What does good performance management look like?

  • Posted by: AD Group
  • 15 January 2019

Source:HR News

Performance management is under the spotlight at last. Radical changes in business culture are transforming the way people are managed – for the better. In the past, performance management has been relegated to the annual appraisal. It is an outdated, ineffective and demotivating tool.

Performance management is one of the most powerful things a manager has in terms of motivating employees and ensuring individuals and teams meet strategic goals. But not all businesses are getting on board. All too often performance management gets put to one side. But it doesn’t make good business sense.

Employees are pivotal to business success. In an increasingly competitive global economy, recruiting talent and retaining staff is at the topof the corporate agenda. That’s why performance management is now more important than ever before.

So, what exactly is performance management and what does good performance management look like?

What is performance management?

Performance management is designed to achieve two things. Firstly, to accurately assess an individual’s job performance. Secondly, to create a system that advances the goals and objectives of the business. It is acritical business process essential for gaining competitive advantage.

Performance management is sometimes split into two areas:

corporate (the performance of the entire organisation)
people (individual performance in the organisation).

What are the objectives of performance management?

The main aim of performance management is to support an employee to reach a desired level of performance that aligns with the company strategy and goals. It is intended to reinforce desired behaviours and inspire employees to perform to the best of their ability. Modern day performance management also seeks to develop employees’ capabilities.

Is the annual appraisal still relevant?

The annual appraisal was traditionally considered to be the best format for evaluating employee performance. However, a growing number of companies are moving towards more frequent, informal check-ins. Regular feedback ensures problems can be addressed in real time, rather than left until an abrasive annual appraisal.

Millennials don’t like the annual appraisal; they crave constant feedback. As by 2020 half of the global workforce will be a Millennial, businesses need to adapt the way performance is managed and reviewed to retain talent.

Regular check-ins are being used to replace appraisals, and open up more opportunities for rewards and recognition and personal development, as well as gleaning feedback about company leadership and business culture. In a fast-paced global economy, the annual appraisal doesn’t cut the mustard. It simply lets problems fester.

The old-school annual appraisal also doesn’t support career growth. Millennials are much more mobile in their careers than previous generations. They need challenges and career progression. Modern performance management systems are much more suited to that.

The latest performance management software, such as that offered by BreatheHR, includes features that give the ability to schedule and record one-to-one meetings, to generate and monitor objectives, analyse performance metrics and give praise through a kudos system.

What should performance management be achieving in a modern business world?

According to ACAS (the Advisory, Conciliation and Arbitration Service), good performance management should:

Help everyone in the organisation
Encourage employees to engage with the goals of the business
Improve the relationship between managers and employees
Be fair to all staff.
Importantly, performance management should help employees to better understand business strategy and how their role influences business goals.

According to CIPD (the Chartered Institute of Personnel and Development) good performance management is critical for organisational success. See more on CIPD’s viewpoint here.

What does good performance management look like?

Good performance management works on the assumption that regular feedback is the norm. Forward-thinking performance management helps employees to understand what the business is trying to achieve and how their role helps in achieving those goals.

An increasing number of businesses are introducing HR software with performance management tools, which help to create a structure for doing performance management well.

Good performance management helps to motivate staff, check that employees are making a valuable contribution to the business, track and guide career development, spot poor performance and enable managers to support staff to improve.

So, what are the components of good performance management?

Successful performance management can only be achieved with the following six elements in place.

Regular feedback and coaching
Feedback is critical to improving performance, but giving feedback in the right way is important, especially if you have something negative to say.

Not only should managers give feedback to employees, but staff should also be able to offer periodic feedback about their managers as well.

Learning and development
Alongside effective communication and listening skills, performance management is the best tool for managing and developing effective and appropriate training programmes. Learning and development needs to be connected with performance because one-size-fits-all training isn’t nearly as effective.

When learning opportunities are individualised according to performance it makes training personal and relevant. This is the most effective way to balance employee needs with business goals.

Goal setting
In order to effectively evaluate employee performance, goals must be set. These should be a mixture of achievable goals and challenges. Goals need to be clear and given a specific time frame. These goals need to be monitored and supported with regular check-ins. Employees need to understand what is expected of them. For more information on how to set goals for employees, see here.

Effective monitoring
Effective monitoring and recording of performance goals and achievements is essential. It enables managers and employees to target future goals, support employees to grow and identify any problems in real time so they can be nipped in the bud.

Engagement surveys
Regularly measuring employee satisfaction is vital to business success. A good performance management system will enable employees to give feedback about leadership and culture. Employee engagement surveys are an effective way of achieving this and should be built into any performance management system. They are critical for gauging the mood of your employees.

Recognition and reward
Good performance management involves regular reviews. When goals are met, they should be celebrated and employees should be offered a reward. It is hugely motivating for employees and ultimately good for business.

What are the challenges?

The biggest challenge to businesses when it comes to performance management is the fact that more frequent check-ins requires active participation from managers and staff. The framework for such depends on a strong and positive culture.