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Originally introduced in the 1950’s, the concept of Management by Objectives (MBO) encouraged the involvement of employees in the company’s goal setting process to increase engagement and improve results. By the 1980’s practically every modern Fortune 500 Company had implemented a goal setting process as part of their overall performance management practice. By setting goals, the organization could focus performance on those activities that would yield the greatest results. And ultimately, setting goals at the individual level provided managers a baseline to measure employee performance and gave greater meaning to the annual performance review conversation. The formal performance management process consisted of managers setting goals at the beginning of the performance period which were communicated to employees and, at the end of the performance period, “looking back” to determine if goals were met. The process culminated in a conversation between the manager and employee, which was generally viewed by both as meaningless waste of time. In many instances, the evaluations were based on subjective rather than objective, empirical-based information.

Toward the end of the 1980’s, GE introduced an aggressive performance management program; making stack ranking a widespread people management policy. Utilizing aspects of the previous MBO model, with the new system, managers were forced to define their top and bottom performers annually using fact-based data points. Compensation and promotion decisions were tied to the ranking; bottom performers were “managed out” each year to improve overall organizational performance. Over time, many other companies followed suit and applied similar ranking systems, commonly referred to as “rank and yank,” within their organizations. During this period, the formalized Performance Improvement Program became a valued-added part of the performance management process for the purpose of supporting the underperforming employee to improve their performance, as well as protecting the organization from wrongful termination actions.

In the late 1990’s a newly formed company named Google changed the landscape for employee performance management. Rather than adhering to the “tried and true” GE performance program, the Google management team developed a model based on targeted goals supported by continuous and frequent feedback throughout the performance period to assure employees were performing at an optimal level. Incorporating conventional goal-setting practices, the new model borrowed a working concept from the Intel company called Objectives and Key Results or OKRs. The OKR process was different from the traditional goal setting methods in that it:

1. added cascading alignment of goals,
2. involved the employee in the goal setting process and
3. divided the larger goals into several targeted objectives tied to key results.

The OKR system created clarity and accountability for everyone in the organization, and assured individual employee goals were tied to overall organizational goals. Key-results were viewed as chronological milestones that took employees in the direction of reaching their goals. The OKR cycle at Google was broken into quarterly segments where every senior executive, manager and individual employee set objectives and corresponding key-results quarterly.

In addition to changes to the traditional goal setting process, the management team made changes to the traditional review process to include not only the annual performance review, but provided for frequent and continuous “performance check-ins.” These check-ins were regularly scheduled one-on-one meetings, not viewed as a performance conversation but rather as a forward looking, coaching opportunity between the manager and the employee. The coaching session is not designed to be the manager “telling” the employee what he/she should be doing but rather a calibration session whereby the employee reviews their current performance and, if targets are not being met, coming up with suggestions for potential changes that may be needed for them to reach their goals for the coming period. These sessions also allow the managers to provide development opportunities such as helping employees improve performance or increase their ability to solve problems, make better decisions, learn new skills and reach their career goals.

Since its inception, the Google performance management model has been embraced by many companies. As the continuous feedback loop is designed to make sure all employees are on the right track to attain quarterly goals, one would think this model would eliminate the need for performance improvement plans; however, companies have found this not to be the case. The reason for implementing the performance improvement process can range from employees who have assumed a new role and are unclear on performance expectations, or those who are regularly not meeting performance expectations to those who are not exhibiting appropriate business behavior. Many companies that have implemented a coaching performance model with continuous, frequent feedback have found that when coaching does not result in improvement or when the employee’s behavior is not changing, they need to fall back on the performance improvement process in the way of counseling sessions.

Counseling is a private discussion with a closed door and limited interruptions. It is meant to impress upon the employee the seriousness of your expectations, and permit the exchange of information that is critical to the employee’s success.

Generally, these counseling sessions are supported by the traditional documented performance improvement plan (PIP) and the touch bases more frequently scheduled. When establishing a performance improvement plan, the manager should make sure the document includes various standard elements such as:

• Current and expected performance or change in behavior
• Timelines for corrective actions as well as ongoing counseling sessions
• Measures that will be used to demonstrate the performance or behavior has improved
• Potential outcomes based on whether sufficient improvement was achieved

Throughout the performance improvement period, feedback conversation and other documentation should be incorporated as the events occur.

Beginning with the initial counseling session, the manager should drive employee ownership of the actions associated with the plan, as well as leading the discussion on how performance or behaviors are improving. This helps the manager gauge the employee’s desire to change and reinforces that the individual has a choice to improve. Also, throughout the counseling sessions the manager should recognize success the employee experiences regarding progress that the employee has sustained.

If the manager finds that the employee fails to improve performance, or the problem is not corrected within the agreed upon timeframe, it may be necessary to move to a progressive discipline process.