Now more than ever, organisations are reconsidering their approach to employee performance management. Instead of carrying out traditional reviews on an annual basis, competitive companies favour a dynamic process where the output of team members is continuously measured and improved.

For the HR department, effective performance management is crucial to hiring, developing and retaining staff. It can set clear expectations and objectives, highlight growth and training needs, and provide helpful coaching and feedback. An effective performance management system can also:

  • Increase productivity
  • Improve engagement and retention
  • Reveal counter-productive activities
  • Transform workers into a strategic advantage

Regardless of industry or size, every business must know what its employees are doing, how they do it and where they can do better. This is difficult to accomplish without a system that defines roles, delivers constructive insights, facilitates interventions and reinforces positive change.

Before we continue, let’s take a closer look at the importance of performance management and how it can benefit both talent managers and the organisation as a whole.

The Importance of Performance Management

There are three key issues that performance management addresses.

The first is keeping employees engaged. In a recent study, nearly all respondents preferred if managers offered real-time feedback and development opportunities, while 81% would settle for quarterly check-ins at the very least.

So is retaining talent, which involves meeting frequently to discuss concerns and receive training, and is also part of effective performance management.

The third aspect is developing leaders from within the company. By staying focused on improvement and growth, it will be much easier to nurture leaders who already understand the internal culture and dynamics. Plus, employees are more motivated to excel knowing that doing so may lead to a promotion and other bonuses.

The Purpose of Performance Management

Not excluding the above, we can identify five main objectives for managing employee performance. These are:

  1. Boosting workforce productivity
  2. Developing leadership skills
  3. Increasing engagement
  4. Outlining clear role definitions and expectations
  5. Implementing a program that incentivises and rewards accomplishment

In short, the point of having a robust performance management system is to lay out the pathway to success and keep track of everyone’s progress on that map. At the same time, it serves as the foundation for identifying and implementing opportunities for team members to develop and improve.

Performance Management Best Practices

While the benefits of performance management are fairly straightforward, the process itself can be complicated. To make it easier, consider the following best practices for implementing an effective performance management system.

Set Your Goals.

An established set of objectives will help guide the creation of your performance management program. Therefore, it’s important to understand what you aim to accomplish. For example:

  • Are you aiming to streamline the compensation process?
  • Do you want to primarily increase productivity?
  • Is your team looking to develop leaders from within?
  • Should staff retention or engagement be improved?

With your goals in place, you can move on to defining and describing the roles of your employees. It is much easier for a team to be successful when each member knows what is expected of them, how they should carry out their duties and what the end result will be.

Create a Performance Plan.

Alongside your objectives should be a detailed performance plan. This will reduce the likelihood of your objectives being overwhelming, especially when it comes to those that extend into the long term. Your performance plan helps visualise the intended path and split milestones into actionable, trackable tasks.

In a similar vein, analytics and metrics can help you stay on top of your performance targets. It can also make it easier to determine when an intervention is necessary for keeping an employee on track.

Use the Right Software.

At the foundation of every effective performance management system is proper software for the job. Your best bet is an application that’s dedicated to performance management. A popular option is StaffCircle, thanks to a comprehensive range of features including one-to-one check-ins, real-time feedback, monthly and quarterly reviews and more.

The software also takes care of comms and culture, as well as various tasks related to HR operations. You can get started by checking out the Staff Circle guide on the types of performance management system tools and techniques. This is a useful source of additional information for helping you make the best start with performance management.

Provide Regular Coaching.

The purpose of training is ultimately to reveal and solve problems as early as possible. If coaching doesn’t happen often enough, it won’t be useful. Make sure that you’re hosting meetings on a monthly or at least quarterly basis.

Within these meetings, you can also keep staff up to date with the latest guidelines for their roles. These policies and recommendations should outline specific limits on search and experimentation. Of course, it’s no good having too many constraints, but employees work best when their roles are clarified with a few solid guidelines.

Build a Strong Culture.

Employees are more likely to adhere to their guidelines when working under shared values and cultural alignment. A unified sense of beliefs and expectations is vital in today’s workplaces, and helps foster a more harmonious, pleasant and productive environment. Team members should be committed to the values and objectives projected by leaders.

Organise Workshops.

Inviting teams to participate in regular workshops has innumerable benefits for all involved. Not only can they be fun and engaging events where employees get to know each other better and strengthen their relationships, but workshops can also help staff and managers become more familiar with the strengths and weaknesses of each department.

An important note for any kind of meeting that occurs in your offices is that they should be approached with the right mindset – that is one where any feedback is provided in an actionable and appropriate manner. It’s not about looking back and pointing fingers, but rather guiding employees towards future success with valuable insights and suggestions.

Don’t Forget About Managers.

It’s not only your employees who might need the occasional tune-up. Leaders also require training and regular feedback on how they can improve. The act of training itself is a skill that needs to be built by managers who are responsible for coaching other staff, and should thus be well-versed in their abilities to lead and guide teams.

Another great practice to follow in this area is multiple-source feedback. Having team members provide feedback on each other can serve as a great source of information. It will provide a more holistic view of how the department is performing and the challenges that teams are facing.

Finally, remember that problems are not always caused by employees. Depending on the company, external factors such as supply chains, internal processes or organisational policies can also be sources of trouble and should be investigated on a regular basis as well.

Always take initiative to seek out the cause of any issue as precisely as possible. That said, implementing an effective performance management system is bound to vastly improve your organisation.