Is there a cast on setting up a performance agreement for your direct for the coming year?

I am not clear on what you mean by "agreeing the performance agreement." Are you saying your direct pushes back or does not agree with the performance targets you set for the coming year?
Are you providing feedback throughout the year (concerning performance) and meeting regularly via one on ones?

Hi Darryl
Not a lot clearer second time round but I'll hazard a guess you may mean setting objectives within the actual Performance Development Review process and/or document? 
What I've found works well (when the CEO and senior team are on board) is to use the key values of the organisation and working down from the CEO's goals. You then dovetail the manager's goals with the CEO's and then the individual contributors' goals dovetail into the manager's goals. 
That's not always achievable if the CEO hasn't been involved from the outset, so the next best thing can be to use the organisation's strategic plan. Set objectives or goals around those using the values - make them measurable and MT specific (measurable and timely). 
Below is an example of a HR Manager whose objectives (4 of them) were the same as the CEO, but the Targets varied. Though as a rule, I try to stick to only 3 biggies for the year. You'll know how much they can handle or what is achievable. Of course, you'll want a stretch target in there also.
Hope this helps.
Cheers,
Cyndy
Objective 1: Improve our relationship with employees, making xxxx an Employer of Choice
Target 1:  Implement revised Performance Appraisal process with completion of one full 12 month cycle with 100% participation across all staff and managers by June 2011.
Result:                                                                                                           Weighting:  10%
(Objective same as #1)
Target 2:  Build upon and enhance the xxxx culture (employee surveys, values, wellbeing programs) by increasing satisfaction and engagement of staff (achieve average satisfaction rating of less than 2.0 from >60% of all staff in 2011 employee survey).
Result:                                                                                                           Weighting:  20%
(Objective same as #1)
Target 3:   Implement people metrics by providing accurate fortnightly and monthly HR reports to managers on significant people related statistics (recruitment, retention/turnover, use of EAP, anniversary dates, head count). Source HR Information System modules with payroll Attaché software.
Result:                                                                                                           Weighting:  20%
Objective 2:  Build and enhance relationships with clients by providing IR/ER support internally and externally to clients.
Target:      Develop and plan to execute an Intranet HR resource service for clients
Result:                                                                                                           Weighting:  20%
Objective 3:  Improve client profitability in the area of labour costs
Target/Measure:  Plan and begin execution of a strategy to reduce client labour costs by 1%
Result:                                                                                                           Weighting:  20%
Objective 4: Grow xxxx profit
Target :   Review HR Budget and monthly P&L, cost control management of HR expenses within budget.
Result:                                                                                                           Weighting:  10%