Linking Company Goals to Employee Performance

In business, companies that figure out how to take products or services to market in the most efficient, profitable way will win. The road of business is populated with companies that, somewhere along the way, lost sight of these basic principles. Aligning employee performance to company goals is key to outperforming the competition. Given all the other matters for daily consideration, how do you do this effectively and consistently?

While the steps to link performance to the achievement of your company goals may be the same, no two companies are alike. You must take the principles of performance and craft a system with complementary programs for each employee level. A performance system describes the general policies and parameters for the administration of the company's performance programs. Before business owners and managers can set specific, measurable performance goals, they first must decide the company's overall objectives. Once this is determined, a performance system can be developed.

The core components of a performance system include:

• Vision - What is the company's vision for delivering its product or service?
• Strategy/Plan to Achieve the Vision - What is the plan for the company and individuals to help achieve the vision?
• Organization - What is each person's role within the organization and what accountabilities are involved?
• Expectation of Performance - What is the perceived level of performance for each employee?
• Individual Goals - What individual goals need to be met to achieve company goals?
• Training/Development Programs - What training/ development programs will help individuals accomplish their goals?
• Reward/Incentives - Which rewards/incentives will be most effective and when will these rewards be given to employees after goals are met?
• Measurement - Which metrics will be used to measure performance, and are those measurements tied back to goals?
• Continuing Improvement - In which areas can the company and/or individuals make improvements or reductions to further company goals?

The second part of the process that links employee performance to your company goals is the performance program - the specific procedures, methods and requirements for planning, monitoring and rating performance. Whether you have one employee or 10, the systematic steps to linking an employee's performance with the part s(he) plays in meeting company goals are the same.

Steps to link employee performance to goals:

1. Set specific, measurable performance goals for individuals and groups.

2. Ensure each employee knows company goals and how his/her performance affects achieving those goals.

3. Discuss the many ways goals are achieved and the
performance implications of each.

4. Develop incentive systems that reward employees for positively contributing to the achievement of company goals and clearly explain how performance is measured.

5. Reward immediately and, if possible, customize rewards for employees.

At first glance, these steps seem simple and straightforward - and they can be. However, some managers and business owners find themselves in trouble as they develop different performance programs for various levels of employees throughout the organization. For example, in a manufacturing plant, a program for managers would be different than one for plant employees because individual objectives are different. Managers, perhaps, would focus on managing their budget, whereas plant employees may focus on decreasing safety incidents and decreasing defects. Keep in mind that group goals work so that manager and employee goals come together to achieve company objectives.

When performance programs are implemented, companies need to ensure that individual goals do not conflict with group goals. An example of a conflict could be where employees are rewarded for outputting more product than other employees, and instead of working together so that the whole group achieves more, each employee adopts a dog-eat-dog mentality. Business performance advisors rely on a methodical approach that ensures balance across individual and group goals. A strong performance program takes into consideration individual, group and company goals.

Successful implementation of a performance system starts with clear communication. Follow these guidelines to ensure communications are specific and targeted toward company goals:

Make company goals known and visible within the workplace.
From the day an employee starts to everyday interactions, company goals should be clearly communicated and displayed in some way throughout the workplace. For example, if decreasing safety incidents is the goal, a poster showing how many days have passed without incident serves as a reminder of the goal. Publishing highlights of employee successes in the company's internal newsletter or on its Intranet also spotlights goals and rewards of those who help achieve company objectives.

Relate each goal to the job.
If the company goal is to hit a certain sales number by the end of the year, for example, ask employees what they can do to increase qualified leads or what sales strategies they can think of to impact total sales. Each employee should meet with managers to develop individual goal plans and, likewise, managers should meet with company owners or executives to develop similar plans.

Link company goals to individual motivators.
Each employee has his or her own unique motivator. For some individuals, money is motivating and for others, time off is prized. The more often a company can link individual motivators to the achievement of individual and group goals, the more successful your performance processes will be. For example, some companies offer employees three choices as they reach individual goals: bonus pay, time off or points that may be used to purchase merchandise, including airline tickets.

Ensure communication flows both ways.
Managers need to meet with employees to hear feedback on the performance process and to ask if goals are understood. Employees need to provide information that will enable managers to make changes so that the program is more effective. Research indicates that employee involvement can be an indicator of how successful a performance program may be. Invite employees to contribute ideas that help achieve company goals.

Deliver rewards immediately.
The more immediate the reward, the more reinforcing it is for the behavior it is rewarding. Whether you use honorary awards (symbolic), informal recognition awards (no monetary value) or formal recognition awards (bonus, time off or other specified reward), the more immediately you can award it to the individual, the better your chances are of motivating that individual to repeat the desired behavior.

Offer training and development that helps managers and employees achieve goals.
The best of intentions can't overcome lack of knowledge or skill. On the other hand, if employees don't have the skills to achieve goals, then frustration can result. For example, if employees seek to increase telephone sales, telemarketing training may help them achieve this target. You can't measure an employee's knowledge without providing tools or training, and managers who rate employees without providing these tools are setting themselves and employees up for failure.

Linking employee performance to company goals isn't easy, but it's well worth the effort. With balanced performance processes, companies reach overall objectives as employees achieve individual and group goals. And since individuals are not rewarded until goals are met, the company's bottom line grows incrementally along with rewards. Performance programs and systems can be found in successful companies that have discovered linking employee performance to company goals is good for business. Business performance consultants can walk you step by step through the implementation of these programs.