How to Build an effective Performance Management process
Is your performance management process as effective as it could be? Gartner research shows that just 32% of HR business partners believe traditional performance management is helpful to employees. This is just one of the reasons that 74% of organisations have switched up their performance management processes in the past five years, many doing away with formal reviews altogether.
Yet there’s still a strong case to be made for employee performance management. With the right systems integrating feedback with support, employees gain a greater understanding of expectations – driving productivity and performance. In this guide, we’ll explore the essential components of an effective performance management system, including key strategies for development.
What is meant by performance management?
Performance management refers to activities that optimise employee value in line with a company’s objectives.
These activities include things like examining objectives, setting measurable goals, giving and receiving feedback, and linking performance to reward or review. Successful performance management for managers and employees alike involves two-way communication, backed by formal review processes.
How does a performance management plan work?
Performance management planning creates a series of stages.
• Setting goals
• Monitoring performance
• Assessing outcomes
Within this framework, traditional performance management systems include formal performance reviews at regular intervals.
A more modern approach to the review system is continuous employee performance management. This uses technology to manage goals in real time, with ongoing assessment and timely feedback.
What are the benefits of a performance management system?
The benefits of performance management for managers include the ability to assess employee performance in clear, consistent, and measurable ways. For employees, this type of system lends clarity regarding expectations, all while driving forward career progression.
Performance management systems are beneficial in a broader sense as they ensure all team members are successfully contributing to company-wide objectives.
What is an example of a performance goal?
The performance management process starts with setting goals at an individual or team level. Some goals measure core task performance, while others assess problem-solving, soft skills, or self-management. Here are a few examples:
• Improve team satisfaction scores by 10% in the next quarter
• Deliver all projects within deadline over the next year
• Develop public speaking skills by presenting at next month’s team meetings
Key components of an effective performance management process
Effective performance management systems rely on clear targets and regular feedback.
1. SMART goal setting
Vague goals help no one, with employees left guessing what’s expected of them. Objectives are most effective when they follow the SMART framework, being Specific, Measurable, Achievable, Relevant, and Time-Bound.
2. Useful feedback
If you’re only assessed once a target’s been completed, it’s difficult to implement the feedback in a useful way. Ideally, business leaders should create systems that allow employees to seek and apply feedback while working on a task or project.
3. Performance review
An effective system will use a data-driven approach with clear, objective tools to assess each employee’s performance in line with company priorities. Rather than relying on an annual performance review, many companies are now holding these conversations at shorter intervals. This puts less of a focus on appraising past performance, and a greater focus on current challenges.
Strategies for continuous feedback and employee development
Traditional performance reviews are ineffective and time-consuming – in fact, research shows that managers reported an average of 210 hours spent on performance management each year, with 9 out of 10 HR managers reporting inaccurate information.
By contrast, using a continuous framework for feedback and development enables a more agile, open, and efficient performance management system. Here are a few strategies to improve the process.
Schedule regular check-ins
While regular review is still important, it’s more effective to hold regular, real-time check-ins between managers and their team members. These better reflect changing priorities, fostering a two-way dialogue focused more on development rather than assessment alone.
Use performance management software
Use performance tracking tools like Deel or Peoplebox to streamline your systems. With user-friendly software, team members don’t need to juggle multiple spreadsheets and files to track progress. The best tools include goal management features to set targets at the individual, team, or company level, ensuring everyone’s on the same page. They also compile performance data for more effective reviews in real-time, with insights into potential for growth and development.
Team continuous performance management with end-of-year reviews
While annual reviews alone don’t paint the full picture of performance, you don’t need to scrap them entirely. Instead, use this opportunity to allow employees to show what they’ve gained from rolling check-ins and feedback across the year. What have they learned? How will they apply this knowledge going forward?
Create a clear rewards system
Part of performance management planning involves tying performance to recognition. With measurable KPIs and targets, companies create a consistent and fair system to acknowledge achievements. Additionally, consider rewarding team members for professional development. Developing new skill sets requires effort, which may reflect in a performance review with movement into a higher job level or pay grade.
How LinkedIn enhances performance management
Effective performance management begins during the recruitment process. This starts with writing a detailed job description that outlines organisation goals and expectations. With LinkedIn, you can use AI-powered tools to create better job descriptions that target the right candidates, ensuring they have the skills needed to perform at the required level.
Dive deeper into real-time data points with the help of LinkedIn Talent Insights, creating a targeted pool of qualified candidates with the skills your company needs to achieve its objectives. By setting clear expectations, you’ll be better poised to attract the talent needed to meet your defined performance standards.
Final tips for best-practice performance management planning
Performance management is at its most efficient when performed continuously, rather than relegated to annual reviews. With organisational priorities evolving in a fluid business landscape, employee objectives should be clear yet agile as well. And in the long term, regular, constructive feedback encourages professional development, for improved engagement and productivity.