Performance Management: How to Empower Employees and Drive Company Success
Just 47% of employees strongly agree they know what is expected of them at work. Unfortunately, unclear expectations are key ingredients in a disastrous recipe: low employee morale, poor employee engagement, and even increased turnover.
That’s where performance management comes in. This ongoing process aligns employee performance with organizational goals through continuous feedback, goal setting, and employee development.
Read on for our best tips to help you develop a performance management plan that empowers your employees, keeps teams on track, and drives measurable results for your org.
What is performance management?
Performance management is the process by which an organization measures and improves performance within its workforce. A business may use performance management to align an individual employee’s performance with company goals through career progression, development plans, and constructive feedback.
The performance management framework involves managers and employees working together to set clear objectives, clarify responsibilities, track progress, and foster continuous learning. This can help to improve individual skills that contribute to the company’s overall success.
A complete performance management system should include the following elements, tailored to your business’ needs and structure:
- Manager feedback: Employees want to know how they’re doing and what’s expected of them. Manager feedback can include everything from formal performance reviews to one-on-ones and mentoring.
- 360-degree surveys: With 360-degree surveys, managers, colleagues, and supervisors may weigh in, and the employee completes a self-assessment. Once the results are in, the manager and employee discuss them.
- Performance improvement plans: PIPs are formal documents that clearly outline the desired results, the means to accomplish them, and the metrics that will be used to measure progress.
- Measurable goals: Goals help employees progress—whether it’s taking charge of a new project or cross-training in another department. A popular way to set worthwhile goals is to use the acronym SMART (Specific, Measurable, Achievable, Results-based, and Timely).
- Rewards and recognition: A good rewards and recognition program can show appreciation more than congratulatory words can. A personal thank-you gift from a manager, a bonus, or an extra day off are just a few of the many ways to ensure your employees feel valued.
Benefits of good performance management
When done right, performance management can provide several benefits for both an organization and its employees. Here’s a glimpse of how the right performance management system can positively impact your company.
Achieving organizational goals
Organizational performance is largely dependent on employee performance. A strong performance management system helps people improve the everyday performance of your workforce through consistent feedback, goal setting for improvement, and employee training opportunities to develop new skills.
Improving employee satisfaction
A strong performance management system aligns each employee’s goals with the broader organizational mission. This helps people see how their daily tasks contribute to the company's success, providing a stronger sense of purpose and satisfaction.
Research shows that this can have positive effects on the wider business. Improving employees’ connection to an business’ mission and goals can lead to a 32% decrease in turnover and a 15% increase in productivity.
Keeping employees motivated
Performance management is a great way to keep employees motivated to improve. Having goals gives people something tangible to work toward and can inspire feelings of success and achievement. When those achievements are acknowledged both publicly and privately, it can make employees feel like their personal contributions truly matter, which can also lead to increased retention.
Building a positive work culture
A robust performance management framework can help HR professionals and managers build a positive culture in the workplace. Moving from an annual review process to more frequent coaching, check-ins, and one-on-ones can make talking about performance a little less daunting for both parties. Rather than dreading negative feedback, employees can look forward to setting goals together and garnering support for overcoming roadblocks.
Ensuring fair rewards and promotions
Good performance management helps employees gain an objective view of their overall effectiveness and understand exactly what they need to do to improve. A consistent and objective rating system gives employees a clear pathway to rewards and promotions, and assures them that these incentives are not based on subjective criteria.
Holding on to top talent
When employees are recognized for their performance, have an opportunity to grow, and find consistent motivation, they may be more likely to stay long-term. Performance management should put people first, aligning individual goals with company objectives, and creating a positive, productive work environment for employees to thrive in.
How to improve your performance management process
Improving performance management might seem like an overwhelming task—but it doesn’t have to be. Focus on one improvement at a time and, before you know it, you’ll start to see impressive results. Here are some ideas and best practices to consider:
Put frequent feedback first
Employees prefer and respond better to frequent, ongoing feedback. Consider what would work best in your organization and keep things simple so catch-ups don’t steal too much time. Even informal chats in the break room can help managers and leaders learn what’s on employees’ minds and build better relationships with them.
Understand your employees’ needs
Remember that your performance management system is there to help your employees improve. Consequently, it’s important to develop a system that meets their needs and delivers coaching and feedback in a way that’s helpful and will be well-received.
Ask your employees what they need to feel supported, and use that as a starting point to build an effective system for your business.
Ensure managers are fully equipped
It’s important that all managers understand the performance management rating system and are equipped to coach employees. Consider hosting formal training for managers on how to observe performance, collect feedback, motivate employees toward success, and have difficult conversations if performance doesn’t improve.
Fine-tune your formal review questions
Avoid questions that are too subjective. Instead, questions like, “What would you do if this employee were offered a job elsewhere?”, can produce more insightful and objective answers. Always align your questions with your organization’s objectives and your employees’ interests, and limit your performance appraisals to a few key questions.
Separate performance appraisals from compensation discussions
When traditional annual reviews are used to determine pay raises, it can throw things a little off-track, and result in ‘false’ answers. Employees may be tempted to say whatever they think will get them a raise rather than answering questions honestly. During your performance development plan, take the pressure of salary negotiation off the table, and you’ll get more honest answers.
Focus on the future
To avoid unproductively dwelling on the past, collaborate with employees on what’s happening now, what needs to happen next, and how to get there. Set clear expectations for behavior and performance and explain how success will be measured. Use open, honest, and ongoing two-way dialogue to help employees feel heard.
Build on strengths and continued growth
It pays to accentuate the positive. Rather than frame performance discussions around employee weaknesses, focus on their strengths instead. If you must give negative feedback, be as specific and objective as possible and let them know that you believe in their ability to improve. Similarly, find out what your employees want to pursue and learn, and then provide them with a pathway to develop their careers in this direction.
Tools that can help with performance management
Good performance management tools can help you automate processes, optimize reporting, analyze data, and strategize for the future. Whether you’re focused on goal setting, robust reporting, or 360-degree feedback, it’s essential to find a platform that suits your organization’s needs.
A performance management system should include the following features:
- Goal setting and tracking
- Continuous feedback
- Reporting and analytics
- Customizable templates
- 360-degree feedback
- Centralized data
- Integration capabilities
- Employee development focus
Get your performance management on track
A robust, efficient performance management system can guide your employees on the path to your organization’s goals, magnify their contributions, and propel them ahead on their individual career journeys. Implementing performance management in your workforce development approach is a worthwhile investment in their future—and yours.