MPO699 MANAGING PEOPLE IN ORGANIZATION

1. MPO699 MANAGING PEOPLE IN ORGANIZATION TOPIC 04 – MANAGING FOR PEAK PERFORMANCE

2. Learning Objectives • Discuss concept of MBO & Balanced Scorecards as the performance management tools • Identify characteristics of high performance culture • Identify causes of performance problems • Establish accountability for performance • Discuss various ways to close the performance gaps

3. The use of goal-setting in business organizations seems almost universal. (Edwin A. Locke) The intelligent use of difficult or stretch goals can dramatically improve productivity, efficiency, and profitability. (Steven Kerr) MbO is just another tool. It is not the great cure for management inefficiency... Management by Objectives works if you know the objectives, 90% of the time you don't. (Peter F. Drucker)

4. Management by objectives (and self-control)(Drucker, 1954; McGregor, 1957; 1960; Swiss, 1991; Poister & Streib, 1995) • MbO: Management system / leadership tool to increase productivity by agreeing on goals for every department, team, and (!) employee in line with company’s strategic goals • Goal agreement as basis for self-control (McGregor, 1957) • MbO: goal- and output-oriented, not input-oriented • MbO systems’ key components: SMART goals, Participation, Feedback

5. Goal-setting (theory)(Locke & Latham, 1990, 2003) • Goal-setting theory provides the theoretical basis for MbO (Antoni, 2005) • Underlying premise of goal-setting theory: one’s conscious goals affect what one achieves - as goals direct efforts and motivate As of 1990, support for goal-setting effects had been found on more than 88 different tasks, involving more than 40.000 participants in Asia, Australia, Europe, and North America(Locke & Latham, 2006)

6. Understanding SMART goals 1. + SMART Goals Productivity • SMART goals (Shaw, 2004) S: specific, stretching M: measurable A: achievable R: results-oriented T: time-based • „Stretch goals“ (Latham, 2004) • Specific and tough but not unrealistic • Stretch task and stretch learning goals

7. Understanding why (!) goal-setting works 2. • Attention: goals direct attention towards relevant activities • Energy: goals energize people • Persistence: goals facilitate persistence • Knowledge: goals motivate use of knowledge and learning + + SMART goals • Mediators • Attention • Energy • Persistence • Knowledge Productivity

8. Understanding when (!) goal-setting works 3. • Moderators • SMART goals afford knowledge and ability • Task complexity can reduce SMART goals‘ effectiveness • Participation increases goal commitment • Commitment increases persistence • Feedback helps to adjust direction of efforts Mediators Productivity SMART goals

9. Goal-setting theory(Locke & Latham, 1990, 2003) 3. • Moderators • Knowledge and ability • Complexity of task • Participation • Commitment • Feedback 1. 2. + + • SMART goals • Stretching • Measurable • Achievable • Results-based • Time-specific • Mediators • Attention • Energy • Persistence • Knowledge Productivity

10. Integrating MbO, pay-for- performance, and personnel development

11. MbO Cycle (Dinesh & Palmer, 1998)

12. Executive team Middle management Cascading of goals • Company goals are defined by the executive team and passed on to the next layer of management • Managers at this layer define goals they must achieve for the company to reach its goal – this is done in cooperation with subordinates • These newly developed goals are then passed on to the next layer of management (restart from 2.) Shop-floor

14. Link rewards to goals:pay-for-performance(Locke, 2004) • Option 1: Goals and rewards tightly coupled • Define (multiple) performance goal(s) and bonus for each goal before the fact (Jensen, 2002; Pritchard et al., 2005) • Option 2: Goals and rewards loosely coupled • Define goals but make decision about bonus rewards after the fact by taking into account context factors, e.g.: • How did the company as a whole perform? • How difficult were goals really – in the light of market conditions, available resources etc.

15. Success factors in pay-for-performance systems • System is transparent and objective • Pay for performance is noticeable • Employees agree with (specific) goals and indicators • Employees have control over goals and indicators • Continuous feedback • System reinforces the organizational strategy

16. MbO Cycle (Dinesh & Palmer, 1998)

17. Link reviews to goals:personnel development(Kerr & Landauer, 2004) • Stretch goals can be used to • increase organizational effectiveness (task goals), or • facilitate personal growth and personnel development (learning goals) • Key factor in learning stretch-goal initiatives: supportive infrastructure: • Integrated personnel development program • Provide external resources, e.g. external coaches, internal mentors, external faculty who teach courses

18. Link reviews to goals:personnel development • Use reviews and performance appraisals for personnel development • Give feedback frequently – not once a year • Give formal and informal feedback • Give feedback that is specific, related to behavior, and constructive • If goal attainment becomes unlikely give constructive feedback – do not blame • Give feedback on goal attainment and (!) working paths

19. Effectiveness and usage of MbO programs Effectiveness (Rodgers & Hunter, 1991) • 97% of 70 studies on MbO find productivity gains • But large differences in effects across studies • Top management commitment as key moderator Usage (Hölzle, 2000) • 84% of 184 German companies use goal-setting programs • 42% of those companies define sub-goals

20. MbO: paths to failure • Goal incongruence (!) across hierarchical levels, and units, teams, and individuals (Dinesh & Palmer, 1998) • Interdependencies among levels, units, teams, and individuals are not taken into account • No clear priorities and posteriorities (Drucker, 1976) • Employees have no control over objectives (Pritchard et al., 2005) • Short-term goals can reduce long-term thinking • MbO can undermine collaboration and helping behavior • Setting challenging goals over an extended time period can lead to exhaustion (Latham, 2004)

21. „Changing the goal-setting process at Microsoft“ (Shaw, 2004) • Performance management system review (based on answers from 1500 employees): • Only 40% of goals were SMART • Employees‘ goals were often not aligned with company goals • Further findings: • Managers were not trained in setting SMART goals • High rate of change at Microsoft aggravated goal-setting • Performance feedback was given too rarely • Goals were interpreted as aspirations (hopes)

22. „Changing the goal-setting process at Microsoft“(Shaw, 2004) • Changes in the goal-setting process: • „SMART commitments“ instead of goals (5-7 per year) • Agree on sub-commitments (milestones) and action plans • Define clear success measures and metrics • Realign commitments across company, units, and teams • Check for misalignments of goals and interdependencies more systematically

23. „Changing the goal-setting process at Microsoft“(Shaw, 2004) Goal-Setting Section of Microsoft’s Annual Performance Review Form

24. MbO - how to make it work • Cascade goals vertically and horizontally in the company (take interdependencies into account) • Agree (!) on SMART goals but prevent from „overstretching“ • Continuously monitor goal attainment and give constructive feedback • Link goals and goal attainment with pay-for-performance and personnel development

25. Customer Perspective Financial Perspective Internal Business Process Perspective How do customers see us? How do we look to shareholders? What must we excel at? The traditional balanced scorecard model translates an organization’s vision and strategy into a set of measures built around four perspectives: financial, customer, internal business processes, and innovation & learning. • The balanced scorecard is one of several tools for performance measurement and management. • The Kaplan and Norton model provides a more holistic approach by supplementing the traditional financial measures with three additional perspectives: customer, internal business process, innovation and learning: • FinancialPerspective - Is the company creating value for its shareholders? • Customer Perspective - How is the company performing from the perspective of those who purchase the company’s products or services? Internal Business Process - How is the company managing its internal business processes to meet its client’s expectations? Is throughput improving? Other processes include fulfillment, customer retention, and financial planning. Innovation & Learning Perspective - Is the company improving its ability to innovate, improve, and learn? • It incorporates both leading and lagging indicators. • The emphasis is on balance across multiple dimensions of performance; ensuring that good performance in one area is not offset by poor performance elsewhere. • The strategy drives the choice of performance measures. A failure to meet targets could be because the strategy is wrong Vision and Strategy Innovation & Learning Perspective Can we continue to improve our employees’ skills and create value for our clients? Robert S. Kaplan and David P. Norton have developed what is considered to be the standard Balanced Scorecard template Source: Robert S. Kaplan and David P. Norton, “Using the Balanced Scorecard as a Strategic Management System,” Harvard Business Review (January-February 1996)

26. Financial Perspective To succeed financially, how should we appear to our shareholders? Objectives Measures Targets Internal Business Process Perspective Customer Perspective To satisfy our shareholders and customers, what business processes must we excel at? Objectives Measures Targets Objectives Measures Targets To achieve our strategy, how should we appear to our customers? Innovation & Learning Perspective To achieve our strategy, how will we sustain our ability to change and improve? Objectives Measures Targets What is a Balanced Scorecard? A balanced scorecard is a strategic measurement and management system that can motivate breakthrough performance. A Balanced Scorecard... Measures the progress of an organization toward its strategic goals by translating their vision and objectives into tactics and measures across a balanced set of perspectives Captures the expectations of customers and measures the company’s ability to meet them Translates Strategy, Mission and Vision into tangible measures for use by decision makers through to line workers Is the culmination of a sophisticated data gathering and analysis process and system Can and will drive the process of change, so it must be right! Components of the Balanced Scorecard Perspectives: Four top-down perspectives on enterprise performance (Financial, Internal Business Process, Innovation & Learning, Customer) Objectives: What the company needs to do to accomplish its strategy; one guideline is to have up to sixteen measurable objectives. Metrics: Actionable and tangible measurements which support achieving objectives; this is what makes it real. Targets: Performance level expectations set against the strategic plan. For each metric, set a goal or plan so progress against the objective can be evaluated. Source: Robert S. Kaplan and David P. Norton, “Using the Balanced Scorecard as a Strategic Management System,” Harvard Business Review (January-February 1996)

27. What is a Balanced Scorecard? Overview of Building a Balanced Scorecard The process of creating a balanced scorecard starts with the business strategy, and progressively breaks that strategy into tactical measures. Creating the Balanced Scorecard Use strategy to identify the objectives 1. Business Strategy Start with the Business Strategy, which should be a bold, future-oriented statement Use objectives to identify the measures that will be used 2. Business Objectives Develop key business objectives that will help you to attain your strategy Use measures to build the balanced scorecard Use progress against objectives to confirm strategy 3. Measures & Metrics Develop specific measures and metrics to track progress Use measures/ metrics to evaluate progress against objectives 4. Implement Gather measures, create the balanced scorecard and use it to make decisions. Incorporate a continuous improvement philosophy in the process Use scorecard to determine if targets are met and the right measures are being measured Using the Balanced Scorecard

28. Start with the Business Strategy, which should be a bold, future-oriented statement. Balanced scorecard measures should be used not only to assess the “health” of the organization but to also to challenge the organizational strategy to ensure that it is the most effective one for the company • The balanced scorecard puts vision and strategy at the center of performance measurement. • The definition of a clear strategy, mission and vision is critical to the balanced scorecard building process. • If the strategy isn’t clearly defined, there is no way to measure performance against that strategy. • A balanced scorecard will not give you a strategy but it will inform you quickly if the strategy of the company isn’t working • The balanced scorecard helps align the organization’s strategic objectives across the entire organization, at all levels. • The strategy is used to establishes the organization’s objectives, which are then used to define the measures • The measures pull people at all levels towards the overall strategy • The measures will then indicate whether the strategy is being fulfilled effectively

29. Develop key business objectives that will help you to attain your strategy. —Objectives— 1. Drive rapid revenue growth 2. Manage operating costs and profitability 3. Achieve profitability 4. Effectively utilize assets 5. Manage risk 6. Improved Shareholder Value Financial Perspective Internal Business Process Perspective 1. Rapidly penetrate market segments 2 Sustain significant customer growth 3. Retain customers 4. Achieve high customer satisfaction 5. Provide extremely positive customer on-line experience 6. Achieve customer satisfaction 1. Develop provocative offers 2. Build brand awareness 3. Expand distribution 4. Drive incremental revenues 5. Offer leading high-speed Internet service 6. Provide compelling internet experience 7. Maintain technological leadership Customer Perspective Vision andStrategy Innovation & Learning Perspective 1. Sustain employee satisfaction 2. Maintain employee productivity 3. Retain employees 4. Innovate operationally 5. Measure training quantities 6. Measure training effectiveness 7. Measure and evaluate innovations The diagram illustrates an example of a client’s organizational objectives. In the balanced scorecard development process, the organizational objectives should provide a balance across the four dimensions of performance.

30. Develop specific measures and metrics to track progress. The next step after identifying the organizational objectives is to identify measures & metrics for achieving those objectives. Objectives Measures & Metrics • Effective performance measures have a number of key characteristics: • Measures are part of a cause and effect relationship • Measures are process-focused • Measures are balanced • Measures are actionable • Measures are vertically & horizontally aligned • Measures are integrated • Measures encourage teamwork • Measures focus priorities • Seamless Service • Improved Quality • Cost Reduction Satisfied Clients • Strong Leadership • Effective Training • Reward & Recognition Motivated People • Reduce Cost • Reduce Backlog • Best clients Balanced Growth The above example shows Vendor’s objectives and some corresponding measures & metrics.

31. Gather measures, create the balanced scorecard, and use it to make decisions. Incorporate a continuous improvement philosophy in the process. • A successful balanced scorecard implementation will enable employees at all levels of the organization to understand what they can do to help the organization meet its strategic objectives. • Once implemented, the balanced scorecard allows the organization to test linkages and correlations between the various measures and consequently use this information to manage the organization. • A successful balanced scorecard implementation takes into account : • Change management principles and issues • Effective communication throughout the organization • Implementing and utilizing the proper technology to gather and produce the measures • Implications of operating in the new economy • The balanced scorecard process also needs to incorporate the philosophy of continuous improvement. This will help ensure that measures are always correct, timely, and relevant. • Some examples of continuous improvement process activities can include revising measures periodically, ensuring there is a timely feedback, and that there is an effective feedback mechanism in place. The final outcome of the balanced scorecard development process is a high level and summarized view of the firm’s performance measurements. The above example of a balanced scorecard shows that balanced scorecards can be as simple as management chooses them to be

32. When implemented properly, the balanced scorecard system ensures that faulty measurement processes and faulty management processes are avoided. Faulty Measurement Processes Exclusively financial Focused on functional silos Ignore customers and shareholders Only focus on lagging metrics Lack insight to causes Oblivious to competitors Measurements do not focus on business value Result is misalignment to strategic goals Faulty Management Processes Short term horizons Lack of ownership by management Lack of comprehension by line employees Conflicting rewards Unambitious targets Poor communications Teamwork discouraged Result is misalignment to desired behaviors

33. Establishing Accountability for Performance ACCOUNTABILITY IS A MULTIDIMENSIONAL CONCEPT & OFTEN A KEY ENABLER OF SUCCESS …. TO TRULY WORK, ACCOUNTABILITY HAS TO BE SHARED BY MANAGERS & EMPLOYEES; FURTHER, YOUR ORGANIZATION AS A WHOLE MUST BE ACCOUNTABLE TO THE CUSTOMER & STAKEHOLDER From “Balancing Measures: Best Practices in Performance Management WHILE ESTABLISHING ACCOUNTABILITY FOR PERFORMANCE IS SHOWN AS THE 3RD STEP IN THE FRAMWORK, IT ACTUALLY IS AN INTEGRAL PROCESS TO EACH OF THE OTHER STEPS • A Working Definition of Accountability • Accountability refers to the obligation a person , group, or organization assumes for the execution of authority and/or the fulfillment of responsibility. This obligation includes: • Answering – providing an explanation or justification – for the execution of that authority and/or fulfillment of that responsibility • Reporting on the results of that execution and/or fulfillment, and • Assuming liability for those results

34. Responsibility & Accountability: the Difference Between the Two • Often, the world “responsibility” is used in conjunction with the word “accountability” – however, they are not the same! • Some views on the differences between the two: • “Responsibility “ is the obligation to perform. “Accountability” is the liability one assumes for ensuring that an obligation to perform (a responsibility) is fulfilled (Frost 1998) • “Responsibility” is the obligation to act. “Accountability” is the obligation to answer for responsibilities. Confusing accountability with responsibility obscures the obligation to report (Citizen’s Circle for Accountability 1996)

35. Authority & Responsibility:the Difference Between the Two • Distinguishing the difference between “authority” & “responsibility” is important to understand the application of “accountability” • “Authority” is the right to act without prior approval from higher management & without challenge from peers (Frost 1998) – “authority” is assigned • On the other hand, “responsibility” is delegated. • People in authority have responsibilities & may delegate them • However, delegating responsibility does not relieve the delegator from the assumed liability of that responsibility • And being delegated responsibility does not necessarily mean that one has been assigned authority

36. Key Aspects of Accountability ACCOUNTABILITY IS A RELATIONSHIP ACCOUNTABILITY IS A TWO-WAY STREET, “A CONTRACT BETWEEN TWO PARTIES” ACCOUNTABILITY IS RESULTS-ORIENTED ACCOUNTABILITY DOESN’T LOOK AT INPUTS & OUTPUTS, IT LOOKS AT OUTCOMES ACCOUNTABILITY REQUIRES REPORTING REPORTING IS THE “BACKBONE” OF ACCOUNTABILITY WITHOUT IT, ACCOUNTABILITY WILL NOT STAND UP ACCOUNTABILITY IS MEANINGLESS WITHOUT CONSEQUENCES OBLIGATION INDICATES LIABILITY – AND LIABILITY COMES WITH CONSEQUENCES ACCOUNTABILITY IMPROVES PERFORMANCE THE GOAL OF ACCOUNTABILITY IS TO IMPROVE PERFORMANCE, NOT TO PLACE BLAME & DELIVER PUNISHMENT

37. The Five Levels of Accountability Personal accountability is the foundation of all accountability. It promotes individual accountability, which in turn, promotes team accountability, which in turn promotes organizational accountability

38. The Five Levels of Accountability AN ACCOUNTABILITY RELATIONSHIP WITH ONESELF PERSONAL ACCOUNTABILITY AN ACCOUNTABILITY RELATIONSHIP WITHIN A WORK SETTING INDIVIDUAL ACCOUNTABILITY A “SHARED” ACCOUNTABILITY RELATIONSHIP WITHIN A GROUP OR TEAM TEAM ACCOUNTABILITY INTERNAL & EXTERNAL ACCOUNTABILITY RELATIONSHIPS WITHIN AN ORGANIZATION ORGANIZATIONAL ACCOUNTABILITY A “DETACHED” ACCOUNTABILITY RELATIONSHIPS BETWEEN STAKEHOLDERS & THE ORGANIZATION STAKEHOLDER ACCOUNTABILITY

39. Establishing Accountability for Performance – What Is An Accountability Environment? • Refers to the condition in which accountability can flourish • Specifically, it is the condition in which individuals, teams, and organizations feel • Motivated to execute their authority and/or fulfill their responsibility • Stimulated to perform their work & achieve the desired results • Inspired to share (report) their results; and • Willing to accept the liability for those results • The optimal accountability environment is one of proactive accountability wherein the individual, team, and organization is focused on achieving great results rather than figuring out ways to explain poor results • Very often, the “troubles” with the accountability environment at the individual worker level usually can be traced to a “polluted” environment within the management level

40. Requirements for an Accountability Environment • Leadership • The accountability environment is established from the top down • Thus, leadership becomes the most important “ingredient” in the environment • Reciprocation • Ensures the “two-wayness” of the accountability relationship • Both, the party with assigned authority & the other with delegated responsibility, are accountable to each other • Equity • Equity or fairness is the cornerstone of the accountability • Inequity should be avoided because it will destroy trust & organizational credibility, resulting in less than optimal performance • Trust • If either of both parties don’t trust the other, there probably exists lack of transparency, and the relationship is doomed for failure • In other words, accountability cannot survive in an environment of mistrust

41. Requirements for an Accountability Environment LEADERSHIP BE THE ANSWER LEAD BY EXAMPLE CLEAR THE PATH BE COMMITTED USE GOOD JUDGMENT

42. Requirements for an Accountability Environment • Transparency • In its simplest terms, transparency means all players put “all their cards on the table” • An environment without transparency means one that is full of hidden agenda • Clarity • Key focus areas for clarity are authority, organizational mission, roles & responsibilities, performance expectations, and performance reporting • Balance • In order for accountability to work, there has to be a balance between accountability & authority; expectations & capacities; and pay & performance • Ownership • Ownership gives individuals/groups an interest in the outcomes and thus, leads them to “take care of business” (fulfill their responsibilities). • Analogy of renting a car versus owning a car • In other words, ownership increases responsible behavior & a caring attitude

43. Requirements for an Accountability Environment CLARITY ROLES & RESPONSIBILITY AUTHORITY ORGANIZATIONAL MISSION PERFORMANCE EXPECTATIONS PERFORMANCE REPORTING

44. Requirements for an Accountability Environment • Consequences • The consequences could be good (rewards) or bad (sanctions) • Whatever the case, consequences help drive the execution of authority, the fulfillment of responsibility, and the improvement of performance • Consistency • The inconsistent application of policies, procedures, resources, and/or consequences within an organization undermines the accountability environment by weakening perceived organizational commitment & credibility • Inconsistency deflates employee morale & promotes employee cynicism, ownership “goes out the window & performance suffers • Consistency increases predictability & decreases the need to “guess what’s next” • Follow-up • Where expectations have clearly not been met, corrective actions may need to be taken, possible adjustments to the accountability arrangement made & lessons-learned noted • An accountability relationship without follow-up is clearly incomplete & unlikely to be effective

45. Barriers to the Accountability Environment • Hidden Agendas • Business/office “office politics” sometimes abuse performance activities for personal gain, resulting on targeted employees feeling used (and abused) • These tactics destroy trust, a key element of accountability • Favoritism • Management could favor high performers, leaving other employees feeling “left out” • Or, management could favor employees regardless of performance, also leaving other employees abandoned • Accountability requires inclusiveness & team work • Lack of Leadership • Without leadership, performance results will be much less than expected • Lack of Resources • It is useless to expect optimal performance if individuals or teams are not provided with the resources to perform the work

46. Barriers to the Accountability Environment • Lack of Follow-Through • When management says they are going to do something & they don’t, it tells the employee that management can’t be trusted to follow-through • For example, announcing rewards & penalties for performance & not following through with them, paints management as untrustworthy • It also doesn’t inspire employees to perform • Lack of Clarity • When lines of authority or roles & responsibilities aren’t clear, it’s difficult to pinpoint where certain accountabilities reside • Clarity is essential to an accountability relationship • Data Misuse • Withholding data shows a lack of transparency & mistrust • Not using data at all can come to mean that performance is not important to the organization • In either case, the accountability relationship suffers

47. Accountability Tools PERFORMANCE PLANS PERFORMANCE AGREEMENTS STRATEGIC PLANS SELF-ASSESSMENTS PERFORMANCE-BASED CONTRACTS ACCOUNTABILITY REPORTS PERFORMANCE REVIEWS MANAGEMENT CONTROLS EQUITY STATEMENTS ACCOUNTABILITY MEETINGS SINCE ACCOUNTABILITY REQUIRES REPORTING, THE FOCUS OF ACCOUNTABILITY TOOLS IS ON REPORTING – BOTH INTENTION & RESULTS

48. Accountability Tools • Strategic Plans • Strategic planning is a process for helping organizations think about the objectives they should establish to fulfill their mission & in what directions they should move to achieve those objectives • It is the foundation for all planning, budgeting, execution, control, and evaluation activities by an organization • The benefits of strategic planning include building consensus around organizational goals, objectives, and priorities; providing the basis for resource allocations & operational planning; defining baselines for controlling outcomes; and helping to evaluate organizational performance • Performance Plans • Performance plans outline organizational commitments to achieving specific results against the goals, objectives, and strategies of the organizational strategic plan for the resources requested in the budget • In other words, performance plans state what is going to be accomplished for the budgeted money

49. Accountability Tools • Performance Agreements • Performance agreements are designed to provide a process for measuring performance, and therein, establish accountability • The agreements state expectations for each party signing the agreements • Agreements written in plain & concise format with specific annual deliverables allow customers & stakeholders to know what they getting for their money as well as give them an opportunity to influence organizational priorities • Accountability Reports • Published annually, accountability reports include program & financial information, such as audited financial statements & performance measures in meeting key organizational goals • Performance-Based Contracts • Streamline the procurement cycle, achieve lower costs & higher quality and to move away from audit & inspection at the end of procurement cycle to building in the performance expectation at the beginning of the cycle • Performance-based contracts hold the customer accountable for establishing clear performance expectations & the provider accountable for achieving those expectations

50. Accountability Tools • Self-Assessments • Self-assessments is an on-going process whereby a performing organization monitors its own performance & evaluates its ability to meet performance objectives, measures & expectations, and to control & improve its processes • The self-assessment report should be brief, and charts & graphs should be used wherever possible • The report should address both strengths & weaknesses and provide an action plan to correct any weaknesses • To be effective, the self-assessment must be open & candid and accurately reflect the performance of the organization • Performance Reviews • Performance reviews are ongoing process of planning & monitoring performance. These reviews compare actual performance during a specified review period with planned • From that comparison, concerns can be addressed, modifications can be made to performance expectations, and future directions can be planned • Performance also serves as formal documentation of performance & for employee development & promotion