering results. It’s much more than effort or good intentions.

KPIs are measures for determining progress against the agreed accountabilities. KPIs must be measurable. If you can’t measure it, it’s not a KPI. Once established, a KPI’s definition is unlikely to change very often. Each section of the business is likely to have only 4-6 KPIs.

Goals represent a specified level of achievement of a KPI. Goal setting promotes:

Clarity about what needs to be delivered.
Effective action planning.
Greater freedom to operate.
Greater job satisfaction.
Identification of individual and business strengths and weaknesses.
Fair and easy appraisal and evaluation of the individual and the business.

For example, an accountant will have an accountability to deliver the monthly management accounts. A KPI could be the timing of submission of those reports to management. A Goal could be a requirement to make the reports available within 5 working days of the end of the month.

No matter how poor your past experience of such processes may have been, there are very good reasons why you and your employees should keep trying to have good quality, regular discussions about performance development. Here are some of those reasons:

REASONS FOR HAVING AN EFFECTIVE PDP
YOU	YOUR EMPLOYEES
Want employees directing their effort at the right priorities, so your accountabilities are achieved.	Need to know what your priorities are and where they should concentrate their efforts.
Need employees to grow their capabilities so the business can grow.	Want to develop their skills and their career.
Want to reward people appropriately, so they stay and remain motivated.	Want to be well rewarded for their efforts.
Need your employees’ help to be successful.	Need your help to get the job done.
Need to talk about and praise good performance, and talk about and correct performance that is below expectations.	Want to know how they are doing and want to do a good job.

Success with the PDP is a joint responsibility between you and the employee. Your role is to:

Make sure you prepare well and give the employee a good experience of the conversation. Listen and ask questions until you deeply understand what they are saying.
Be honest, and courageous if required, in your conversation. No one benefits if there are performance problems or training needs and you avoid talking about them.
Praise good performance.
Follow through on any commitments you make and regularly review progress on the agreed objectives and development plans.

Remember that it’s the quality of the conversation that’s important!

You can access an illustration of the process here.

Continue to Step 1