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Four tips for developing an effective performance contract

by , 19 May 2016
Four tips for developing an effective performance contractWhen your employees sign a performance contract, they agree to all the performance targets you've set for them. And so should they not meet any of them, you'll have sufficient evidence to prove poor performance, especially when dismissing them.

That's why is highly advised you implement performance contracts in your workplace.

So to help you set up an effective performance contract for your employees, here are four tips to keep mind...


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The four tips for developing an effective performance contract are…


Apply the performance contract to each position in your company that has measurable outcomes and objectives.


Refer to the following documents to determine the content of the performance contract:

·         The employee's job description;

·         The organisation's business plan;

·         Applicable project plans; and

·         The performance standards for employees within your company, or for whichever position the performance contract deals with;

Use the performance contract as the foundation for your performance appraisals.


Use weighting. This refers to the importance of each specific task in relation to the purpose of the job in question.

It should be out of 100%. So for example, a particular task could constitute 30% and another could make up 20% of the 100%. Do this until you've filled up the 100%.
BONUS TIP: There isn't any set format for when drawing up a performance contract. You need to tailor make it in relation to your company and the individual you're dealing with.

*Those were four great tips to keep in mind when developing a performance contract for your employees. Make use of them today!

To learn more on performance contracts, page over to Chapter P 03 in your Practical Guide to Human Resources Management handbook,

Don't already have a copy? No problem! We've got you covered.

Simply click here to order your copy of this informative HR resource today.
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