1. Steps to a successful Performance
Management implementation
Making the transition from spreadsheet-based Financial Planning and Analysis to a leading
Enterprise Performance Management Solution (e.g., Hyperion, Cognos, etc..) requires commitment,
executive sponsorship, and significant adjustment by those involved. Before moving forward with
haste, certain items should be considered to ensure a successful and sustainable implementation:
1. Assess the Current Environment: Before a company can even consider beginning to scope
out the analytical and reporting needs of a given organization, it is important to take a careful
look at the current environment. Many organizations make the mistake of implementing
analytical tools that only produce what is currently being used. The only difference may be a
more complex user front end. Doing this will not create any value for the organization and will
only lead to frustration and a low adoption rate.
2. Get to Know Users and Understand User Needs: It is important to meet with the key people
in the organization that will be using or relying on the new tool to make business decisions.
Approach these conversations in a way that opens the door so that they are intricate in the
design and development. Keep in mind, fulfilling the needs of the Finance is important,
however, providing a tool that has the power to directly impact the business and profitability is
the goal. It is important to have a strong executive sponsor of the project which will assist with
driving the project and promoting it through-out the executive team of the company. However,
receiving input from the data experts / users of the data will lay the foundation for a useful tool
which will have an impact on the day to day operation and management of the company.
3. Identify Key Performance Indicators (KPI’s): During the discussion with management and
the users in the organization, it is not only important to understand the business drivers, but
also being able to measure business performance by applying KPI’s. KPI’s need to be
measurable, but one simple aspect to keep in mind, is they should be useful. Don’t overwhelm
your user base with complex KPI’s that do not add value. During your information gathering
sessions you should be able to get a feel of what is needed, and you may find in most cases
there is a common theme. Some examples of KPI’s include:
Profit and Loss
Inventory Turn
DSO (Days Sales Outstanding)
Customer Loyalty/Attrition

2. Market Share Indicators
Other relevant measurements
Good Project Management Skills Are Key: Once the information gathering sessions are
complete and a signed-off proof-of-concept is in place, it is time to create a Statement of Work
(SOW). The SOW is a detailed road map of the project. While drafting the SOW, it is
important to keep in mind that you are providing a solution to an existing problem. Therefore it
is important not to over complicate as this will only create resistance and lack of acceptance.
When drafting the Statement of Work, the following should be defined:
Project Scope
Risks identified
Timelines defined
Any additional terms of the project
It is a good practice when managing a project of this scope to schedule weekly update meetings and
to track the progress of the project to ensure that key deliverables are being met. This will keep the
project in line with goals and timelines detailed in the SOW. Lack of diligence can most certainly
result in an overage in project budget and delays in implementation. Some others points to keep in
mind include:
Implement in phases and conduct User Acceptance Testing along the way.
Ensure proper training is made available not only users, but the administrators of the new tool.
Do not over complicate. In some cases, less is more. Provide a sustainable, usable system that
can provide standardized reporting, yet have the flexibility to provide ad-hoc analysis as
needed by users.
Link: http://hrweb.berkeley.edu/guides/managing-hr/managing-successfully/performance-
management/planning

3. Overview
Performance management is the systematic process by which an agency involves its employees, as individuals and
members of a group, in improving organizational effectiveness in the accomplishment of agency mission and goals.
Employee performance management includes:
planning work and setting expectations,
continually monitoring performance,
developing the capacity to perform,
periodically rating performance in asummary fashion, and
rewarding good performance.
The revisions made in 1995 to the Governmentwide performance appraisal and awards regulations support sound
management principles. Great care was taken to ensure that the requirements those regulations establish would
complement and not conflict with the kinds of activities and actions practiced in effective organizations as a matter
of course.
Additional background information on performance management can be found in the following articles:
Chronology of Employee Performance Management in the Federal Government
Setting the Stage for Performance Management Today
In an effective organization, work is planned out in advance. Planning means setting performance
expectations and goals for groups and individuals to channel their efforts toward achieving
organizational objectives. Getting employees involved in the planning process will help them
understand the goals of the organization, what needs to be done, why it needs to be done, and how
well it should be done.
The regulatory requirements for planning employees' performance include establishing the elements
and standards of their performance appraisal plans. Performance elements and standards should be
measurable, understandable, verifiable, equitable, and achievable. Through critical elements,
employees are held accountable as individuals for work assignments or responsibilities. Employee
performance plans should be flexible so that they can be adjusted for changing program objectives
and work requirements. When used effectively, these plans can be beneficial working documents
that are discussed often, and not merely paperwork that is filed in a drawer and seen only when
ratings of record are required.

4. In an effective organization, assignments and projects are monitored continually. Monitoring well
means consistently measuring performance and providing ongoing feedback to employees and work
groups on their progress toward reaching their goals.
Regulatory requirements for monitoring performance include conducting progress reviews with
employees where their performance is compared against their elements and standards. Ongoing
monitoring provides the opportunity to check how well employees are meeting predetermined
standards and to make changes to unrealistic or problematic standards. And by monitoring
continually, unacceptable performance can be identified at any time during the appraisal period and
assistance provided to address such performance rather than wait until the end of the period when
summary rating levels are assigned.
In an effective organization, employee developmental needs are evaluated and addressed.
Developing in this instance means increasing the capacity to perform through training, giving
assignments that introduce new skills or higher levels of responsibility, improving work processes, or
other methods. Providing employees with training and developmental opportunities encourages
good performance, strengthens job-related skills and competencies, and helps employees keep up
with changes in the workplace, such as the introduction of new technology.
Carrying out the processes of performance management provides an excellent opportunity to
identify developmental needs. During planning and monitoring of work, deficiencies in performance
become evident and can be addressed. Areas for improving good performance also stand out, and
action can be taken to help successful employees improve even further.
From time to time, organizations find it useful to summarize employee performance. This can be
helpful for looking at and comparing performance over time or among various employees.
Organizations need to know who their best performers are.
Within the context of formal performance appraisal requirements, rating means evaluating employee
or group performance against the elements and standards in an employee's performance plan and
assigning a summary rating of record. The rating of record is assigned according to procedures
included in the organization's appraisal program. It is based on work performed during an entire

5. appraisal period. The rating of record has a bearing on various other personnel actions, such as
granting within-grade pay increases and determining additional retention service credit in a reduction
in force.
Note: Although group performance may have an impact on an employee's summary rating, a rating
of record is assigned only to an individual, not to a group.
In an effective organization, rewards are used well. Rewarding means recognizing employees,
individually and as members of groups, for their performance and acknowledging their contributions
to the agency's mission. A basic principle of effective management is that all behavior is controlled
by its consequences. Those consequences can and should be both formal and informal and both
positive and negative.
Good performance is recognized without waiting for nominations for formal awards to be solicited.
Recognition is an ongoing, natural part of day-to-day experience. A lot of the actions that reward
good performance — like saying "Thank you" — don't require a specific regulatory authority.
Nonetheless, awards regulations provide a broad range of forms that more formal rewards can take,
such as cash, time off, and many nonmonetary items. The regulations also cover a variety of
contributions that can be rewarded, from suggestions to group accomplishments.
Managing Performance Effectively. In effective organizations, managers and employees have
been practicing good performance management naturally all their lives, executing each key
component process well. Goals are set and work is planned routinely. Progress toward those goals
is measured and employees get feedback. High standards are set, but care is also taken to develop
the skills needed to reach them. Formal and informal rewards are used to recognize the behavior
and results that accomplish the mission. All five component processes working together and
supporting each other achieve natural, effective performance management.
Benefits
Managing employee or system performance facilitates the effective delivery of strategic and operational
goals. There is a clear and immediate correlation between using performance management programs or
software and improved business and organizational results.
For employee performance management, using integrated software, rather than a spreadsheet based
recording system, may deliver a significant return on investment through a range of direct and indirect

6. sales benefits, operational efficiency benefits and by unlocking the latent potential in every employees
work day (i.e. the time they spend not actually doing their job). Benefits may include:
Direct financial gain
 Grow sales
 Reduce costs in the organization
 Stop project overruns
 Aligns the organization directly behind the CEO's goals
 Decreases the time it takes to create strategic or operational changes by communicating the changes
through a new set of goals
Motivated workforce
 Optimizes incentive plans to specific goals for over achievement, not just business as usual
 Improves employee engagement because everyone understands how they are directly contributing to
the organizations high level goals
 Create transparency in achievement of goals
 High confidence in bonus payment process
 Professional development programs are better aligned directly to achieving business level goals
Improved management control
 Flexible, responsive to management needs
 Displays data relationships
 Helps audit / comply with legislative requirement
 Simplifies communication of strategic goals scenario planning
 Provides well documented and communicated process documentation
4 Key Benefits of Performance Management
1. PM focuses on results, rather than behaviors and activities
A common misconception among supervisors is that behaviors and activities are the same
as results. Thus, an employee may appear extremely busy, but not be contributing at all
toward the goals of the organization. An example is the employee who manually reviews
completion of every form and procedure, rather than supporting automation of the review.
The supervisor may conclude the employee is very committed to the organization and works
very hard, thus, deserving a very high performance rating.
2. Aligns organizational activities and processes to the goals of the organization
PM identifies organizational goals, results needed to achieve those goals, measures of
effectiveness or efficiency (outcomes) toward the goals, and means (drivers) to achieve the
goals. This chain of measurements is examined to ensure alignment with overall results of
the organization.
3. Cultivates a system-wide, long-term view of the organization.
Richard A. Swanson, in Performance Improvement Theory and Practice (Advances in

7. Developing Human Resources, 1, 1999), explains an effective performance improvement
process must follow a systems-based approach while looking at outcomes and drivers.
Otherwise, the effort produces a flawed picture. For example, laying off people will likely
produce short-term profits. However, the organization may eventually experience reduced
productivity, resulting in long-term profit loss.
4. Produces meaningful measurements
These measurements have a wide variety of useful applications. They are useful in
benchmarking, or setting standards for comparison with best practices in other
organizations. They provide consistent basis for comparison during internal change efforts.
They indicate results during improvement efforts, such as employee training, management
development, quality programs, etc. They help ensure equitable and fair treatment to
employees based on performance.
15 Other Benefits of Performance Management
Performance Management (PM):
1. Helps you think about what results you really want. You're forced to be accountable, to
"put a stake in the ground".
2. Depersonalizes issues. Supervisor's focus on behaviors and results, rather than
personalities.
3. Validates expectations. In today's age of high expectations when organizations are
striving to transform themselves and society, having measurable results can verify whether
grand visions are realistic or not.
4. Helps ensure equitable treatment of employees because appraisals are based on results.
5. Optimizes operations in the organization because goals and results are more closely
aligned.
6. Cultivates a change in perspective from activities to results.
7. Performance reviews are focused on contributions to the organizational goals, e.g., forms
include the question "What organizational goal were contributed to and how?"
8. Supports ongoing communication, feedback and dialogue about organizational goals. Also
supports communication between employee and supervisor.
9. Performance is seen as an ongoing process, rather than a one-time, shapshot event.
10. Provokes focus on the needs of customers, whether internal or external.
11. Cultivates a systems perspective, that is, focus on the relationships and exchanges
between subsystems, e.g., departments, processes, teams and employees. Accordingly,
personnel focus on patterns and themes in the organization, rather than specific events.

8. 12. Continuing focus and analysis on results helps to correct several myths, e.g., "learning
means results", "job satisfaction produces productivity", etc.
13. Produces specificity in commitments and resources.
14. Provides specificity for comparisons, direction and planning.
15. Redirects attention from bottom-up approaches (e.g., doing job descriptions,
performance reviews, etc., first and then "rolling up" results to the top of the organization)
to top-down approaches (e.g., ensuring all subsystem goals and results are aligned first
with the organization's overall goals and results).