Performance Management
What the domain tests
Performance Management (绩效管理) tests goal alignment, measurement, review, calibration, and the legal use of performance results. In China, the exam often links performance to pay, promotion, and termination, so documentation and procedure matter as much as the model.
Core rules
- Choose a model that fits the work: MBO for clear objectives, KPI for stable operations, OKR for fast-changing and ambitious goals, balanced scorecard for cross-functional strategy. Do not mix all four without a design rationale.
- Goals should be specific, measurable, achievable, relevant, and time-bound, with weightings that sum to 100% and data sources agreed in advance.
- A performance cycle includes goal setting, mid-cycle coaching, appraisal, calibration, feedback, and an improvement plan. Calibration reduces manager bias; forced ranking is a distribution tool, not a legal justification for dismissal.
- Under Labor Contract Law Article 4, rules that directly affect employees’ vital interests-including performance and disciplinary rules-must be discussed through the employee congress or all employees and publicized.
- “Incompetence” termination requires objective criteria, evidence that the employee failed, training or reassignment, a further failure, 30 days’ notice or pay in lieu, and severance. It is not the same as economic layoff.
- Protect pregnancy, maternity, nursing, and work-injury cases from performance action used as a pretext.
Worked example
An employee misses sales targets for two quarters. The company has signed KPI sheets, monthly dashboards, and two documented coaching sessions. A 60-day PIP sets specific weekly targets, gives territory support, and records results. The employee still misses the targets. The company may terminate with 30 days’ notice or one month’s pay in lieu, plus statutory severance. If it simply labels the person a “low performer” and dismisses immediately, the dismissal is likely unlawful and compensation of 2N applies.
Traps
- No signed goals or data definitions, so ratings are challenged.
- Using “末位淘汰” as automatic dismissal; low ranking alone does not prove incompetence.
- Skipping training or reassignment before an incompetence dismissal.
- Rating without calibration, creating cross-team unfairness.
- Letting performance management become a surprise annual event.