What is Performance management and why it’s important?

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Performance Management is not an annual evaluation meeting. It neither prepares for this evaluation meeting nor is it a self-assessment. It is neither a form nor a measurement tool, although many companies can use tools and forms to track goals and improvements, they do not form the performance management process.

Performance management is the process of creating a workplace or environment in which people are empowered to work to the best of their ability.

Performance Management is an entire work system that begins when an order is defined as necessary. It ends when an employee leaves your company.

Performance Management defines your interaction with an employee at every step of the process between these important life cycle events. Performance Management makes every opportunity to interact with an employee a learning opportunity.

Components of a Performance Management System

The performance management system can contain all these components, but it is the overall system that matters, not the individual components. Many companies have been able to develop effective performance management systems without applying all of the following practices.

A performance management system includes the following measures:
  • Develop clear job descriptions based on a recruitment plan that identifies the selection team.
  • Recruit potential employees and select the most qualified to participate in on-site interviews.
  • Conduct interviews to reduce your candidate pool.
  • If necessary, hold several additional meetings to learn about the strengths, weaknesses, and capabilities of your candidates to deliver what you need. Use tests and assignments of potential employees if they make sense for the position to be filled.
  • Select the right people in a comprehensive employee selection process to find the most suitable candidate for the culture and position you want.
  • Offer the job to the candidate of your choice and negotiate working conditions, including salary, benefits, paid leave and other benefits.
  • Welcome the new employee to your company.
  • Provide effective orientation for new employees, assign a mentor and integrate your new employee into the company and its culture.
  • Negotiate performance requirements and standards based on performance, results, and actions between the employee and his or her new supervisor.
  • Careful education and training as needed.
  • Continuous coaching and feedback.
  • Quarterly discussions on career development planning.
  • Develop effective compensation and recognition systems that reward people for their ongoing contributions.
  • Provide opportunities for promotion and career development, including lateral transfers, transfers, and job shadowing for employees.
  • Participate in exit interviews to understand why key employees are leaving the company.

What are the basic elements necessary for effective performance management?

Effective performance management is based on a number of basic elements, including the following

Objectives — You need to set objectives in the right way. They must be meaningful and understandable. Employees should be aware of the context in which these individual objectives are important and how they promote the company’s objectives. Employees are much more concerned about their role and much more involved when they know and truly understand the importance of their work.

The objective should be a collaborative process. Whereas in the past, objectives were set by the top echelons of an organization, today modern organizations are aligning their objectives upwards. Therefore, the objective should be to meet employees and be transparent about the company’s objectives, direction, and obstacles. With this information, employees can formulate objectives that complement the company’s objectives and make daily decisions to achieve them. When employees are placed in the driver’s seat and can set their own goals (before being approved by their supervisor), they experience an increased sense of autonomy and responsibility in their work. This inevitably leads to an improvement in employee performance.

Transparent communication and cooperation — employees want and need that their managers and executives are open and authentic at all times. They don’t want to be left in the dark when their company is going through a difficult time. They want to be kept up to date on relevant information. In addition, they want to communicate in real time while building healthy relationships with their colleagues and leaders. This includes regular feedback and honest conversations even if this communication is difficult or unpleasant.

Employee recognition — An effective performance management system should prioritize employee recognition and reward. Employees should feel valued and appreciated for their work and commitment. In recognition of employees is not a priority, it is likely to have a negative impact on your voluntary turnover.

Honest and regular feedback and assessments — The more frequent and accurate the feedback, the better the individual’s performance. It’s that simple. Employees want to get a regular overview of their work, and the better-informed employees are about their performance, the more likely they are to improve and excel.

Employee development — None of the most ambitious employees wants to stay in a company for long without developing their skills. Development and advancement are important for employees not to mention the fact that companies can benefit if employees are more competent and more productive.

What is effective performance management?

It is very important that all elements of the performance management cycle are in place, but this does not necessarily lead to effective performance management for your company.

There are many other factors in the game, such as:
  • Purchase of senior managers and executives for performance management.
  • Ensure that the performance management cycle is continuous and not annual.
  • Ensure that discussions and performance evaluations are meaningful and not “tick the box” exercises.
  • Easy-to-use performance management software that enables effective performance management and gives you an overview of performance management activities.
  • The skills and willingness of your senior managers to effectively manage performance in their daily work.

What makes performance management systems ineffective and uninspiring?

Unfortunately, only about 14% of companies say they are satisfied with their current performance management system. If you are not vigilant, performance management processes can often become ineffective and counterproductive. Below are some examples of what can happen:

Your system is not fair or accurate — This often happens when annual reviews are preferred over more continuous performance management. How can an employee be assessed and treated fairly and accurately when all of his or her annual performance is summarized in a single session? Do managers remember all relevant events that occurred a year ago — and how does the employee receive the appropriate level of feedback, motivation, support, and recognition? In fact, how can the annual review be fair if there is no trust relationship between the employee and the manager?

Managers view performance management as a “checkbox” exercise, this happens when managers take action, review and give feedback, but they only pay lip service to the process. These managers could use a useful tool, such as personal development goals, and reach the absolute minimum with employees without reviewing and revising them. This is a big warning sign that a performance management system is not working. When your managers are dismissed, your employees will soon follow.

You rely too much on paper — businesses can grow so fast today that pen-paper systems are no longer necessary. Today, technology is more affordable, easier and more accessible than ever. To be truly effective, companies need to invest more in simplified and easy-to-use technologies.

Your system is more focused on evaluation than on coaching — One way to make employees afraid of performance reviews is to give them the impression that they are being judged by their supervisor at every meeting. Instead of destroying employees, managers should be coaches. They must be supportive and encouraging, not dictatorial and impatient.

Looking for an efficient automated Performance Management system, we suggest you IceHrmwhich is one of the best HRIS systems which has so many HR functions automated into one system.

IceHrm is a Human resource management system for small and medium-sized organizations. This HRM software centralizes employee data and allows only one authorized person to access it, providing a high level of security. The presence module monitors employee time based on information about insertion and perforation. It covers all the basic HRM needs of a company such as Time Management, Attendance Management, Expense management, leave management, Recruitment management and handling employee information.

Key Features of IceHrm

Payroll Management
Time & Attendance Management
Document Management
Employee Self Service Management
Performance Management
Performance Appraisal
Benefits Management
Attendance management
Email Integration
Project Management
Workflow Management
Dashboard
Employee Lifecycle Management

Unlike the other popular HRM software, you can use one system for all HRM functions. As the other HRM software tools are designed for specific HRM functions separately, using IceHrm will benefit you to utilize all HRM functions in one software. There are three different editions in IceHrm. Each edition has different features. You have a choice to select which edition will suit your organization according to your HR requirements in the organization. Also, you can purchase the IceHrm software based on the number of employees in your organization.

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