Performance Agreements

Performance agreements are results-oriented contracts between two parties who anticipate doing business together. 

Without written guidelnes, performance expectation is left up to interpretation between business partners. Performance agreements attempt to cure this problem by defining accountability for specific goals related to the business relationship. They help to align the results-oriented goals of both business partners. This way, both parties know what to expect regarding the return on their investment. 

Performance agreements establish measures of accountability, as well as consequences for not satisfying said measures. The parties agree on the actions of the performing party, and the expected results from those actions. If one party does not achieve the expected results, the other party will have recourse under the agreement.

Managers and employees

Managers sometimes use performance agreements as an incentive to improve employee performance. Additionally, managers use performance agreements as tools for new employees to develop positive work habits from the beginning. The most important part of the performance agreement is that it supports the company's overall objective. 

Entertainment

Businesses also use perforamnce agreements to define the expectations of entertainers they may hire for office parties, club performances, etc.