Designing Effective Performance Management Systems: Best Practices and Strategies

Today, we conclude a 5-part series on one of our highly recommended strategies for driving a culture of peak performance – The Evolution of Performance and Impact Measurement. In the previous articles, we discussed Performance Management Systems as a Catalyst for Continuous Improvement and How To Implement Effective Performance Management Systems.

Designing Effective Performance Management Systems: Best Practices and Strategies

No two organizations are the same. Whilst there may be a great deal of similarities in the broader sense, the specific variables are always distinct. The objectives may be similar but the methodology cannot be parallel. In designing effective performance management systems, leaders must take into account the similarities and differences, points of convergence and divergence, assets and liabilities, strengths and weaknesses, opportunities and threats that the organization is exposed to. The strategic design of a performance management system is critical because if the fundamentals are flawed, the outcomes will inevitably be flawed. It’s like trying to use a crooked stick to draw straight lines. It becomes even more critical for large organizations where they are much complex spans of control. Overall, the following themes must be represented in designing an effective performance management system

A. Clearly Defined Expectations

In jurisprudence, it is said that “where there is no law, there is no sin”. This means amongst other things that as leaders, we cannot hold a person to account for a task we didn’t intentionally assign to such person. There are many cases where employees take initiative and do things without being asked; whilst that is great – it should be the exception and not the rule. The overarching corporate vision of an organization should ensure that tasks are assigned to a person, a team, a department, or a board. This allows everyone on the team to channel their creative energies to achieving those objectives. Setting expectations should be done in concert with each responsible officer to orient them not only on what drives productivity but the why the responsibility is critical to the vision of the organization. The metrics of success should also be clearly spelt out so that everyone can constantly undertake a self-assessment and take cognisance of any departure from the agreed objectives. These expectations should be firm enough to instil accountability yet flexible enough to accommodate exigencies.

When German coach and former gaffer of the Super Eagles of Nigeria, Gernot Rohr was unceremoniously sacked, it sparked a lot of controversy in its wake. The hitherto longest serving manager’s dismissal drew praise and criticism in almost equal measure from football pundits in the country. Rohr on his part, called out the Nigerian Football Federation for terminating his contract and over his unpaid wages. He maintained that contrary to widespread reports, he meet all the key performance indices of his contract. Then President of the Nigerian Football Federation, Amaju Pinnick, on his part stated that sacking Rohr close to an AFCON tournament was a pre-emptive step to prevent disaster that was waiting to happen. He also insisted that Rohr has lost control of the locker room which gave rise to unbridled indiscipline. 1A claim that was strongly debunked by Rohr, declaring that, “The dressing room was 100% behind me”. This conundrum is a classic example of a lack of specificity in stating the terms of a contract between employer and employee. An efficient performance management system would double down on details such that claims and counter-claims would be at a minimum, if any at all.

B. Periodic Monitoring

After specifying expectations, assignments and projects should be monitored regularly. Intermittent interventions and interrogation should be a feature of effective performance management systems. This is where leaders move from what is expected to what is inspected. From experience, it’s not always what is expected that gets done but what is inspected. Monitoring isn’t mere observation, it’s involves providing feedback, conducting interviews to ascertain the other person’s point of view and comparing interim results with expected objectives to know whether to continue, pivot or abort the task. Monitoring on the one hand is to minimize liability and on the other hand to regulate behaviour. Many successful organizations don’t allow the mass production of commodity without achieving a minimum viable product. A minimum viable product is achieved when management has monitored the dynamics of a product and is satisfied that it can be presented to its external stakeholders, especially the customers.

Goldman Sachs changed its playbook from a rating-based performance assessment process to a performance management strategy that involves frequent feedback. It developed its own web-based tool for deliverables and getting feedback that promotes informal performance dialogues. The annual review methodology was trashed for a concept introduced in 2021 and known as The Three Conversations – which sees performance reviews being conducted at least three times a year. It sees managers collaboratively set goals with team members at the beginning of the financial year, a progress-check at the middle of the year and a discussion at the end of the year where performance is measured in the context of expected goals.

C. Meeting Employees’ Developmental Needs

An ineffective approach to leadership is to demand productivity without addressing the developmental needs of the employee. Laziness stems from an unwillingness to perform a task but incompetence is the inability to perform the task. It is possible for an employee to have the willingness to be productive but lack the ability to be productive. This is why training is an indispensable feature of any effective performance management system. Upskilling employees is raising their competence levels to match the expectation or demand placed on them. Other times, addressing an employee’s developmental needs means promoting such a person to a higher position or giving them a more significant task because you can see that they have more potential and providing them that opportunity is a response to a developmental need. Developmental needs may also come into the form of providing an updated software, machine or information for the tasks to be executed. A performance management system should not take a punitive approach but a partnership approach that makes the leader just as interested in the productivity and progress of the team member.

Meta (formerly known as Facebook) does its best to engineer a most convenient workplace for its employees to foster productivity. Its performance management system focuses majorly on peer-to-peer and employee-to-manager feedback. Meta creates secret one-to-one groups to share individual goals, track progress, and share feedback. Regular employee coaching is also a part of Meta’s performance management practice. Employee performance coaching is a form of on-the-job learning. It is a collaborative process between a manager and an employee, as well as between employees in the form of everyday interactions.

D. Conduct Appraisals

Appraisals are a more formal, detailed and objective feedback. It’s not just conversations but an attempt to represent productivity in qualitative or quantitative terms. This makes leaders use performance management systems to regularly provide assessments to the employee. It’s for evaluation as it is for comparison. It helps to know which employees are putting in the work and getting with the programme. It also helps management know if a particular employee is improving against their previous output by juxtaposing employee results and drawing a graph of their performance. Appraisals explain the correlation between outcomes and expectations, it’s a summary of how an employee’s actions have contributed to an organization’s corporate vision. Many employees can tell whether or not they will survive in an organization by looking at their appraisals because they are signposts that tell the story of productivity or the lack thereof.

As a leader in big tech, Google uses a signature performance management system. From when talents are hired, Google doubles down on training, learning and talent development. It measures the capabilities of its employees annually by conducting performance evaluations with a mid-year checkpoint and monthly performance check-ins that span across items such as coaching, growth and workplace challenges etc. Its annual Upward Feedback Survey is akin to a 360-degree evaluation. It depends on objectives and key results for its performance management initiatives. 

E. Implement A Fair Reward System

Hopefully, the appraisals show that an employee is productive – when that is the case, there must be an intentional and significant reciprocity towards that person from management. Desirable behaviour and outcomes should be reinforced so that the benefits that accrued from it serves as motivation for an employee. These rewards can both be formal and informal such as promotion, increased salary or bonus, paid vacations, awards, a commendation letter, a public acknowledgement of performance like the employee of the month or year, contract renegotiation etc. The reverse is also true, a performance management system is used by leaders to identify underperforming or grossly unproductive employees. Once the appraisals shows that such behaviour or output is far below the threshold of what is acceptable, leaders are compelled to wield the stick. It has to be made abundantly clear that actions have consequences. This punitive measure might range from demotion, deduction of salary, issuing of a query or outright dismissal.

2Presco Plc rewarded some of their staff for outstanding performance during the year 2023. Its Managing Director, Felix Nwabuko revealed that tremendous progress was made in both field operations and production targets which he remarked could not have been achieved without the workers whilst describing them as the company’s greatest asset. A Tractor Operator, Mr. David Onoto, emerged the overall best staff of the company, followed by Mr. Charles Onwuasoanya who emerged overall second-best staff. No doubt, an in-house performance management system identified these top performance using various qualitative and quantitative measures. 



Growth Opportunities

To further position your leaders for peak performance, you can download a free copy of the latest edition of The Peak Performer Magazine You can also enrol your Mid-level  Leadership Team for the Made4More Accelerator Program and your Senior Leadership Team for the Dr. Abiola Salami International Leadership Bootcamp MOMBASA 2024 We also have an upcoming training for leaders in public service

About Dr. Abiola Salami

Dr. Abiola Salami is the Convener of Dr Abiola Salami International Leadership Bootcamp and The Peak PerformerTM. He is the Principal Performance Strategist at CHAMP – a full scale professional services firm trusted by high performing business leaders for providing Executive Coaching, Workforce Development & Advisory Services to improve performance. You can reach his team on and connect with him @abiolachamp on all social media platforms. 

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