Best Practices in Pay for Performance
“Ownership” of performance management by line managers. How
managers handle performance management is a key to system effectiveness. They
need to take control.
Training for both managers and individuals being appraised. Both
managers and employees need to understand the process, their roles, and the skills
and behaviors important to the process. This training also contributes to the
accuracy of the ratings
Leadership by top management. Executives need to demonstrate their
strong commitment to the performance system and to the importance of high
Performance goals that are driven by business strategy. Most of the
agencies rely on individual goals with explicit ties to the strategy. The best
practice relies on goals jointly set by managers and employees. The linkage
helps justify the ratings.
Ongoing feedback from managers. Employees should receive regular
feedback on results and performance throughout the year.
Use of competencies, development planning, and assessments of
how individuals achieve their results. The feedback should also focus on
the individuals’ strengths and weaknesses and involve development planning to
improve future performance.
Ties between financial rewards and performance ratings. In order to
manage the budget for pay for performance, managers need to differentiate among
“Calibration” meetings for managers to compare ratings. When
managers meet to discuss performance ratings, it strengthens the credibility and
validity of the ratings and reinforces the perceived importance of the process.
*Dr. Edward Lawler, Best Practices in Performance Management.