What is Performance Management? It is a set of activities focused on improving employee performance and a  key aspect of success in business.

What is performance management?

What is Performance Management? It is a set of activities focused on improving employee performance and a key aspect of success in business.

Everyone should know the answer to the question what is performance management. It is the theory, activity and set of practices which are geared to maintain and improving employee performance in line with organizational objectives. Current theory has transitioned from traditional to continuous performance management. Traditional performance management is a top-down, static and out-dated process, which establishes objectives (individual, team or organizational) at the beginning of a term and expecting them to be achieved in a given timeframe. Management then monitors performance against objectives and shares evaluation periodically. It is an outdated and archaic management practice, and has a range of problems associated with it.

Alternatively, continuous performance management is defined as performance management processes which are ongoing throughout the year. Management processes typically include one-on-one meetings and conversations with managers, direct reports, regular performance and development employee reviews as well as continuous 360° feedback.


How to measure the effectiveness of your performance management process?

An organization may wish to utilise performance management in order to monitor said performance at an individual, team, departmental or organizational level.

Being able to measure performance in an organization is not an easy task. There is a process that needs following in order to effectively do so.

performance management

1. Define your key goals and objectives

Before measuring the effectiveness of your performance management process, you will need to gather key information and indicators regarding your goals and objectives. What are your goals that you are trying to achieve through performance management?

2. Initial information

that you will need includes:

• How easy to use is your management processes and software to use for employees and managers. • How much time and resources are your processes expending? • How many employees are actively engaging with your performance management processes?

3. Set evaluation criteria with measurable outcomes.

• How often there are check-ins between a manager and the employee (this can be collated at an individual employee-level, individual manager-level, or departmentally).

• How many employees have agreed upon goals and how many employees managed to achieve their objectives.

• The number of employees undertaking learning and employee development opportunities during and/or post their performance review to improve their knowledge skills.

• Compare and contrast your data and performance standarts with previous years. If your performance management processes are effective, then there should be an upward trend in the ratio of high-performing to under-performing employees.

• Employee retention and employee turnover rates. More effective performance management processes will keep the first one high and the second one low.

Use these evaluation criteria as a metric to see if you are continuously improving. Use the initial information criteria to see if your current processes are properly set up and being engaged with.


Why is performance management important?

An effective performance management process has the potential to produce a number of organizational benefits. A survey by Bersin and Associates found that of those companies that reviewed goals each month, over half were also in the top percentile for performance. In contrast, of those companies that reviewed goals annually, only 24% fell into the same bracket. A study by Gallup identified that employees had regular one-on-one meetings with their managers are almost three times as likely to be engaged. Lastly, frequent feedback has been shown to boost performance by up to 39%.


Who is responsible in the company?

It is important to note that one person, or a set of people from one department is not accountable for the whole of the performance management process.

  • Employee – in charge of achieving their individual goals and the goals of their team.
  • Managers – are expected to outline expected performance deliverables to the employees, and continuously gauge the employee’s performance to determine whether to step in, offer constructive feedback or provide recognition.
  • HR Department – need to outline expected performance with respect to attitudes and other social criteria. HR departments should also be in charge of using HR software to optimise performance management, and feeding the information from the software to managers and employees on a continuous basis.

Optimizing your performance management process is achieved by aligning these key players in the organization.


How do you best manage performance?

The million-dollar question. How do you best manage performance without disrupting or negating the process which are working well currently? The internet is inundated with suggestions, research and tactics to improve your performance. It’s up to you and your organization to decide which ideas will work when integrated into your performance management processes. Here are a few ideas:

  • Set clear expectations and goals.
  • Provide managers with necessary training.
  • Provide employees with opportunities (internally and externally) to aid their learning and development.
  • Utilize employee handbooks.
  • 360° feedback.
  • Use a goal setting system (i.e. SMART goals or OKR’s).
  • Give employees the right tools to excel.
  • Make sure managers are consistent.
  • Invest in performance management software to optimize your processes. More on this below…

Effective performace management


What systems are available?

The management processes which HR department use is constantly evolving. So too then, does performance management. It needs to flex to help both company growth and industry trends. Employee performance management software can help you to optimize your current processes. We’ve written a number of blogs denoting the benefits of investing in performance management software or check the benefits summary bellow;

  1. Modernizing paper-based spreadsheet methodologies will save you time and money, optimizing your processes.
  2. Software makes the performance management process specific and catered to your business.
  3. Software provides a needed infrastructure to shift from annual performance reviews to continuous feedback, making that transition easier and more integrated.
  4. Technical support — A final key to finding (and retaining) software’s worthiness.

benefits of performance management software Some other cited benefits of performance management software include:

  • Customizable - PeopleGoal is a modular, customizable platform that allows you to tailor your current process, rather than be dictated by a strict formula. Customization allows for organizations to add features which are of importance to them.
  • Secure - Having a centralized location for personal data that is encrypted and has customized permission levels means your personal data is more secure.
  • Electronic History - Performance management systems allow you to review an individual, team or departments achievements, goal success rates, reviews, feedback and performance
  • Data Driven - With data in one centralized location, it’s easy to run reports and view key prior reviews. Consequently, it allows you to map progress through all levels of the organization. It also allows you to compare and see trends in performance across time periods.

If you are intrested in this, check out these blogs: ‘Don't Think Performance Management Software Is "Worth It"? Think Again’ or ‘Performance management software: Is it worth an investment?’. Alternatively, read our other blogs which span a range of HR topics and debates.

Joseph Garvey

Joseph Garvey

Content Team

9 minute readPublished on August 23, 2019
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