The 101 Guide to Creating a Performance Management Policy in Minutes

Sam Branch
July 18, 2022
min read
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Looking to get started creating your performance policy? Our performance policy template document is a simple easy way to get started.

A New Type of Performance Management Policy

It’s easy to hear the term “performance management policy” and picture a list of rules and procedures that is only dug out of storage when someone needs disciplining. A document of little relevance to most employees, with limited uses, but one the organisation still needs to spend resources reviewing and maintaining each year.

However, this represents an enormous, missed opportunity. Research suggests that organisations with a strong link between the performance management process and organisational vision benefit from improved organisational goal setting and achievement of mission statements. A relevant, proactive, and accessible performance management policy is a simple yet effective tool for nurturing everyone’s understanding of organisational goals and how their day-to-day tasks contribute to them. Building this document requires three key ingredients:

1. Your performance management philosophy

What is the purpose of having a performance management process?

Taking time to consider this question is something most people in the organisation won’t do (it’s not part of their job), so if it’s not communicated to them, the process can seem irrelevant and distracting from everyday work. Connecting organisation priorities such as employee growth, a culture of feedback, or team cohesion to performance management can have a great impact on buy-in.

2. Drivers and Objectives

What are the goals and drivers for performance management and how do these link to organisational vision?

Most organisations have vision statements, yet the connection to the performance management process is ambiguous. Detailing the objectives and drivers of performance management legitimises its strategic significance in the eyes of employees at all levels.

3. Framework Overview

How does performance management actually get done?

Here the document gets into the specifics of responsibilities, cadences, and expectations for how goals will be set, reviews will be conducted and feedback will be handled. These are known as “performance management procedures” and make up most of what employees think of when they think of a performance management policy.

Example Performance Management Procedures

Performance management procedures outline specific processes the organisation uses to implement its vision of performance management. Generally centred on a process of goal setting, regular feedback and a performance review, performance management procedures include:

  • How goals are set and aligned across teams/levels
  • Which goals are public and which are private
  • How often feedback is shared and whether anonymous or not
  • How often managers should host 1-on-1 meetings with each team member
  • What activities should be covered in 1-on-1s throughout the year
  • When and how reviews are conducted
  • If and how reviews are calibrated
  • How to create a development plan

The outcome of these procedures goes far beyond the traditional review process. Modern performance management practices help generate engagement, focus employee development, and nurture a positive culture.

You may choose to include additional procedures that make sense for your organisation such as checking in with remote employees, when engagement surveys are launched or the inclusion of a lightweight interim review to ensure goals are aligned more regularly.

Each organisation has a unique philosophy and purpose for performance management and a tailored performance management policy will help communicate the experiences you wish to nurture. Ensuring these performance management procedures are aligned with your culture and ways of working, as opposed to a generic template, will help achieve far greater levels of buy-in, adoption and success for your performance management activities.

5 Use Cases for your Performance Management Policy

1. Encourages accountability and transparency

Encouraging accountability is a crucial aspect of any performance management system. Defining performance expectations through a clear and comprehensive document serves as a guide for employees to understand their roles and responsibilities, as well as the expectations set for them. It sits alongside your role descriptions to create clarity for your team. This helps employees to stay focused on their goals, and to understand what they need to do to meet or exceed expectations.

Having clear performance expectations also helps employees to monitor their own progress and identify areas for improvement. When employees are aware of the expectations, they are more likely to be motivated to achieve them, and this sense of accountability can drive better performance.

Moreover, the performance management document helps to create a culture of transparency and open communication, where employees feel comfortable discussing their progress and receiving feedback on their performance. This feedback can help employees to identify their strengths and weaknesses and work towards continuous improvement.

By defining performance expectations, the document encourages employees to be accountable for their performance and to strive for continuous improvement. This helps to create a positive and productive work environment and contributes to overall organizational success.

2. Provides a framework for resolving questions of fairness

A performance policy provides a clear framework for evaluating employee performance by establishing specific criteria and methods to be used in the assessment process. This helps to ensure that performance evaluations are consistent, fair, and objective, and that employees have a clear understanding of what is expected of them and how their performance will be evaluated.

The policy should define the goals and objectives of the evaluation, the specific performance metrics that will be used, and the timeline for conducting evaluations. It should also outline the process for providing feedback to employees and for addressing any performance issues that may arise. Overall, a well-designed performance policy serves as a roadmap for the performance evaluation process and helps to ensure that it is carried out effectively and efficiently.

3. Provides collateral for briefing the board

Often, the board is ultimately responsible for the governance of performance and aligning organisational policies with its strategic objectives. A performance policy can be a useful tool for briefing the board on the performance of the organisation and aligning it with the organisation's strategic objectives. By providing a clear and concise framework for evaluating employee performance, the policy demonstrates that the organisation is committed to ensuring that its day-to-day operations are aligned with its strategic goals.

This information can be presented to the board as a way to demonstrate the organisation's commitment to performance and to highlight any areas where improvements can be made. Additionally, the policy can be used to communicate the progress of performance evaluations and to identify any trends or patterns in employee performance. This information can be valuable for the board in making informed decisions about the direction of the organisation and for setting strategic priorities. Overall, the performance policy can be an effective tool for engaging the board and communicating the organisation's commitment to performance.

4. To influence culture

Investment in company culture requires proactivity. Investing in company culture requires a proactive approach, and a comprehensive performance management policy can play a key role in this effort. By presenting new starters with a complete and relevant performance management policy, the organisation can ensure that they understand what is expected of them and how performance management works within the organisation. This helps to establish clear expectations from the start, which can contribute to a positive and productive working environment.

Sharing the performance management policy at key moments in the performance cycle, such as goal-setting or review time, can further reinforce expectations and help set the stage for upcoming activities. This proactive approach to performance management can help to create a culture of accountability and continuous improvement, and can ultimately contribute to the success of the organization.

5. To help improve success (performance)!

When a policy document outlines the philosophy, goals, and vision for performance, it can work as a tool for aligning behaviours across employees and managers for a consistent approach. Modern performance procedures will help you scale a fair, data-backed, and growth-oriented performance management process that will achieve success for both your organisation and your people.


Having a performance policy document that outlines the philosophy, goals, and vision for performance can be a powerful tool for aligning behavior and promoting consistency across the organization. A well-designed performance policy helps to create a common understanding of the organisation's expectations and provides a roadmap for employees and managers to follow.

By clearly defining the philosophy and goals of performance management, the document ensures that everyone is working towards the same objective and reinforces the importance of performance as a core aspect of the organization's culture. The policy can also outline the vision for performance, including the desired outcomes and the role that performance management plays in achieving these goals.

In addition, a modern performance policy should take into account the latest developments in performance management and align with best practices. This means incorporating elements such as data-backed decision-making, a focus on employee growth and development, and a fair and equitable process for evaluating performance.

By implementing a modern performance policy, organisations can create a performance management process that is fair, data-driven, and focused on growth for both the organization and its employees. This can result in a positive and productive work environment where employees feel valued and motivated, and the organization is able to achieve its goals.

Still, stuck on how to get started? We've created a template performance policy document.

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