Some companies, despite being successful, are still building their corporate infrastructure. Having recently embedded a new performance management structure in an already highly successful company, we are sharing the considerations for embarking on this journey in this introductory paper.

1. Setting up a
Performance
Management
structure in your
organisation

2. INTRODUCTION
Optimise is a specialist sales optimisation,
enablement and performance
consultancy.
We focus exclusively on improving the
effectiveness of sales organisations
providing practical guidance, tools and
methodologies adaptable to any size of
company.
Our aim is to optimise the sales
infrastructure and as a result create
enhanced performance, improved sales
ROI and ultimately increased revenue.
optimise-sales.com 1

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WHAT AND WHY
What is Performance Management
The entire idea of performance management is to
improve employee performance in line with an
organisation’s objectives - by focusing on activities and
processes, skills, resources and support
Why have a formalised Performance Management
structure
It is understood that continuous, effective performance
management helps foster an open dialogue between
employees and their management - and the company as
a whole.
This increases trust between all parties and ensures
everyone feels better supported and more engaged.
Without this structure, employees are more likely to feel
detached from their work and its role within the
organisation, which is very likely to result in a higher rate
of staff turnover. Not only that, they can become
detached from required performance levels and as a
result, become less effective.
There are key reasons to have a formalised structure and
process for managing performance. These are;
• Boosting employee morale and in turn,
productivity and performance
• Highlighting training gaps and where further
training is needed
• Helps identify the right employees for promotion
• Improves workforce planning, including
managing workloads and delegation
• Boost employee retention/reduces employee
turnover
It is also important to remember that the responsibility
of performance management falls on both the individual
and their manager – an individual needs to be personally
accountable for their development, and a manager is
responsible for enabling this development to happen.

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Employee Benefits
• Clarifies expectations
• Provides opportunities for self-assessment
• Clarifies the job accountabilities
• Provides record of good performance
• Contributes to improved performance
• Clearly defines career paths
• Promotes job satisfaction
Company Benefits
• Improved organizational performance, employee retention and loyalty
• Improved productivity
• Overcoming the barriers to communication
• Clear accountabilities
• Cost advantages
• Consistency of performance measures across the organisation
Manager Benefits
• Reduces conflicts
• Ensures efficiency and consistency in performance
• Provides structure and formality to conversations about performance
• Provides evidence where needed in difficult conversations
Whilst the overal aim is to improve performance, there are clear benefits right across
the organisation to having a structured approach to performance management.
Ultimately the employees should understand more clearly the investment and input
into their personal development. Lets have a look at the benefits here;
BENEFITS

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PROCESS
Whilst we talk a lot about the performance management structure, it is key to make
sure that there is a process built to house the structure and ensure that it is workable
across the organisation.
Clear structure
For the structure to be effective it is necessary to ensure that the process is clearly
laid out for all parties. This means that the benefits, the accountability and the steps
are all documented and shared, and obviously this also means that this is all the same
information laid out for everyone.
System
There needs to be a system to accommodate the performance process . If the
company has an HR management system then usually this can be a module within it
The system does not necessarily needs to be digital, it an be manual but of course in
this day and age it tends to be more effective and efficient to have a digital version
ENVIRONMENT
The performance process is one that should cascade down from the top levels of the
business. The overall company goals and objectives are the true north of the
organisation and ultimately all areas of performance in the organisation should point
to that.
Top down goals
To that end, the the top level goals should be defined – and communicated - in order
that they are understood by the organisation. The goals and objectives for all
individuals should be an extraction of, and point towards, their leaders goals and
ultimately the company goals.

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PROCESS cont
Stabilised compensation
If there are areas of the business where there are differing compensation plans then
the best advice would be to stablise these as much as possible. Essentially,
individuals within the same type of role should have the same type of compensation
plan. This does not mean that everyone necessarily has the same pay, more that they
are paid in the same format. This is important so that the impact of reward and
consequences are the same across the board.
Bonus vs incentive
Companies should ensure the right elements of variable pay are established.
In line with the stabilisation of the compensation, bonus and incentives should be
clear for all staff. For sales individuals they would generally have a variable incentive
plan and for non-sales indviduals often best practice shows that the ability to
participate in some form of bonus scheme is important.
Generally this bonus scheme would be a discretionary pot meaning that there are no
guarantees, discretionary pots tend to be reliant on company performance to be paid
out. If a pot is available then the identified performance will be a key factor in noting
the contribution to the company performance and therefore an individuals share of
the discretionary pot.
Stage Release
A company should consider how much of the structure and process they are going to
launch in one go. Dependent on the status quo, it could be too big a mountain to
climb to roll out the whole nine years in one go
JOURNEY
It is important to ensure that the roadmap from the status quo to the new structure is
laid out. As with any change, this should be managed as a project so that all relevant
steps are planned and communicated. It pays to repeat myself when saying that it is
key to ensure that you get communication right throughout the change process

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MANAGEMENT
For performance management to work as a process it is dependant on several factors
within the organisation. It is important to be transparent about these factors across
the leadership team, and ensure that there is alignment, prior to embarking on the
change process. Some of the key factors are outlines here;
Structure
It is critical that each team member has a specific manager in order that someone has
accountability for every individuals performanc.e
Performance management is about individuals growth, not team growth. This may
seem obvious, however I have experience of clients managing their teams as teams
and never having individual conversations with their team members.
Consistency
To reap the rewards of having a performance management structure it is very
important to maintain consistency with your communication touchpoints. Regularity
of interaction is key to ensuring trust is maintained on both sides.
Abilities of management
For the process to be successful it relies heavily on the skills of the people leaders in
the business, The management skills required include objective observation,
feedback, coaching. If there are any gaps in the skills set of the management then it
will be key to upskill them in order for the process to have the optimal impact.
Communication
If is important to ensure that, like any change management, there is the right level of
sponsorship in the organisation. Usually, for something as significant as this, Executive
sponsorship is the right level as the entire organisation will receive the same message
in terms of tone and language. Because consistency of structure is key, it is also
important that the subject is kept as a focus which means that the regularity of
commmunication is as important as the regularity of the process itself.

8. PERFORMANCE CYCLE
There is a simple cycle to performance management
The key rests in setting expectations of an employee and then measuring
performance against those expectations – and further having a ‘so what’ with the
outcome
The structure needs to be consistent and cyclical, there should be an annual structure
in place to provide milestones (split into equal periods)
The important thing is that we ensure that it is not just having conversations to fulfil
the process, but that actions are taken with the outcome – a combination of feedback
and coaching, career planning and or remuneration planning.
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Define
Performance
Expectations
– Goal
Setting
Career
development
discussion
Performance
Appraisal and
evaluation
discussion
Provide
ongoing
coaching
and
feedback
Define
performance
rewards and
consequences

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SETTING EXPECTATIONS
Define Performance Expectations
Performance management is not
effective if it isnt anchored to the
expectations of a person in a particular
role.
These expectations are in the goals
and objectives but are also captured in
the competencies or behaviours –
every individual should have a
balanced scorecard which looks at the
whole of their role. The balance is
between the explicit goals and the
competencies.
Sales Individuals:
Their role has a reward for
performance vs a financial target or a
conversion for example.
Their performance should be measured
on the achievement of the
targets/conversion expectations AND
the competencies (which we will go
into a little later) – the balanced
scorecard.
Goals should not necessarily just
incorporate the financial goals
however, they should include all
elements expected of them in their job
including things like conversion rates,
particular initiatives or focus
Non-Sales Individuals:
Those roles are generally not
determined, or motivated, by an
explicit financial target but an
encapsulation of what they need to
deliver in their role
For these individuals their performance
should also be measured on
achievement of goals/objectives AND
competencies - the balanced scorecard
We talked earlier about how
important company goals are in this
structure being rolled out to the
whole organisation
The premise is that all goals and
objectives should be a derivative of
the overal company goals. If you take
the company goals, they are
distributed to the key departments
across the business. In turn those
department goals are distributed to
members of the team. At each level
the goals will obviously become more
granular – but ultimately each goal,
for any individual, should be pointed
towards the company goals and be
endeavours that will support the
company objectives.

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COMPETENCIES
A competency framework is very useful as a tool to be used for setting behavioural
expectations and for using these for self assessment and performance review.
A competency is the set of demonstrable characteristics and skills that relate to the
efficiency or performance of a job, usually a combination of skill, knowledge and
attributes all rolled together into performance behaviours – in other words how to
describe what ‘good’ looks like.
A competency comprises of 4 key areas;
The reason why competencies are so important is that when you are setting
expectations for someone in a particular role, you not only want to be setting goals
or objectives but also what types of behaviours are expected of them. Using
competencies is just a way to articulate those elements and break down the
performance so that it makes sense.
So together with the explicit goals and objectives, the competencies are also used to
set out the balanced scorecard, we talked about this in the ‘setting expectations’
section.
Knowledge
Relates to
information
Skills
Relates to the
ability to do
Outstanding
Performance
of Tasks or
Activities
Attributes
Personal
characteristics or
traits

11. PERFORMANCE CYCLE cont
Performance Reviews
As we have already covered, setting the expectations at the start of the cycle means
that every performance conversation you have after that can be related back to those
expectations. So next we move on to Performance Reviews.
Some things to think about when you embark on the review;
• Have scorecards from all leadership levels in mind
• Ask team members to self-assess, this applies to competencies as well as
explicit goals and objectives.
• Ask stakeholders for input
Ongoing Coaching and Feedback
There should be continual emphasis on trained material. This comes from objective
and substantiated feedback on someones performance in role. When moving through
the performance management process there will be occasions where you, as a
manager, will need to give feedback and coaching
This could be as a part of the formal conversations that you have but also as part of
general day to day oversight and observation.
As a manager it is your responsibility to oversee the coaching (or training) of an
individual based on their strengths and development areas. This does not mean that
you need to be the person that always delivers all of that coaching and training but it
does mean that you need to ensure it is happening.
Define Performance Rewards and Consequences
Reward is a subject of some substance all on its own however current thinking is
consistent on the link between reward and performance. Reward mechanisms should
be seen as motivators which increase employees outputs. To that end it would
support the approach to this subject if companies maintained some form of
employee satisfaction surveys to garner input.
Reward for performance could be in the form of remuneration, recognition or
advancement.
The second part of this section is around consequences, this is an area that
companies tend to find more difficult than rewards.
The crux of the matter is that there has to be a ‘so what’ to the performance reviews.
This means that wherever the performance level of the individual, this should mean
something in terms of how they are managed. Whether they are below, meeting or
above expectations of performance. Companies which do not impart any
consequence for regular poor performance run the risk of making any other
performance measure ineffective.
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12. PERSONAL DEVELOPMENT PLAN
If you think of the performance management as a whole then the overriding goal is to
improve performance. The intent of the steps is to get to a personal development
plan for every individual so that their development needs are identified and there is a
plan to address them.
Every individual should have a Personal Development Plan to ensure that their
learning path is specific to them. In terms of learning, everyone has their own set of
needs, they learn differently, they learn at a different pace, they have different
experience levels, knowledge and skills
Development areas are identified throughout the performance management process
ie not only at ‘formal’ review time, but potentially as an outcome of any performance
or managerial conversation. Of course, development areas are not necessarily
remedial they are sometimes aspirational.
The development plan could encompass several solutions, it could include training
(and that is what is usually identified as a solution) however it does not necessarily
have to be just that, it could be things like project participation, exposure, mentoring
or some other focus
Managers are responsible for enabling the development plan to be actioned but not
necessarily be part of the solution themselves. They should oversee the attendance
to the learning process and support the upward progression in terms of abilities and
potential
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13. PERFORMANCE CYCLE cont
CAREER DEVELOPMENT
When you are going through a performance cycle there are points at which you
consider the potential for growth and movement through the organisation.
There are people you think of first when it comes to putting staff forward for
promotions, bonuses or other incentives. But while these shining stars might have
plenty of good points, can they truly be described as high potential employees?
With the increasing competition and costs associated with recruiting top performers,
as well as their potential impact on business performance, it is becoming more
important for businesses to identify high potential employees in their own teams.
Of course the other aspect of this is that you offer an environment that encourages
people to want to grow and develop in your organisation because that development
be recognised – this is appealing to new recruits and also adds to the picture of a
good employer
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14. WHERE TO START
PREPARATION
In terms of the actual structure and process there are some key project steps to work
through. If going from no structure to having one you will need to conside this as a
change management project.
The key 5 steps to change are;
Prepare the Organization
For an organization to successfully move to using a performance management
structure, it must be prepared both logistically and culturally. Before delving into
logistics, cultural preparation must first take place.
Craft a Vision and Plan
Once the organization is ready to embrace change, you must develop a thorough and
realistic plan for bringing it about. The plan should detail:
Strategic goals:
Key performance indicators:
Project stakeholders and team:
Project scope:
The plan should also account for any unknowns or roadblocks that could arise during
the implementation process and would require agility and flexibility to overcome.
Implement the Changes
After the plan has been created, all that remains is to follow the steps outlined within
it to implement the required change. They should also do their best to anticipate
roadblocks and prevent, remove, or mitigate them once identified. Repeated
communication of the organization’s vision is critical throughout the implementation
Embed Changes Within Company Culture and Practices
Once the change initiative has been completed, change managers must prevent a
reversion to the prior state or status quo. This is particularly important for changes
related to these types of processes.
Review Progress and Analyse Results
Conducting analysis and review, or a “project post mortem,” can help business
leaders understand whether a change initiative was a success, failure, or mixed result.
It can also offer valuable insights and lessons that can be leveraged in future change
efforts. You would not expect that this is a one and done type of change, typically
performance management structures are ever evolving in order to tailor themselves
to the needs of the organisation
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COMMUNICATON
When putting together the communication on what and why make sure that you
keep the messages simple;
A performance management system tracks the performance of employees in a
manner that is consistent and measurable
A key point here is that performance management is a continuous process — not
a once-a-year “one-off” activity. Quality performance management should, therefore,
bring together a number of different, integrated activities to form an ongoing”perfor-
mance management cycle”,

16. CONCLUSION
The basics of the performance structure outlined here is an insight into the complex
area of performance management. Market thoughts on the approaches continually
develops with corporate experiences.
When you are embarking on a new structure, and this is new or more advanced than
the organisation has had before, it is wise to start with a simple and easy to
understand structure and process to aid with the embedding across the teams.
The steps outlined should give you the building blocks for a robust and structured
performance management approach, together with the templated forms.
For more detailed insight into the subject of performance management and how to
embed this within your organisation please contact us.
Did you get value from this paper?
Consider the full series of papers on Performance Management
Learn more about sales performance and optimisation
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Jo Andrews
Sales Optimisation Consultant
joandrews@optimise-sales.com
+971 52 895 0423