Performance management is a set of activities to motivate employees to achieve their best work. It's a key factor in an organization's growth and success.

What is Performance Management?

Performance management is a system of processes to track and improve employee performance in line with organizational objectives.

Great performance management is about helping employees to develop their skills and consistently improve themselves, in the ways that work best for them.

Current theory has moved on from traditional to continuous performance management. Traditional performance management is a top-down, static process which establishes objectives (individual, team or organizational) at the beginning of a term and expects them to be fully achieved in a given timeframe. Management then monitors performance against objectives and shares an evaluation periodically. It's an outdated and archaic management practice, and has a range of problems associated with it.

Continuous performance management is defined as performance management processes which are ongoing throughout the year. Management input typically includes one-on-one meetings and conversations between supervisors and direct reports; regular performance and development employee reviews; as well as continuous 360° feedback from peers and colleagues.


Why is performance management important?

An effective performance management process benefits both individuals and the full organization.

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. Of those companies that reviewed goals annually, only 24% fell into the same bracket.

A study by Gallup identified that employees that had regular one-on-one meetings with their managers are almost three times as likely to be engaged.

On top of that, frequent feedback has been shown to boost performance by up to 39%.


Who is responsible for performance management in the company?

Performance management is not the responsibility of just one person or one department. Every participant is accountable for the whole of the performance management process.

  • Employees are in charge of achieving their individual goals and the goals of their team, as well as identifying their career progression goals and seeking the appropriate training.
  • 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 and coaching.
  • HR Department needs to outline the expected performance in line with the company strategy, and with respect to attitudes and other social criteria. HR departments should also be in charge of using HR software to optimize performance management and make it an accessible part of an individual's workflow, as well as feeding the information from the software to managers and employees on a continuous basis.
  • Senior Leaders should set the organizational strategy and use the performance management system to communicate this clearly to the company. They should also be modelling the behaviors they want to see from the organization; giving and asking for regular feedback, holding one to one meetings and tracking the company's strategic objectives.

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


How do you get the best out of performance management?

The million-dollar question! How do you best manage performance without disrupting or negating the processes which are currently working well? 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 best practices:

  • Set clear expectations and goals.
  • Provide managers with the necessary training and coaching to lead their teams.
  • Provide employees with opportunities (internally and externally) to aid their learning and development.
  • Utilize employee handbooks.
  • Implement 360° feedback across the organization.
  • Use a goal setting system (i.e. SMART goals or OKRs).
  • Give employees the right tools they need to excel. This means tools that work where they work, and facilitate performance management as part of their daily workflow, not separate from it.
  • Make sure managers are consistent in their evaluations and expectations.
  • Invest in performance management software to automate your processes so that you can focus on the outcomes.

Effective performace management


How to measure the effectiveness of your performance management process

An organization may wish to utilise performance management in order to monitor the overall 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 the specific goals that you are trying to achieve through performance management?

2. Gather upfront information

Some initial information that you will need includes:

  • How easy is your software and performance management processes 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 check-ins between a manager and the employee take place (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 standards 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.


What performance management software systems are available?

The management processes which HR departments 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 summarized some of the benefits:

  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 the 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 benefits of performance management software include:

  • Customizable processes. 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, and tailor these to their company culture.
  • Security. 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 department's achievements, goal success rates, reviews, feedback and performance over time, and compare the progress as your company grows.
  • 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.

Performance management covers a lot of areas of an employee's work day, and an ideal system will enhance your productivity and help you to focus on the work that matter most.

If you're 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?’.

Whether you invest in performance management software or just start with scheduling regular employee/manager 1-1s, building a performance management system will bring benefits to all levels of your company.

Joseph Garvey

Joseph Garvey

Content Team

9 minute readPublished on August 23, 2019
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