How to Set Leaders Up for Success with a Performance Management Framework

This article first appeared on Acorn Labs in March 2024.

For a more in-depth look at the performance management framework, have a read of the full article.

A performance management framework is a structured approach to managing and improving the performance of individuals, teams, and businesses. It encompasses processes and activities with a focus on setting performance goals, aligning employees with organizational strategy, and supporting employee development to improve performance.

The importance of a performance management framework

Traditional performance management just isn’t built to drive business performance. Only 1 in 3 North American employers say their employees feel performance evaluation is fairly rated, and less than half agreed their managers were any good at evaluating their direct reports’ performance. Plus, traditional performance management puts a lot of weight on annual performance reviews, preventing employees from getting regular feedback or development opportunities.

An effective performance management framework is the only solution. You can even use a performance learning management system to help with the process. It drives:

1. Better employee performance as a result of clear objectives and performance expectations.
2. Increased employee engagement and retention due to employees being more likely to stay with their companies if there is an active investment in their professional development.
3. Greater alignment between individual and company goals, increasing productivity due to employee behaviors and actions working towards business strategy.
4. More effective succession planning as you identify and develop your top talent to take on more responsibility or different positions within the organization.
5. Efficient resourcing and decision-making through frequent performance appraisals that generate valuable insights about employee performance, including strengths and improvement opportunities.

How to create an effective performance management framework

If you want effective modern performance management, you need to create a progressive performance management framework. You can do this with three key elements.

1. Regular and continuous feedback

Imagine an employee on the customer support team who has been getting good reviews from customers all year, only to be told in their annual review that they were doing the wrong things all year. Their performance was noted by their manager throughout the year, but nothing was said about it. Wouldn’t it have been easier to nip those performance issues in the bud as they happened, so corrective action could have been immediately implemented?

Regular, ongoing feedback mitigates this risk by linking performance with learning. This way, managers can provide feedback in the moment and ensure that employees are given the necessary development opportunities to improve their performance as the need arises, rather than waiting until the end of the performance period (during which time performance issues may become business problems).

2. Flexible, business-aligned goals

Progressive performance management is all about enabling incremental changes in employee behavior in order to drive organizational transformation. The changes needed (and therefore goals set) need to be adjusted according to your evolving business environment.

In traditional performance management, goals are rigid, but progressive performance management focuses on flexible goals that can be aligned with current employee and business needs. For the best goal-setting approach, use SMART goals—goals that are specific, measurable, achievable, relevant, and time-bound.

3. Future-driven

Future-driven performance management is what makes it “progressive” performance management. Traditional performance reviews focus on rating performance after the fact, a bit like a school report. A progressive performance management framework looks to the future instead, identifying areas for improvement and providing learning opportunities to employees (often in the moment of need).

If your performance management isn’t meeting organizational goals through the continuous improvement of the workforce, then you don’t have an effective performance management framework in place.

Do a capability gap analysis to find out what needs to be developed for the future. A capability gap analysis identifies where capabilities are now and where they need to be in order to meet desired outcomes. For individuals, capability is measured in levels of competence, where low competency indicates a need for development. The idea is that employees should be increasing their competence as a result of your learning and performance initiatives.