Managing individual performance is one of the most frustrating challenges faced by the modern organizational leader.  My experience has been that most of the time this frustration is caused by a lack of clarity of performance expectations and an unwillingness on the part of leaders to make to a commitment to strategically managing employee performance. To address this challenge, try using the strategy of performance contracting.

Managing individual performance is one of the most frustrating challenges faced by the modern organizational leader.  My experience has been that most of the time this frustration is caused by a lack of clarity of performance expectations and an unwillingness on the part of leaders to make to a commitment to strategically managing employee performance. To address this challenge, try using the strategy of performance contracting.
 
THE STRATEGY: DEVELOPING AND USING PERFORMANCE CONTRACTS
 

1.   Start with performance expectations--Goals.
 
Performance contracts should include Routine, Stretch and Development goals that incorporate expectations or specific actions to be taken.  Keep all goals specific, measurable, attainable, relevant to business objectives and timely.
 
Routine--include actions that encompass performance expectations an individual would complete in the normal course of doing his or her job and that are project-directed.

Examples:

• Design and implement a strategic public relations plan
• Recruit and hire six specialists with appropriate certifications.
• Complete preparations for the annual audit two weeks prior to on-site audit.

Stretch--include actions that challenge the skills, abilities and knowledge (competencies) of an individual, but are realistic and project-directed.

Examples:

• Initiate and complete a review of how all direct reports conduct intake interviews with a view to making the intake process more efficient.
• Prepare a plan B budget for the next fiscal year that reflects a reduction in revenues and expenditures of 15%.
• Complete an all-employee opinion survey and develop an action plan based on the results.

Development--include actions that are directed at self-development and enhance current and future value to the organization.

Examples:

• Complete certification as a clinical specialist within 90 days.
• Attend the annual professional conference and plan and conduct training debrief for colleagues on three subject areas.
• Complete a workshop and receive six hour of coaching on interpersonal communication skills.

2.    Include milestones.

Milestones or dates for specific actions to be completed for each goal are critical for employees to accept accountability.  And, the overall contract should extend six to nine months in order to promote systematic accountability checks.  Generally, one year performance contracts are not as productive as shorter term contracts because contract completion appears distant to both leaders and employees, which causes commitments to weaken.

3.    Schedule accountability sessions.

One-on-one accountability sessions are important components of the contracting process and include reviewing progress, determining what additional resources may be needed, adjustments of the milestones and performance coaching.  Schedule a final review to establish completion of the contract, negotiate a new contract and deliver any rewards associated with contract completion.

FINAL THOUGHT

E-mail me with questions and/or comments, or if I can assist you in any way to implement this highly effective process for managing individual employee performance.  And, please contact me if you are interested in substituting this process for the traditional performance appraisal.

Let me know what topics you would like addressed in future editions of Strategies & Solutions.