Top 6 Tips for Effective Modern Performance Management

Is your performance management program actually making a difference to employee performance? Research shows that many companies (more than half, by some estimates) aren't doing this.

In a McKinsey & Company survey, 54% of respondents indicated that employee evaluations in their company have not positively impacted performance. If employee performance isn't improving, then what exactly is the point of "management"?

Today's employees need more than what many companies offer in terms of goal setting, feedback, coaching, and career development. Read on to learn about six best practices for developing a performance management process that gets results.

What is employee performance management?

The most well-known (and sometimes least popular) lever of performance management is the annual performance review. For employees and their managers, this review process sets goals and expectations and reinforces accountability. The problem is that many companies focus their employee management solely on the annual performance review, ignoring some important components of a well-rounded program.

Effective performance management requires more than just looking back at an employee's performance - it must also look to the future. Holistic performance management is based on clear goals coupled with continuous learning, mutual feedback, and growth opportunities.

How does performance management help employees and the company?

Performance management needs to go both ways (or rather, it needs to be a multi-lane highway). Employees should receive ongoing support from their managers, peers, and the company, while leaders must get the training and coaching they need to lead effectively. An effective employee information system can facilitate this by ensuring continuous communication and feedback throughout the organization.

High performance is a team sport. Every individual and every team should be accountable for achieving shared company goals that move the company forward. However, employees cannot be expected to perform at their best without the right tools, processes, and support from their leaders. The entire company thrives when every employee is able to do their best work.

6 Best Practices for Continuous Performance Management

Every industry and company is different, and strategic HR leaders are best placed to know what performance management strategies work best in their company. Still, there are many good industry studies (including IceHrm's) that demonstrate the effectiveness of some proven best practices.

Swap the Annual Performance Review for Continuous Feedback

In a IceHrm, 35% of individual employees said they only receive valuable feedback during their annual performance review. Once a year; that's it! Imagine having to wait 365 days to find out whether or not you're doing a good job.

Company culture has a significant impact on how often employees give, receive, and even ask for feedback. When leaders at the highest levels of the company prioritize real-time feedback, the rest of the organization will typically follow suit. Additionally, operationalizing experience with processes and technology makes it possible to build feedback mechanisms into daily work.

Clearly communicate expectations and goals

You can't improve performance without measuring it, and you can't measure it without setting clear, time-based goals. Setting objectives and key results (OKRs) can help align efforts across the organization and improve individual and team performance.

Visualizing OKRs in a clear OKR dashboard gives managers and employees a better view of progress, successes, and obstacles, and increases personal accountability and teamwork.

Recognize and show gratitude for a job well done

According to a Gallup study, only one in three employees receives recognition or praise for a job well done. Employee recognition from peers and managers increases engagement, productivity, and performance.

Recognizing employees—both publicly and privately—reinforces positive behaviors and actions. Research also shows that gratitude in the workplace can improve well-being, reduce stress, and build resilience. (At IceHrm, we make recognition easy and fun with high fives.)

Help your employees discover their strengths

A strengths-based approach to performance management can deliver tangible results for employee development. Marcus Buckingham, director of people and performance research at the ADP Research Institute, writes in the Harvard Business Review:

Although we call weaknesses "opportunity areas," brain research shows that our weak spots aren't where we learn and grow the most. In fact, the opposite is true: We form the most new synapses in the areas of our brain where we have the most pre-existing synapses. So our strengths are our true growth opportunities."

By matching their strengths with key roles and responsibilities, employees can unlock their true potential and focus on the areas that feel most natural and energize them. Help your employees discover their strengths so they can feel comfortable in their current role and pursue new career opportunities.

Supporting Employees' Career Ambitions

It's the responsibility of every good manager to support their employees' personal and professional goals—even those that are unrelated to their current job. Unfortunately, 48% of employees in our Leadership Effectiveness Study said they have never once discussed their career aspirations with their manager.

Career planning conversations are nothing to shy away from and can actually improve employee performance in their current role. Give your employees the tools to develop a career vision so they can find an exciting path forward, whether that's inside or outside your organization.

Turn Managers Into Coaches

Instead of "managing" performance, managers should coach it. In the McKinsey study, researchers found that performance management systems are 74% more effective when managers develop their employees through coaching. In the scenarios where respondents don't see their managers as effective coaches, only 15% report more effective performance management.

What if managers don't know how to coach effectively (or don't know how to coach at all)? Well, they can benefit from coaching too! Consider a management development program that focuses on both training and coaching and is integrated into the workflow.

Effective performance management goes beyond annual reviews. By incorporating continuous feedback, clear goals, recognition, strengths-based approaches, career support, and coaching, companies can foster high performance and engagement. At IceHrm, we provide the tools and processes to make this transformation seamless and impactful.