EP14: Six Rules for Better Performance Reviews

Sanjiv Anand, Chairman, Cedar Management Consulting InternationalCompanies seek performance-oriented cultures, but unlocking human capital depends on how individual performance is measured. Traditional KPIs often failed to deliver results, leading organizations to adapt the Balanced Scorecard originally designed for enterprise performance for individual performance management. When applied correctly, it can motivate employees; when done poorly, it can demoralize and drive attrition.Effective use follows a few key principles. Performance measures should be limited to five or six, as individuals cannot meaningfully focus on more. Each measure should carry sufficient weight ideally at least 15% to ensure it is taken seriously. Measures must largely be within the individual’s direct control; holding junior employees accountable for outcomes like company profitability is ineffective. As seniority increases, performance becomes more strategic, so financial measures should carry greater weight at higher levels. Finally, targets must be balanced: a mix of challenging, realistic, and achievable goals prevents demotivation.Applying these principles increases the likelihood of building a truly performance driven organization.