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Strategies for Effective Employee Performance Improvement

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With effective performance management, companies can ensure that their employees understand their tasks, receive constructive feedback and have the support they need to achieve their goals and business objectives. Let's look at what performance management is, what the performance management process looks like and what examples there are.

What is performance management?

Performance management is a set of processes and systems aimed at developing employees to perform their jobs to the best of their ability. The goal is to help employees develop skills that enable them to better perform their tasks, realize their potential and increase their success while achieving the company's strategic goals.

Effective performance management is a continuous dialogue between employees, managers and the human resources department.

The performance management process is strategic and systematic. It combines oral and written components that take place throughout the year and culminate in an annual performance review. The process includes the following:

  • Set clear expectations,
  • Setting individual goals that align with the goals of the team and the organization,
  • giving constant feedback, and
  • Evaluating the results.

Career decisions, including promotions, bonuses and layoffs, are linked to the performance management process.

Performance management goals

Performance management aims to develop the skills and competencies employees need to improve their performance and success at work. These capabilities, in turn, help the company achieve its goals.

However, according to a Betterworks study, 21% of employees say their goals are set annually and then never reviewed, while 16% say they don't set goals. A third of employees say they don't have one-on-one meetings with their managers or receive feedback to help them work toward their goals more than twice a year. 1 in 10 employees say they rarely or never receive this type of feedback.

Performance management goals include setting performance expectations so that employees have clarity about what is expected of them and what they can achieve by meeting those expectations, including compensation, rewards, or even promotion.

Continuous, real-time feedback helps employees understand where they stand, learn, self-correct, and grow. They can constantly improve their performance at work, which gives them a greater sense of achievement. As a result, the company has a competent, committed and qualified workforce.

A study by Willis Tower Watson found that companies that effectively use performance management programs are 1.5 times more likely to financially outperform their competitors and 1.25 times more likely to see an increase in employee productivity.

Performance management improves individual and team performance, which helps companies achieve their goals. For example, if a company goal is to increase sales, effectively managing your salespeople's performance can help achieve that goal.

Why is performance management important?

When the above performance management goals are achieved, there are several benefits for both your employees and the entire company.

Securing the future of your employees' skills

Ongoing communication with employees and monitoring their skills, learning and training development help uncover potential skills and performance gaps within the company. You can then work to close them, giving the company a strong competitive advantage.

Increased employee engagement

When done effectively, performance management sets expectations for your employees in a transparent manner.

It offers them learning and development opportunities, a clear career path within the company and an understanding of the impact of their role on achieving company goals. Additionally, ongoing performance management helps employees feel valued and cared for, making them more willing to accept constructive feedback and work on improvements.

Higher employee retention

When an employee can track their career development and know exactly what career path they are taking and what they need to do to get promoted, this leads to more engaged employees who are more likely to stay with your company.

Culture of feedback and trust

Establishing a culture of communication, transparency, and trust begins with leadership and HR initiatives that will trickle down to the rest of the organization. That includes the nature of your performance management process and a transparent performance management policy.

When managers are open and give honest, constructive feedback to employees, this encourages employees also to be open and honest, building mutual trust. It also fosters a healthy overall company culture.

Improved organizational performance

Managing employee performance ultimately leads to significant improvements in business performance, including sales growth and customer satisfaction. Helping your employees learn, develop, and perform better in their roles has a positive knock-on effect throughout the organization.

According to Bryan Adelson, consultant at Red Clover HR, companies need to understand the “why” behind their performance management strategy.

"Why are these conversations even happening, what is the value of them, and what are they trying to accomplish? Understanding these questions will ultimately help structure the conversations and produce the most effective outcomes for the employee and the company," Adelson emphasizes.

What are the stages of performance management?

A typical performance management cycle consists of four key phases. Let's look at these in detail.

The planning phase is about setting performance expectations for employees. Job descriptions should clearly outline these goals to attract the right candidates. After hiring the candidate, you need to reaffirm these expectations and work together to set SMART goals and employee performance metrics.

Performance management plans must be flexible so that they can be adjusted as the company's goals change over time.

The employee should be actively involved in the planning process as this increases satisfaction and motivation for improvement.


The second phase is monitoring. In this phase, HR and managers must regularly monitor employees' performance against set goals and provide employees with feedback on their progress. If they do this regularly and not just once a year, problems can be identified and corrected sooner rather than later.

Performance management software can help track employee performance in real-time. However, data and reports should not be used as a replacement for face-to-face conversations.


In the development phase, the data collected in the monitoring phase is analyzed and used to improve employee performance.

Inadequate performance can be corrected by suggesting refresher courses, continuing education, performance coaching, and other L&D methods. Managers and HR can encourage better performance by assigning the employee an additional project to improve their knowledge and performance and motivate them to achieve further excellence.

4.Assessment and reward

The final phase is evaluation and reward. Employee performance must be evaluated regularly throughout the year and during a performance review or evaluation. This helps quantify employee performance, determine each employee's added value to the company, and make changes if necessary. Both employees and managers should submit their reviews for 360-degree feedback.

Continued inadequate performance may result in transfer to another role or dismissal. Your company should also recognize and reward above-average performance, whether through praise and recognition, a raise, or a promotion.

Effective Strategies for Performance Management

Evaluate what is currently working and what is not

Before making changes to your current performance management process or toolkit, you need to understand what is currently working, what isn't, and why. The HR department should survey both employees and managers and collect opinions about the current process and suggestions for improvements.

You can then share these internal insights, coupled with studies and evidence-based research, with business leaders and decision-makers who can promote and drive change within the organization. Show them how an improved performance management process impacts business results.

Selecting the Optimal Strategy

There are two common approaches to performance management: a behavioral approach and a results-based approach.

Behavioral Perspective: Behaviors are identified and assessed, and employees are evaluated based on their behavior and efforts. This approach is useful for providing detailed feedback on behaviors by highlighting desirable future behaviors and when individual outcomes are difficult to measure. Examples include individual players on a team, support staff and human resources managers.

Outcome-driven Strategy: Employees are evaluated based on objective criteria. The focus is not on the input but on the output in terms of quality and quantity. This approach is suitable when there are multiple ways to get the job done. The end result is more important than how it was achieved. Examples include contact center employees who have certain success metrics and sales representatives. Evaluating lawyers and accountants is also very results-oriented as they track their billable hours.

When choosing an approach, consider what role you play in ensuring the effectiveness of your performance management process.

Engage and Develop Managers

Leaders are critical to the success of your performance management program. They play a crucial role in engaging, motivating and supporting employees. That's why it's important that HR has a clear plan for training managers on how to give and receive constructive feedback.

Managers should also be trained on how to maintain a continuous, open feedback dialogue with their employees.

Help setting SMART goals

Managers and employees should set SMART goals for employee performance and involve HR in setting employee development goals.

Each employee should have their own clear, personalized key performance indicators (KPIs) so they understand their manager's expectations and can track their results and performance. Personalization is important depending on the job and function as well as the employee's personal and professional ambitions.

"Investing in a talent management system can allow managers and employees to continually monitor their progress and also make quick changes, evaluate or shelve what is needed. As employees develop, their goals are likely to change with them, meaning that you have to allow for a certain degree of fluidity," explains Wilde.

“Regular development discussions and effective tracking of goals means that goals remain current and there is no doubt about what needs to be achieved to make progress.''

Establish a formal system

Continuous performance management promotes employee engagement, motivation and performance. Equally important, however, is a formal performance evaluation system in which high-performing employees can receive a raise, bonus, or promotion if they achieve certain goals. This conveys to all employees that good work is recognized and rewarded.

Supporting employees in the creation of personnel development plans

When employees have a solid plan for their professional development within the company, it strengthens their position in the workplace and helps them take ownership of their professional development and reduce turnover rates.

Human resources managers can work closely with managers to understand their employees' needs, schedule professional development meetings, and help employees complete necessary training.

Employee development plans are notoriously difficult to implement because managers and employees are too busy. This is where HR can help by creating plan templates for managers to use to create development plans with their team members.

Use technology

The use of HR technology and software helps improve the efficiency and effectiveness of the performance management process. Performance management data can provide detailed insights and patterns that manual tracking and surveys cannot match.

With the right technology, a manager can also save time, but only if there is a clear performance management strategy in place. They also need to be able to view real-time data at any time to set the right goals for success.

However, it is important to remember that performance management is a people-centered process. Technology cannot (and should not) replace direct communication and difficult conversations with leaders. Managers must take and retain responsibility for this. But the right data in a dedicated performance management system can eliminate implicit bias, reassure employees that they are being evaluated objectively, and facilitate honest discussions.

One last word

Performance management is a crucial aspect of the success of any company. By focusing on setting goals and expectations and establishing a continuous performance management process, you give your employees the opportunity to develop and improve every day, setting the stage for your company's success.


What is performance management?

Performance management aims to improve an employee's job performance through a series of processes such as goal setting, progress monitoring, skills development and rewards.

What role does performance management play?

Performance management contributes to individual and team performance, which helps companies achieve their goals. By effectively managing employee performance, companies can build committed, qualified and future-ready employees who contribute to the company's success.

What is the difference between performance management and performance appraisal?

The performance appraisal is an individual conversation between the employee and the supervisor. This often happens (semi-)annually. Performance management is a regular, systematic and objective process that aims to ensure that an employee performs his or her job in the best possible way. Performance appraisal is therefore part of performance management.

Use IceHrm to redefine performance management. Simplify evaluations and increase productivity. Discover your options now! With effective performance management, empower your team


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