Measuring HR Performance: Three Keys to Successful Performance Management (Guest Blog from Burton Goldfield, President & CEO of Trinet)

Given the current economy, “employee productivity” is no longer a buzzword; it’s an absolute business necessity.  There’s less money than ever for hiring, so maximizing every last iota of energy from your current workforce becomes crucial to surviving 2009.  That means having a robust, professional performance management process in place.

The short list for performance management success calls for keeping focused on just three things:
1. Setting and aligning goals from top to bottom
2. Linking performance reviews to compensation
3. Touching base on goals throughout the year

My company, TriNet, provides human capital outsourcing and consulting services to over 2,000 small companies throughout the United States. As a result, I have a pretty good view of performance management across a wide subsection of industries and organizations. And I find that despite the importance of key performance indicators around employee productivity, very few companies in the small and medium-sized market set concrete goals for their employees, and those that do failed to specifically link compensation to the completion of those goals throughout the year.

Rather, promotions and salary increases—or lack thereof—became a matter of the manager’s “gut” instinct.  Employees had no clear path to understand how they might grow and advance in the organization since there are no standardized processes for linking performance and compensation.

Hosting the performance information in an online system is even better, as it enables managers to store performance metrics alongside other key performance indicators and business intelligence such as hiring trends, compensation data, and other workforce information.

After all, end-of-year performance reviews shouldn’t be a mystery. Rather, they should be prepared for throughout the year so there are no surprises. What’s not measured is what’s not being managed.