The key to strategy implementation is employee performance management. It is the most important business process that HR manages.

Individuals can also use it to deliver, learn, and grow.

Performance is the bedrock of employee engagement.

I was negotiating with a power generation company. In order to secure a mega power production project, the corporation submitted a very low price for power generated in a government auction. The business was unable to attain the necessary efficiency to become profitable.

The Chairman realised the issue was with employee performance management. He wanted me to meet with the CEO and the CHRO to figure out what was causing the problem and how to fix it.

A. The CHRO’s Perspective
The next morning, I had breakfast with Sanjeev, the company’s CHRO, before meeting Srinivas, the CEO.

Me: “What is the PLF (Plant Load Factor – a measure of plant utilization in power plants)?”

Sanjeev: “It’s between 60 and 70 percent. Srinivas will be able to tell you anything you need to know.”

Me: “When we quoted for the power rate in the auction, what was the planned PLF?”

Sanjeev: “I’m not sure. I’m fresh to the program. We’ll have to check with Rao, the CFO.”

Me: “What is the plant head’s target?”

Sanjeev: “To efficiently run the facility and meet all O&M parameters.”

Me: “Are these parameters quantifiable?”

Sanjeev: “We trust our senior management. They know their work. How can we set targets for them?”

Me: “How do you set goals for middle management and frontline teams?”

Sanjeev: “This is a plant, not a sales organization. Roles are defined. People just do their jobs.”

Me: “How do you evaluate employee performance?”
Sanjeev: “Employees do self-evaluations. Managers review them. We use skip-level assessments to reduce bias. Leadership then moderates the ratings. It’s a reliable system.”

Me: “How are plant leaders evaluated?”

Sanjeev: “The plant head uses judgment. There are no formal documents. The CEO rates the plant head. I’m not involved.”

Me: “What does your engagement survey say?”

Sanjeev: “Engagement is very low.”

Me: “Why?”

Sanjeev: “People are under severe pressure from top management.”

At this stage, insights from employee engagement survey companies often help organizations identify gaps between perceived performance and actual employee experience, bringing more structure to such discussions.

B. CEO – The Buck Stops Here
We then met Srinivas, the CEO.

Srinivas: “I left office at 1 a.m. That’s normal.”

Me: “Why?”

Srinivas: “Performance demands. The plant is losing money.”

Me: “What PLF are you achieving?”

Srinivas: “67%.”

Me: “What PLF is required for profitability?”

Srinivas: “95%.”

He further explained that while expectations existed, they were not documented or linked to individual goals.

Me: “Can we aim for 88% (industry best) to reduce losses?”

Srinivas: “That sounds reasonable.”

Me: “If we clearly define goals and align individual contributions, we can bridge this gap.”

Srinivas: “Yes.”

C. The Problem – Lack of Basics
The organization was operating without clear goals. It was like hitting the ball randomly and then placing the goalpost where it landed.

Without direction, performance becomes inconsistent, engagement drops, and financial losses follow.

D. The Solution – Back to Basics
We worked with leadership to:

Define clear, measurable goals
Align them from leadership to frontline employees
Create accountability at every level
Introduce structured performance reviews

This clarity transformed the organization:

Employee engagement increased
Performance improved significantly
PLF increased from 67% to 98%
Eventually, the plant became one of the most efficient in the world.

However, this is not uncommon. Many organizations lack structured goal-setting processes. Performance is judged retrospectively rather than planned proactively.

When everyone is rated highly regardless of output:

There is no motivation to outperform
Performance declines over time
Organizations enter a downward spiral

True performance management is not about evaluation. It is about direction, clarity, and accountability.