Tying performance management to company goals can be particularly helpful for employers that are looking to grow, says Laurie Zaucha, vice president of human resources and organizational development for Paychex in Rochester, N.Y. Recently, Paychex took on a new growth initiative, and part of its plan is to base an individual's performance on how it ties into the overall company goal, which is particularly useful for a large work force.

"We looked at our new strategy to accelerate the company's growth, and we felt that it was important that our high-level company goals were aligned with what all of our 12,000 employees were doing throughout the company," Zaucha says. "We are now taking these company goals and cascading them down throughout the organization."

Most employees want to be successful and feel as though they're making a difference in the company, Freedman says, and this ambition increases employee morale. However, when individual goals are set, the correlation can be hard to define. But aligning company goals with performance allows employees to see how they are directly affecting the company, and that affects the work force's attitude.

"Being clear on where the company is going and how the employees align to the change is important because it will contribute to the overall business success," Freedman says. "It creates a culture of folks who are connected and engaged."

Although Paychex's transition is still new, many employees are already feeling positive about the new approach to performance management, Zaucha says. Communication from the HR department, CEO and other high-level managers has been open and frequent, and Paychex is also planning to host training sessions and webinars for each level of management and the frontline employees. Zaucha believes this will help employees feel comfortable about the new process and learn to effectively set their own goals.

"With our new mission and values, we are now able to translate that to an individual level and show each employee how they can play a part in our company's success," Zaucha says. "That alone has been very motivating for people. We've gotten great feedback so far."

One of the biggest challenges in implementing this performance management strategy is overseeing the management team, Freedman says. Some managers have a tendency to set too many goals. Others are likely to set forth vague objectives, but for this performance management strategy to succeed, employee goals must be specific, measurable, achievable, relevant and time bound, and it's the HR department's job to monitor management.

"HR needs to do a spot check on some of the performance reviews to see if the managers are creating a reasonable number of goals that are aligned to the business," Freedman says. "If not, HR needs to give these managers some ongoing coaching and feedback on how to perform better in that area."

As employers make future plans, Freedman expects to see a greater emphasis on company goals aligned with performance management. Company goals will be more specific, and that will require a more defined plan on action.

"I think it's going to become even more important," Freedman says. "More companies are going to get much more metric driven in their goals; it's not going to be these soft goals. Companies will set much more measurable, specific goals, and that will be streamlined with performance management. They'll be worrying about how to coach and be more successful as a business."