What is performance management?
Employees are critical to the success of companies and to achieve success, employees need to be heading in the same direction. Performance management is a way to get employees there.
Performance management is an ongoing process between a manager and an employee which is used to maintain and improve the performance of a workforce, and supports accomplishment of the strategic objectives of the company. It helps companies become more successful and stay ahead of their competitors.
It is a collaborative communication-based process where employees and managers work together to plan, monitor, and review an employee’s objectives, long-term goals and contribution to the company. It involves measuring, reporting and managing progress to improve performance, at both individual and corporate level.
A good performance management system should align a team to the business objectives whilst developing, supporting and helping employees to improve their performance.
For managers, the best interests of your employees should always be at the forefront of your concerns, a happy and content team will always perform better than a team who feel unrecognised and undervalued.
Choosing the right performance management technique
Performance management includes an array of aspects regarding a team’s successful functionality, there are many techniques that can be used to tackle one issue. It is key to choose the correct technique for each scenario.
Performance management techniques typically form to address the following:
Monitoring performance – meetings and check-ins
Progress checks – Reviews and summaries
Setting expectations – explaining what is required and how employees can achieve this.
Offering incentives – For recognition, reward and to help tackle poor performance.
Continued professional development – conferences, mentoring and coaching
Two of the most important steps are making the organisational and individual performance objectives clear and using feedback to review and improve processes and performance.
The performance management process has 5 key elements for success, these are:
Planning and goal setting – goals must be set and how these goals will be evaluated must be made clear and given specific time frames for achievement. (SMART Goals)
Management and employee involvement – for reviews to work, employees need to know the process isn’t just a tick box exercise. Employees needs to be engaged in the process and that it is a two-way process between the manager and the employee.
Monitoring and feedback – this allows tracking of an individual’s performance and provides them with ownership of their development. It also allows an opportunity to provide help and support if the employee needs this to help achieve their goals. Feedback intervals could be monthly or quarterly.
Development and improvement – following monitoring of employee’s, further improvement and development will need to be encouraged. An employee on target to meet their goals should be encouraged to exceed and go beyond the goal that was set.
Reward and compensation – for employees to continue to achieve and develop, there needs to be some kind of encouragement for them to do this. This can include, salary increases, bonuses, shares in the business, extra holiday days and promotions.
Investing in or developing performance management tools, techniques and processes is an important part of creating a high-performance culture within a business. Every business regardless of its size should be aiming for strong performance at every level of the business.
Businesses need to consider what techniques will fit their size and structure and how performance arrangements will fit with other business policies.
The techniques that will work best depends upon the needs of the business, for example, an engineering company will probably do things differently than a retail business. Smaller businesses may prefer the idea of more informal techniques based upon regular face to face meetings, larger businesses will need to consider the number of teams they have and how they can best measure their employee performance across the business.
Top 7 Performance Management Techniques
Peer Reviews/ 360-Degree Feedback
360 reviews allow peers to provide both positive and constructive feedback. It provides individuals with a broad assessment of their individual performance based on the views of the people around them. This process allows members of teams to grow as they can identify areas for improvement in others, while they consider their own development needs. This process is mainly handled by team members, but managers should still oversea the reports that are generated to ensure that any concerns, praises or claims are made note of and addressed. By doing this it shows teams the importance of peer review because it has resulted in action being taken and therefore team members are more likely to be engaged in the process.
Insights from 360-degree feedback are usually used in employee training and development. If done correctly 360-degree feedback helps to democratise the performance review process as it uses the opinions of others around the individual instead of just the line manager.
If an employee is underperforming, they may not know it. A meeting should be held to identify possible causes for their underperformance and solutions to help the employee. When giving feedback to an underperforming employee it is vital that a manager does not just give negative feedback, positive feedback is needed also to encourage them to continue to do the good things they do, managers need to let underperforming employees know what their strengths are. Feedback needs to be done regularly, not done as a yearly review as this can create stresses within teams, regular feedback (for example monthly) helps to keep teams motivated and engaged.
Key Performance Indicators (KPIs) and Metrics
These provide a way to measure how well companies, units, projects or individuals are performing in relation to their strategic goals and objectives. The main value of KPI’s is enabling data driven performance conversations and better decision making. Well-designed KPI’s should be vital navigational instruments that provide a clear picture of current levels of performance and shows if the business is where it needs to be.
These are probably the most commonly used performance management technique. When used properly, they can be very powerful for aligning the goals of individuals with the strategic aims of a business. To be beneficial employees must feel the appraisal is a regular, fair, honest and constructive two-way conversation between them and their manager. If they are not, then appraisals can become a tick box exercise and end up a de-motivator which can lead to a decline in employee performance.
Management by Objectives (MBO)
This process is defining specific objectives and setting out how to achieve each individual objective. It is powerful for specific work that must be done one step at a time. This method is a good way to create a culture of working towards common goals as once each objective is achieved those involved are aware of their achievements which helps to improve moral and motivation. MBO measures individual performance and compares that performance to standards previously set.
These are one of the best-known management frameworks and has been popular over the last 20 years, it was voted one of the most influential business ideas ever in the Harvard Business Review. The balance scorecard helps businesses to:
- clarify their strategy and communicate their business priorities and objectives;
- monitor progress by measuring what extent priorities and objectives are being delivered;
- define and manage action plans to ensure initiatives are in place to deliver the business priorities and objectives.
Personal Development Plans (PDP)
A PDP is an action plan that is based on reflection of an employees performance and needs, PDPS set out goals for future performance and actions that will support personal development. They are often used to identify specific training and development needs and create actions plans to meet those needs. PDPs help employees set out how they want to grow and what actions they need to take to achieve that growth. This helps employees to feel more invested in the business and know the role they play in the success of the business.
Performance Management Tips for Managers
Managers are a vital role in promoting employee commitment, motivation, engagement and are key to developing and nurturing employees.
The top 7 tips for managers to promote enhanced employee performance are:
- set meaningful and attainable expectations – be clear about expectations and explain what measures will be used;
- approach the process as a collaborative effort – work with employees to engage them in the process and gain employee ideas to lead to the achievement of business goals;
- provide employees with the necessary tools they need;
- continually assess and communicate progress – feedback should be timely and make specific reference to each goal;
- provide coaching, mentoring to optimise employees’ strengths and identify areas for improvement;
- do not leave feedback until end of year, feedback should be done monthly or quarterly and should be done via face to face meetings;
- provide employee recognition.