The Definitive Handbook on Performance Management: A 5-Step Framework and Proven Best Practices

Understanding the Essence of Performance Management

Performance management is a process that allows managers to evaluate the work of their employees and their support of organizational goals. The goal of performance management is to track and improve the skills employees need to perform their jobs.

A similar term, performance appraisal, also focuses on goals and self-improvement, but focuses on the individual and does not take into account the strategic goals of the organization. Performance management is important not only for the organization, but also for the individual, as many opportunities for growth, including bonuses, promotions and ultimately layoffs, are tied to this process.

Optimizing company success through efficient performance management

Effective performance management looks different depending on your industry and company goals. However, there are two approaches you can start with.

Understanding Human Behavior

This works well when your employees work (and achieve) as part of a team and it is difficult to measure individual results. With this approach, you evaluate your employees based on their behavior and efforts. The feedback looks like this, that you identify the current behaviors, communicate the desired future behaviors, and provide training or coaching to close the gap between the current state and the desired goal.

A Results-Driven Strategy

This approach is ideal when performance metrics are easy to quantify, such as meeting a sales quota, number of billable hours, or achieving specific call statistics. This approach focuses on the quality and quantity of the end result.

Employee Engagement Strategies

A performance management plan consists of a five-step process. Let's take a closer look at the five steps.

1.Plan
Although employees' goals and responsibilities are set out in their job description when they are hired, it is important to discuss this information with them on a regular basis. Clearly stated and communicated goals help your employees understand what is expected of them and when they are falling behind.

2.Monitor
Company management should constantly monitor the performance of its employees. If you only check once or twice a year, a small deviation from the prescribed path can have a lasting impact on the employee's performance. That's why it's important to stay in constant contact with employees throughout the year and create an open environment for feedback.

3.Develop
Once you've identified areas where your employee needs improvement, you can work with them to provide training, mentoring, continuing education courses, or other materials to help them get back on track or fill skill gaps.

4.Evaluate
Without a rating scale, it can be difficult to see whether employees are improving as part of their development plan. Additionally, with a rating scale communicated to employees, they know where they currently stand and what is needed to take them to the next level of performance.

5.Reward
Although every step of the process is necessary, the reward is perhaps the most important. Give positive reinforcement to employees who are achieving or working toward their goals. Recognize them for their hard work and drive to be better and do more for the company.

This can be in the form of bonuses, thank you cards with small gifts, public recognition, or through an employee rewards program. This not only inspires the employee receiving the recognition, but also motivates others who may need an additional incentive.

Remember that the performance management process is a cycle that must be applied continuously throughout the entire time an employee works at your company.

You are never “done” with performance management and this should be taught to your employees when they join the company and then communicated to them throughout their employment. Without open communication throughout the process, employees may become satisfied with their mediocre work performance or become disengaged.

Performance Management Best Practices

This concept and process has been around for years, and fortunately there's no need to reinvent the wheel. There are a number of performance management best practices you can incorporate into your plan.

1.Re-evaluate goals regularly. If the COVID-19 pandemic has taught us anything, it is that societal changes may require a new approach to business. Goals may need to change, and sticking with old decisions in a new world could cause that to happen that you punish (and lose) good employees.

2.Use SMART goals. To be achievable, goals must be clearly defined and communicated and must be specific, measurable, actionable, relevant and time-bound. Employees are more likely to achieve their goals if they are formulated correctly are.

3.Have performance conversations throughout the year. Performance management conversations should not reveal any information that is surprising to the employee or manager. Ideally, managers have candid conversations with their team members about performance throughout the year, and performance reviews should serve as a check-in on performance documented over a period of time. If you communicate regularly with each of your employees, they will learn to expect constructive feedback and look forward to these encounters.

4.Standardize and automate your process. All employees should go through the same performance management process and be held to a consistent standard .It's not just about making the process fair, but there comes a point where you have too many employees that you have to manage in a continuous cycle.A set process and an automated software solution for managing performance reviews can then be very helpful.

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