Case Studies

CASE: Optimizing Your Performance Management System

Performance management is one of the most important—and toughest—jobs of a manager. Perfomance incentives and reivews are often flashpoints for controversy. This Guttman program combines performance consulting with skills transfer.

A worldwide shipping company

A few years ago, a worldwide shipping company needed to reevaluate its performance management system. After several profitable years, employees had come to expect year-end bonuses based on their day-to-day job performance, as opposed to performance above and beyond their job. As a young company that wanted to inculcate high-performance behaviors and values in its employees, it decided that going forward people would need to earn bonuses by demonstrating achievements above and beyond their daily activities. Basic performance evaluation, used for merit increases, needed to include those competency-based behaviors that the company wanted to drive.

Working with the vice president of human resources, Guttman began by creating a new performance evaluation and incentive program, in which bonuses were tied to goals above and beyond typical performance, as well as to company goals. Beginning with the CEO and his senior team, strategic goals were set for the company and each function and then communicated down through the organization. Each successive level was then charged with creating goals to align with those set by the senior team. All managers and employees participated in the Guttman program, “Optimizing Your Performance Management System,” where they discussed upcoming changes to the system. They learned how to create performance goals that clearly define results and can be measured objectively. They were also given the interpersonal skills needed to participate in effective performance discussions year round. Managers received coaching skills and practiced giving feedback and conducting effective coaching and performance evaluation conversations.

After the initial session, each manager sat down with his/her direct reports, one at a time, to set goals and determine how success would be measured. Then they began partnering to achieve the goals—and the bonuses that went along with success. 

The results: People understood that incentives were not an automatic entitlement. They were also clearer about what was, at their level and in their job, merely good performance and what was superior performance. The quality of performance reviews rose when both parties possessed the skills needed to give and receive feedback and resolve differences of opinion. And, because each function’s operational goals were tied to the company’s strategic objectives, there was greater alignment of goals cross-functionally.