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What is performance management?
Performance management is a process of supporting and improving an employee’s performance in line with an organization’s goals. It includes a range of activities, from formal performance reviews to on-the-spot feedback. It is a group of activities to help track, maintain and strengthen workforce performance in line with a company’s goals.
Employees then work towards these objectives, receiving support and training to help them deliver these goals. Performance management is usually led by an employee’s manager and supported by the HR function.
Performance management is a performance improvement method that allows employees to know what they need to improve on and how they can go about doing so. There are many performance management tools an employee can use, including performance appraisals, performance development plans, feedback sessions, training courses, and performance support systems.
An effective performance management process includes a performance management policy that ensures all performance management resources and performance improvement methods are available to employees. A performance review is a critical part of performance management and aims to provide feedback on performance and development needs.
It’s an important way of ensuring employees are capable of delivering the company’s strategic objective. By tracking of how employees are delivering against their objectives and then providing feedback and support, managers can help employees improve their performance and motivate them to achieve more.
Why is performance management important?
Performance management systems are important because of the way they allows a company to link organizational goals and success to individual goals and success.
Through performance management, employees know what is expected of them and the performance standards that managers expect. By matching performance with expectations, employees can improve their performance and increase job satisfaction by having a clear understanding of their role within the business.
Managers also benefit from performance management as it allows them to measure individual performance in comparison to organizational goals, identify performance gaps and allocate performance support where necessary.
Performance management is a performance improvement method that focuses on performance issues, emphasizes performance development, and emphasizes performance accountability by managers to ensure employees are achieving the company objectives. It allows the organization’s leadership team to understand how their strategic priorities are being achieved through targeted interventions by HR business partners.
This is fundamental to helping an organization ensure employees are working towards the right aim and also that they are developing the skills that the organization needs them to have.
Enhance employee performance management can turn a company’s workforce into a competitive advantage when implemented well. There are several ways it can do this:
Goal setting
It gives employees a clear focus by aligning employees with organizational goals and vision. An important aspect of employee performance is goal setting. By using continuous performance management, leadership can ensure company goals are trickled down the organization and become part of every employee’s objectives.
Knowing what is expected of them makes them free to deliver their objectives in a more autonomous way. This improves productivity and can also contribute towards a feeling of increased trust.
By using a series of regular one-to-ones, managers can ensure they stay in touch with how employees are working towards their objectives.
Training and development
It supports training and development needs by identifying and fill knowledge and skills gaps. Regular reviews between and employees and their manager help highlight opportunities for training and development to meet that employee’s objectives. The performance management cycle helps identify where employees lack the skills to complete certain tasks.
This can help a company budget and plan for training more effectively. With this information, managers can then give the employee the necessary support to develop these skills with training, mentoring or feedback.
Performance management can also be a way of stretching highly capable employees to stop them from becoming bored in their roles. If they are achieving their targets easily, the manager can identify this and give them stretch targets or special projects to work on. It can also motivate the employee as they know their manager and the company they work for support their professional development.
Career planning
Put people in the right job. Performance management can help managers and HR with future career planning by identifying specific skills and aptitudes. Performance management system can be used to evaluate an employee’s performance, managers will have a better understanding of whether or not an employee is ready for promotion or would benefit from a cross-departmental role change.
Managers can feed this information back to HR to help them into talent planning. The performance management process can also feed into an employee’s career planning sessions, helping motivate the employee by giving them future roles to aspire towards.
Support recognition and reward
The transparency of an effective performance management system allows recognition of a good job done. The performance management system is ideally suited to encouraging employees with recognition and subsequent rewards. It is clear which employees have delivered or over-delivered on their goals, which allows managers to reward employees.
This clear signal is also motivating for employees and helps reduce conflict from employees with lower rewards due to the clear indicators. By reviewing progress against objectives, managers can give employees positive feedback that then goes on to improve their future performance.
Improve retention
By having a strong performance management processes a company is putting many of the features that are essential to employee retention. For the above reasons, review employee performance has been shown to improve retention and employee engagement.
This results in a more productive workforce, set strategic objectives and can help reduce the costs and disruption associated with high turnover. Goal setting, feedback, training and recognition feed into a good performance management cycle. These are also known to improve employee retention.
Improve performance
Performance management is a performance improvement tool, not a performance appraisal system. Making the performance process transparent allows employees to have an input into their performance and helps them improve how they work. Regular performance reviews allow for feedback between managers and employees about what is working well and areas that can be worked on.
In performance management the performance process is all about helping employees understand what they are doing well and where they can improve.
Effective performance management systems provides a performance improvement tool that increases employee satisfaction with their jobs, helps employees deliver continuous improvements in performance for business performance, which leads to increased productivity.
How to improve performance management in a company?
The best way to improve the employee performance management in a company is to change it from an annual ‘event’ into an ongoing and always-relevant process.
Managers are key in the execution of performance management, but before that, it is vital to get buy-in from the highest level of the organization.
A few examples of managing performance include:
Clear vision
Leadership must set the direction for the organization and clearly communicate the overall business objectives. This will give the performance management process a baseline from where performance is going to be measured. Performance management programs should only focus on those areas of the business that are performance critical. Meeting performance requirements should be a condition of reward and promotion.
Regular reviews
Changing the annual review into a series of more regular review events. Quarterly reviews or 360 degree reviews give managers and employees a better chance to act on feedback and course-correct if necessary.
Reward and recognition
Make reward and recognition a regular occurrence. Instead of limiting recognition to the annual appraisal, you will see employees feel more engaged and motivated to deliver more by celebrating wins throughout the year.
Clear communication
Each manager must communicate objectives to their direct reports and hold them accountable. Regularly communicate the company vision and explain how each employee helps deliver this. This way, instead of thinking about their objectives as something isolated, employees learn to recognize the interconnectedness of their work.
Depending on the employee’s role this could be weekly, fortnightly or monthly. By building objective tracking into one-to-ones, employees are more likely to hit their goals.
Regular feedbacks
Managers must check-in with direct reports and support them in achieving these goals. Regular one-to-ones, feedback, tailored training, and progress checks will help employees achieve their goals. This way, employees are more likely to grasp the bigger picture, and performance objectives become part of their day-to-day workflow.
Regular training
People management is a key element of improving performance management. Therefore manager training is a key aspect of ensuring success. This is especially the case for newly promoted managers or managers who have recently joined the organization.
Training should be regular, organizational performance focused and tailored to the individual’s performance management style.
Training managers to coach, not just manage
By giving managers the skills to coach employees, you will soon see employees starting to accomplish more. That’s because coaching focuses on improving employee strengths and supporting them to achieve.
Having a consistent approach and timeline to the performance management process can make it easier for HR to see where managers are failing to deliver performance management promptly.
Similarly, a cohesive approach to reward, recognition and career planning will ensure employees don’t feel left out on the virtue of who their manager is.