One of the keys to a sucessfulfirm is creating a process for setting goals and managing performance.

A performance management process is best when it links execution to compensation. That, in turn, encourages employee engagement.

Whether used for individuals or teams, the process should include setting, measuring and rewarding achievable expectations. Over time, it will help identify and address performance gaps, improve employee skills and increase professional development.

A disciplined performance management process also ensures that managers are communicating with employees regularly, reinforcing what they are doing well and letting them know when improvement is needed. 

Here are steps to take to create an effective performance management process:


First, define employees’ individual goals, then align them with the firm’s goals and strategy. This should be a collaboration between a manager and his or her employees. Setting goals together will help employees understand what is expected of them, take responsibility for their performance and receive recognition for their accomplishments.

To identify performance targets that are appropriate for the individual employee, firms can mine a variety of sources including their key initiatives, job descriptions and client retention practices. A firm can also develop objectives based on professional development milestones such as completion of professional designations (certified financial planner, certified public accountant, etc.).

A common tool for creating clear and measurable performance goals is the SMART goal framework. This is the process I use with our consulting clients, and I recommend working with each employee to create the goals together.


S = Specific: Tell employees exactly what is expected, when and how much. Clearly define desired outcome or results.

M = Measurable: Establish concrete criteria for measuring progress toward the attainment of each goal. Provide milestones to track progress and motivate employees.

A = Achievable: Success needs to be attainable, with a bit of a stretch. The goal should be challenging but realistic, given time and resources.

R = Relevant: The goal is aligned with the job description and/or firm objectives and direction.

T = Time Bound: Set specific deadlines to create urgency for completion.


Creating a high-performance culture means talking to each employee individually every week on an informal basis, not once every six or eight weeks, and certainly not just once a year.

Leaving too much time between reviews, even informal ones, leads to backward-looking discussions focused on what has already happened.

Implement weekly check-in meetings that focus on looking ahead. They should also allow time for slight tweaks or correcting course. At weekly meetings, try asking the employee what is going well and where help is needed.

Managers must be aware of employees’ progress so they can step in with coaching or resources when it appears that targets may be missed.

Even better, monitoring allows managers to acknowledge success with appropriate monetary or non-monetary rewards. In addition, it is also important for employees to track their own progress.

Quarterly, take the time to document each employee’s performance. For their part, employees should come to these meetings prepared with documents and evidence of their accomplishments in business outcomes, client satisfaction, teamwork, new skill development or knowledge related to job performance.

Managers can use quarterly meetings to review goals and adjust timelines, discover if additional resources are necessary or even broaden goals, as needed.

These quarterly meetings are particularly handy as preparation for the all-important annual performance review.


To get the most out of employees, the appraisal process should include listening, observing, giving constructive feedback and providing recognition.

The most important part of the appraisal is homing in on what the employee has successfully learned, as well as what they still need to learn. This is vital not only for the employee’s professional development, but also for the health of the entire organization.

Employees have a greater sense of loyalty to companies that develop talent from within. In addition, learn about employees’ career goals and discover whether those goals align with the company’s plans. This allows the firm to help employees develop certain skills and experience. It also allows the company to create a pool of talent for strategic succession planning.

Swap the “old school” numerical system of rating or stack ranking employees for a more qualitative approach. Work has become more collaborative, more knowledge-based and, as a result, more difficult to measure.

Technological advances have made more employees crave real-time feedback. Satisfying employees’ need for feedback can only be achieved by meeting with them regularly, and frequently soliciting their input and feedback.


A successful compensation strategy is the key to retaining top talent and driving organizational performance that exceeds all expectations.

It is important for employees to know that, if their performance meets or exceeds expectations, they will be rewarded through pay raises, bonuses, or things such as a flexible schedule, time off, gifts or educational reimbursement.

This approach can also be used to improve the working environment and reward teams. In turn, that can encourage employees to band together to reach important goals.

A highly successful performance management plan is the key to creating an engaged and aligned workforce, which is the hallmark of all successful businesses. Without one, an advisory firm could lose not only time and money but knowledgeable employees and, in the end, a competitive edge.

Kelli Cruz is a Financial Planning columnist and the founder of Cruz Consulting Group in San Francisco. Follow her on Twitter at @KelliCruzSF.

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