In this toolkit you’ll find a distillation of lessons learned implementing new and complex employee performance management solutions in over 100 large international enterprises. PeopleGoal’s objective is simple: to give your organization a project plan. We'll provide you with a roadmap to easily and successfully reinvent your performance management process. With this toolkit you’ll get a best-in-class approach to designing, building, and implementing new processes. We want you to have the tools needed to engage employees, helping them to become better performers and more satisfied participants in your business. We’ve also included practical templates, because we want you to have a head start on the practical implementation of such a project, as well as the framework needed for successfully executing such large-scale change.
In modern business, it is no longer sufficient to just “manage” employee performance. You must strive to improve employee engagement; giving employees the right tools to not only understand their performance, but also to elevate their careers and increase job satisfaction. This means that performance management systems must be continually updating to meet the changing needs of management and employee alike.
HR departments struggle with issues like lack of visibility in performance progress—when employees aren’t “seeing” the company goals, to senior managers not “seeing” how employees support these goals—to lack of employee engagement, and attracting/ retaining talent.
You start by reviewing and incorporating change into three key areas of your business: technology, process, and culture. Improvements in these areas can increase employee productivity, while streamlining your performance management systems.
In this article, we split implementing change to your organization into different sections. We suggest reading each section’s brief, then answering the key questions included with each section. You’ll also find links to those practical templates we mentioned—designed to help you implement the information presented in each section.
“More than 80% of organisations are considering making a major change to performance management, or already have.” —Gartner, 2019
A project plan is an essential element to managing any project effectively. As Winston Churchill said, “those who plan do better than those who do not plan, even though they rarely stick to their plan.”
It is not only important for communication, but it is also an invaluable way to keep yourself, and your project organized. An effective project plan includes four essential components—time, cost, scope, and stakeholders.
Your planning phase should address these key areas. You will very likely need to make assumptions as you flesh out a plan; it’s useful to document these key assumptions in your project plan. And your project should have room to flex, containing contingencies should things run over.
Now, let’s examine these four key components in greater detail.
Key question – Is there an internal deadline driving this change? If not, what would an optimal go-live date look like?
The objective here is to determine a rough timeline for the project. Start with an ideal go-live date and work backwards. An accurate estimate of timing may only be available as we progress further into the analysis phase, but it’s helpful to set milestones or stage gates.
For example, you may wish to break down your timeline into target dates for the completion of each phase of the project plan. Similarly, you may wish to include milestones for getting business approval on each phase of the project. We’ve created a sample project plan, which you can use to plan and monitor your performance management overhaul project.
Key question – What is your budget for this project?
Budgeting can be a complex piece of your project plan; you may need to request additional funding for your performance management update project, or move resources away from alternative projects. Additionally, you should be prepared to add a 20 to 30% contingency line to your budget. Be sure to consider all the chargeable factors, such as:
Key question – In broad terms, can you describe the organizational, functional and system areas that are in scope for this project?
It has been our experience that the best variable to adjust in your project planning is scope. If you are constrained by time or cost, then you should flex your scope. It’s better to deliver change with a smaller scope at a higher quality, than over-stretch yourself and under-deliver.
Scope must first address the organizational change. Are we planning an overhaul of performance management for the entire organization, or for specific teams/ departments? And which functional areas are we overhauling—360° feedback process, employee training in risk & compliance, annual performance reviews, or something else? Many of these systems may overlap, and can be impacted by changes to your existing HR system setup. As you begin to articulate the scope of your project, you may be tempted to start defining requirements, but try to keep it to a higher level at this stage. Detailed functional and system requirements will emerge in the analyze and design phases. Be prepared to revisit your plan and assumptions after each successive phase of the project. Your assumptions will very likely change as your progress. Now let’s address the final key element of your plan, stakeholders.
Key question – Who has the authority to influence this project or its outcome? Your project’s success or failure is highly dependent on stakeholders. The more engaged your stakeholders are, the higher the chance of completing the project successfully. Therefore, it is critical to create a strong stakeholder matrix at the start of any project. A stakeholder matrix consists of the project phases, activities, milestones, and a stakeholder list. For each stakeholder, a RACI definition should be assigned. A RACI definition includes:
Regardless of an organization’s HR size or budget, continuous feedback is often not part of the culture. With limited comments on company goals to employees, lack to processes that enable succession planning / identifying talents, and poor reviews/appraisals that don’t properly capture goals and feedback, cropping up as common pain points across the landscape.
These issues may not come as a surprise to you. In fact, they may be present in your own company right now. If so, know that there is a better way; a solution to transform and upgrade your performance management process.Thus, once you have developed a project plan for implementing change to your performance management process, the next step is to analyze the processes that are already in place and how they need to develop.
In the analysis phase, the starting point should be to benchmark the state of your performance management process. This is your baseline to work from; a basic assessment of the “AS-IS” situation. The “AS-IS” assessment helps you know what parts of technology, people, and processes you want to keep in place, and which aren't working.
The benchmark information also helps you to define the “TO-BE” target scenario. The opposite of the “AS-IS” is the “TO-BE”, the target state you want to get to. Finally, a differential analysis, or a “gap analysis” is performed. This identifies the gaps between the “AS-IS” and the “TO-BE” states, and allows you to bridge the gap between the target scenario and the current assessment.
Key question – What systems and processes are in place today, and how are these performing to target?
You should begin defining your “AS-IS” segment by documenting what processes and systems are in place today. Next, perform some data-driven research to firm up your assumptions. Consider conducting a survey to address:
You can also use our handy survey. If you score an 80% or better in any of the above areas, you have an effective process in place. If you score less than 80%, you know you have a performance management process pain-point that needs to be overhauled.
Key question - What does a best-in-class performance management system look like for your organization?
Here is your opportunity to think outside the box—to take a broad strokes approach and ignore any obstacles. What would best-in-class look like at your organization? A recent report by McKinsey & Company found that the strongest driver of overall performance management effectiveness is perceived fairness. This is broken down into three parts:
It's useful to think about these drivers in the context of functional areas. For example, how can your organization ensure that employees are conscious of top-level business priorities such as the importance of revenue/profitability versus risk and customer experience? If you begin to match your “TO-BE” desires to these key drivers, you are in a great position.
Key question – What are the gaps be- tween the AS-IS and the TO-BE? Once you have identified the gaps between the “AS-IS” and the “TO-BE” states, a differential analysis, or gap analysis can be performed to quickly identify any areas that need change.
The “gaps” in the gap analysis can be broken down into three categories: process gaps, system gaps, and cultural gaps. Once you've documented these gaps you will have a clearer picture of the individual and specific changes required to optimize your performance management system and strategies.
The design phase allows you to truly begin the detailed work—creating a set of requirements that should cover user stories, and the needs within a user’s story, to build a targeted process map.
Key question - What is your list of functional and system requirements for the project?
A requirements matrix is a great way to identify and gather the requirements needed for changing your institution's performance management process. You can use it to track both system and non-system requirements throughout the project cycle.
It is critical to create this requirements matrix during the design phase, as it forms the foundation for the rest of our toolkit. You will use it to build, test, and launch your process management overhaul. It demonstrates clearly what is required to achieve your desired state of performance management. It also comprehensively defines your requirements, and gives you a far clearer picture of scope. It can be used to hold 3rd party vendors accountable, and keeps everyone aligned with the project’s objectives.
Ensuring all of the relevant stakeholders have agreed to (and ideally participated in) the requirements definitions are critical. It's also best practice to aim for business sign off, or approval of these requirements, before moving onto the next phase.
Key question - What do the target processes look like from the perspectives of different roles involved?
Process documentation provides a clear map of the hand offs needed between steps. It shows the functional requirements of the new performance management process in a clear flowchart.
Used as a guide in the next stage (the build stage), process documentation should give a birds-eye view of the process, from the perspective of any given role. The idea is to create a process flow (reflected in a process map), as it relates to a particular activity or a task.
Process maps should be matched and aligned to requirements as defined in the requirement’s matrix. Ideally, all of your documented requirements will be covered or touched upon in the process map. These documents, one page in length on average, contain the elements of “input/output controls” and the systems required to perform the activity.
Inputs to help you define the necessary information to conduct the procedure. Outputs to help define the documentation/information that will form an input to the subsequent step. Controls allow you to add checks and balances to a process.
For example, if you want to run a spreadsheet with marketing KPIs, the input is the scores you have to put in the spreadsheet. The outputs are calculated figures in the above example, and controls relate to controls that you have in place to avoid having an error in your calculations.
A good process map will also identify all the necessary participants in the process. Creating process maps is a time-consuming task, and will require dedicated resources, however the output is invaluable—your process documentation could become a golden source of information for your organization, especially when it comes to dealing with 3rd parties, building new employee training materials, or even general queries.
Performance management systems have been the driver behind employee effectiveness. Now it is time to build a performance management process that will enable your employees to improve their performance. Build phase of implementing change is all about constructing and building the processes and systems you've meticulously designed and planned in the earlier sections of planning your project and analyzing and designing the change implementation. This phase can take the longest chunk of time, so it’s essential to keep your stakeholder group updated on the status of the project.
Regarding the actual build phase, the first step is to identify what you can handle in-house versus outsourcing. Then you’ll need to secure 3rd party service providers and software vendors.
Key question - Which parts of your processes and systems should be outsourced to 3rd-party vendors, and which parts can you deliver internally?
Once you have established what processes and systems you’ll need to outsource, you can shop for (and decide upon) reliable 3rd party vendors and providers. A vendor comparison table will allow you to evaluate the system options available from potential 3rd party sources. The table should include all of the performance management features you require (and the elements that aren’t being handled in house), so you can compare each vendor by feature/functionality.
Some excellent places to look for solution vendors are:
Once you have identified your top three vendors based on requirements, you will submit RFPs (request for proposals) or other official requests. You can also ask for things like product demonstrations, trial accounts, and qualification calls.
Before choosing a vendor, you should map out your future process, and even run pilot phases with your top vendor’s software. You can also include non-software vendors in this step. Be sure to raise your queries and requests with each vendor specifically, as you may have missed something in your requirements coverage analysis.
And, if you’re looking for additional buy-in support with your superiors or key stakeholders regarding performance management software, our blog post; Why invest in performance management software?, gives you seven stellar reasons why your organization should consider investing in performance management software.
Key question - What is working, what is causing delays, and are you documenting the friction points of the process?
With respect to the process side, during the build phase you will want to have frequent meetings to review the status of your performance management project. Using a RAG status report— Red, Amber, and Green rating system—will allow you, and your key stakeholders, the chance to raise potential issues, address blockers with the project completion, and identify solutions to move forward.
You should also be ready to update your target process documentation as you go through the mock runs. Give yourself and your team the flexibility to adjust the process designs as you build them. Then, once you're comfortable that everything is developed and running smoothly, you're ready to move on to the test phase.
This phase is about testing the target processes holistically. The objective is to test the solution with real users in a real environment; then match tests to requirements, and get sign-offs from key stakeholders before proceeding to the implementation (or go-live) phase.
Key question - Which group of business users would be best suited to run a pilot test of your new performance management process?
A pilot phase can be extremely useful for reducing overall project risk and increasing business confidence in the proposed solution. Testing also has an important role in validating all of the functional requirements in your performance management remodel.
Once you have a working pilot test, pick a team or department (e.g. account management, small-business customer prospecting, loan portfolios) to participate in your test for a fixed period in length (one to three months is typical). The pilot phase should have the clear objective of achieving final business sign-off.
Your pilot team will run the performance management process outlined in the pilot test(s) and then sign off individually, providing feedback if needed. Building a UAT (User Acceptance Testing) schedule that correlates the tests to the functional requirements will ensure all aspects of the new performance management process are tested successfully.
Additionally, a UAT sign-off template to summarize the tests completed, and to highlight if the testing was successful, is a good idea. This form should contain the output of the UAT testing, the name of the tests, and a sign-off area. Each pilot test can have multiple test runs, and may also include a decision to purchase license(s) from 3rd party vendors, or agree contracts. When each test in the schedule has been passed and signed-off, you are now ready to approach your stakeholder group for final authorization to implement or “roll-out” your reinvented performance management process.
Even a carefully planed change can fail due to poor implementation as turning plans into actions is not easy. So how do you implement change to your performance management process and support it throughout your organization?
The deployment or implementation phase is comprised of three main elements: communication, systems, and a go-live event. By covering these areas, you can ensure that the project has a successful implementation, and is well received by your organization and the stakeholder group.
Key question - Why is our business doing this project, and what does it mean for your department and for you as an employee?
A companywide communication email/newsletter is essential in preparing the organization for the upcoming shift. Ideally the communication should be co-signed by the project sponsor or executive; it should also clearly and simply explain what's happening. Common communication email/newsletter elements include:
Your performance management changes communication should go out on or prior to your go-live date. Be sure to include links to more detailed material, including any FAQ training materials you have prepared. You can also consider including contact details for those have questions.
Key question - Which system activities need to occur prior to going live?
A go-live checklist is great way to build confidence that all the necessary system activities have been completed prior to the implementation date. Things to consider for your checklist include the configuration of 3rd party products in production, data migration from existing systems/databases, user setups, imports from connected systems, and testing live integrations.
Key question - What does “going-live” actually look like and who, what, where is involved?
The go-live event should be planned well in advance. Consider the optimal working-week day and time for this to occur. Large system changes often occur on weekends to minimize disruption. Also consider who needs to be involved to provide live support, answer questions, and solve problems. Be sure to include 3rd party vendors in your go-live event, if their help is required to onboard users and provide support.
It’s also good idea is to nominate a go-live champion who will run the show, and call the shots during the go-live event. Significant communication needs to occur between vendors, IT, and the business, so think about what communication channels will be used during the event.
The first few months after going live are about providing support, training, and helping to smoothly embed the new processes and procedures. Support should be two-pronged, with help and answers available internally as well as from 3rd party service providers. Your employees will most likely have questions on the process and definitions, which you, and your business, should be prepared to answer.
In a 2018 McKinsey & Company survey, 54% of respondents believed performance management had not had a positive effect on both employee and company performance.
Key question - Have your objectives been achieved and what's working versus what isn't?
After a few months of the new processes and procedures being in place, it's time to do an After Action Review (AAR), taking a look at;
You should also consider running the same performance management process survey you ran during the analyze phase to benchmark your progress. It will give you measurable and actionable metrics that will show improvements/gains from the newly implemented process. The expectation here is that you score high. Repeat the survey every 6 months and calibrate your process accordingly.
Additionally, consider what could be further improved or tweaked in your performance management process, and assess the impact of making these changes. For example, maybe you want to implement additional fraud training for new employees. Often it's best to wait until the next cycle of processes to make these improvements. Be sure to stagger or prioritize these changes to minimize impact. Finally, keep your process documentation up-to-date and available to all users; maintaining these operating procedures is key to delivering a consistent and repeatable experience across your enterprise.