A good performance management process won’t reduce your turnover rate to zero, but it will help achieve goals, improve collaboration, and keep employees engaged. Here’s what it looks like.
What is the performance management process?
The performance management process is an ongoing series of meetings and check-ins between a manager and employee that plans, monitors, and reviews the employee’s objectives, long-term goals, and overall impact on the company.
While it is often thought of as an annual or bi-annual performance review delivered from management to an employee, performance management is at its most effective when it is performed throughout the year in a collaborative manner. We know it as Continuous Performance Management.
What are three stages of performance management?
While comprehensive as a process, performance management can be broken down into three distinct stages: coaching, corrective action, and termination.
Coaching: The coaching stage of performance management sets the tone for your company and the success of your employees. Coaching involves training, outlining standards and goals, two-way feedback, and collaboration to help employees get better. More on this later.
Corrective Action: If an employee isn’t meeting the standards and expectations of the position after coaching from their manager, the next stage of performance management is corrective action. Corrective action calls on the manager and employee to work together to find the reasons for poor performance and develop a plan to improve the situation.
Termination: If coaching and corrective action fail to improve an employee’s performance, the final stage of the performance management process is discharging the employee. While a difficult decision to make, the termination can have a positive effect by boosting team morale and offering you a chance to improve at that position.
What is performance management and its four steps?
When your performance management process is humming, it’s largely remaining in the coaching stage. That’s not to say every day is roses, but it means the team is responding to challenges in the moment with coaching and collaboration – and performance isn’t suffering drastically as a result.
A successful coaching stage consists of four main steps: planning out goals, monitoring performance, reviewing results, and rewarding success.
Planning: This step calls for establishing expectations and developing a strategic plan for employees. Here you should set S.M.A.R.T goals, determine deadlines, and make clear how they will impact the team and the entire company.
Monitoring: Crucial to achieving goals is consistent monitoring of progress. You don’t want to be a helicopter manager, but you do want to frequently check in with employees to help work through problems as they arise. Whether it’s weekly, bi-weekly, or monthly, consistent check-ins keep employees and managers working together and on the same page.
Reviewing: With frequent check-ins, performance reviews turn into more of a formality rather than an intensive process. This is the official place for employees and managers to share their view on how the year went and look back on the progress and achievements.
Rewarding: Nothing plays a bigger role in employee motivation than this. Rewarding employees for their efforts and achievements throughout the year, not just once at the end of it, lets them know their talents are appreciated and encourages them to continue to perform at a high level. Inadequate rewarding can leave them discouraged, unappreciated, and looking for a new job.
What are the key elements of performance management?
Every company may have unique aspects to its performance management process, but as Jo Rosser points out, in general, every company with a good one keeps these core traits in mind:
Consistency: Coaching approaches and tactics may vary, but the performance management process should be the same for everyone. Inconsistencies will only add confusion and frustration.
Accuracy: When recording key outcomes throughout the performance management process, accuracy is essential. If need be, you want your documented record of events to be an unimpeachable account, not an inferred one. A tool like Conversations® keeps all those details in one place.
Futureproof: Futureproofing your performance management process doesn’t mean peering around every possible corner, but rather, prioritizing agility. So as circumstances change, you can too.
Employee engagement: Performance management is at its best when it is a two-way street with employees and managers working together. Engaged employees at all levels will improve the process itself by helping companies strengthen their coaching and avoid corrective action and termination.
Ease of use: Part of keeping employees engaged in the performance management process is making it an easy system for them to use. Hurdles or cumbersome steps in this process won’t help the employee or the company.
A performance management process is just that – a process. It’s not a checklist or a passive responsibility; it requires active participation on behalf of employees and managers. The result is aligned teams, inspired employees, and a culture that nurtures personal growth and development, i.e., an effort that is well worth it.
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Back to Basics, Performance Management
About the Author
Mike Lovett
Mike is a senior content marketing specialist at Workhuman where he writes about the next era of the workplace. Outside the workplace, he’s an avid gardener, a frequent biker, a steadily improving chef, and a fantasy sports fanatic.
Performance management isn’t an easy field to navigate. It’s constantly evolving, hence the need for an effective performance management system. New performance management trends emerge every year and, unfortunately, all too often, human resource departments get it completely wrong.
This leads to employees left feeling deflated, unmotivated and unengaged. Managers are frustrated at the poor levels of team and individual employee performance. Thankfully, more and more companies are now waking up to the importance (and resulting benefits) of effective performance management systems. The first step towards revitalising and improving your existing performance processes is to understand what an effective performance management system is.
To do this, we will address the following questions throughout this article:
What Is Performance Management? (Performance Management Defined)
When discussing performance management, many people will immediately think of the annual performance review process. But the performance appraisal is only one component of what is considered to be performance management. One of the best definitions of performance management is provided by Michael Armstrong in his Handbook of Performance Management, which carefully and plainly lays out the Armstrong performance management cycle:
“Performance management is the continuous process of improving performance by setting individual and team goals which are aligned to the strategic goals of the organisation, planning performance to achieve the goals, reviewing and assessing progress, and developing the knowledge, skills, and abilities of people.”
A key point here is that performance management is a continuous process — not a once-a-year “one-off” activity. Quality performance management should, therefore, bring together a number of different, integrated activities to form an ongoing”performance management cycle”, as shown below.
What Are the Stages of the Performance Management Cycle?
The first stage of Armstrong’s performance management cycle is the“Planning” phase for the forthcoming period. Planning should involve:
Agreeing on SMART objectives
A personal development plan
Actions to be taken in the coming months
A review of the employee’s job requirements, updating the role profile where necessary.
Historically, organisations tended to carry out this planning stage once a year. However, with the business environment becoming increasingly agile and fast-moving, many organisations are adapting their processes to set“near-term” objectives every three months. The organisation’s goals and values should feed into performance planning to ensure that individual performance aligns with the overall strategy of the organisation. Specifically, each SMART objective should contribute to achieving one or more of the organisation’s goals.
Personal development planning, meanwhile, should consider what behaviours, skills or knowledge the individual needs to develop to successfully achieve their objectives and uphold the organisation’s values.
Traditionally, organisations have placed a lot of their emphasis on the“Review” part of the cycle — often because a performance assessment is required for reward purposes. However, we have always advised that it is the“Act” and“Track” stages that are the most important. These stages are where performance is actually delivered and results achieved. Individuals need to be encouraged to schedule in regular time to work on achieving their objectives and personal development plans.
Similarly, managers need to be checking in with their staff regularly. They must give frequent, effective feedback and use coaching skills to help their team members overcome challenges and identify opportunities for learning and performance improvement. If this is left until an end-of-year review, it is too late — objectives and development plans may end up only partially achieved.
Notice that in the above performance management cycle, there are no arrows between the four stages. This is because, in reality, the stages do not flow one after the other. Act and Track should be continuous throughout the year. Reviews may take place at any point, and planning may take place several times during the year and be re-visited as the needs of the business change.
What Does the New Continuous Performance Management Cycle Look Like?
Since 2015, this philosophy of continuous performance management has been adopted by leading organisations such as Deloitte, Adobe and General Electric. All these major names have ditched the traditional once-a-year performance appraisals in favour of regular”check-ins” and frequent (or real-time) feedback.
These regular performance discussions are typically developmental and future-focused. They provide team members with an opportunity throughout the year to explore what has gone well and how success can be replicated, any challenges faced and how they may be overcome — and to agree on actions both the individual and manager need to take to develop the individual and further improve their performance. Such check-ins are also a great opportunity to address employee development while offering training opportunities and regularly reinforcing performance expectations.
Here is how this Continuous Performance Management process typically looks in leading organisations:
Performance Management Process: The Basic Elements Necessary for Effective Performance Management
There are a few basic elements involved in building an effective performance management framework, including:
Setting Goals
You need to set goals the right way. They need to be meaningful and understood. Employees should have context as to why these individual goals matter and how they are furthering organisational objectives. Employees will care much more about their roles and be much more engaged when they know — and truly understand — how their job matters.
Goal setting is and should be a collaborative process, which involves meeting with employees and being transparent about company goals, direction and obstacles. Armed with this information, employees can create goals which complement organisational objectives and make daily decisions to further these objectives. Furthermore, when employees are put in the driver’s seat and allowed to develop their own goals (before having them approved by their line manager), they experience a heightened sense of autonomy and ownership over their work. Inevitably, this results in improved employee performance.
Transparent Communication and Collaboration
Employees want — and deserve — their managers and leaders to be open and authentic at all times. They don’t want to be kept in the dark when their companies are going through hard times, especially in the midst of a COVID-19 pandemic. They want to be kept abreast of pertinent information. On top of this, they want real-time communication while building healthy relationships with their colleagues and managers. This will involve regular feedback and honest discussion — even when such communication is difficult or uncomfortable.
Employee Recognition
An effective performance management system should prioritise employee recognition and reward. Employees should feel valued and appreciated for the work they do and the effort they put in. If employee recognition is not a priority, this will most likely have a negative bearing on your voluntary turnover.
Honest and regular feedback and reviews are needed — the more frequent and precise the feedback, the better individual performance. It’s that simple. Employees want regular insights into their work, and the better-informed employees are regarding their performance, the better able they are to improve and excel.
Employee Development
No ambitious top performer wants to remain at a company long-term without honing and developing skills. Advancement and development are important to employees — not to mention, companies stand to benefit when employees are more skilled and capable.
So What Exactly Is Effective Employee Performance Management?
Having all of the elements of the performance management cycle in place is very important, but this will not necessarily lead to effective performance management for your organisation. There are many other factors in play, such as:
Having buy-in from leadership and senior management to performance management
Ensuring the performance management cycle is continuous and not an annual process
Ensuring performance conversations and reviews are meaningful and not”tick-box” exercises
Implementing easy to use performance management software which supports effective performance management and gives you visibility of performance management activity
The skills and willingness of your managers to deliver effective performance management on a day-to-day basis.
What Makes Performance Management Systems Ineffective and Uninspiring?
Tragically, only around 14% of organisations report being happy with their current performance management systems. If you’re not vigilant, performance management processes can often become inefficient and counterproductive. Below are a few ways this can happen:
Your System Isn’t Fair or Accurate
This often occurs when annual reviews are favoured over more continuous performance management. After all, how can an employee be fairly and accurately assessed and treated when their entire year’s performance is summarised in one sitting? Can managers remember all pertinent events from as far as a year ago — and how will the employee receive the appropriate levels of feedback, motivation, support and recognition? In fact — how can the annual review be fair if there is no existing and trusting relationship between employee and manager?
Managers Treating Employee Performance Management as a
“
Box-Ticking” ExerciseThis happens when managers go through the motions, perform reviews and give feedback, but they are simply paying lip service to the process. These managers might take a useful tool, such as personal development objectives, and do the bare minimum with employees, without revisiting and revising them. This is a huge warning sign of an inefficient performance management system. If your managers are checked-out, your employees will soon follow suit.
Paper and Pen Systems are Still Being Used
Businesses these days can grow so quickly that paper-and-pen systems become redundant. These days, technology is more affordable, simpler and more accessible than ever before. To be truly effective, companies need to invest more in easy-to-use, streamlined technology.
Your system is focused more on appraisal than on coaching — one way to get employees to dread performance discussions is to make them feel they are going to be judged by their manager every time they have a conversation. Rather than tearing employees down, managers should be a coach. They should be supportive and encouraging, rather than dictatorial and impatient.
What Can Clear Review Employee Performance Management Software Do for My Company?
Clear Review is a simple, powerful cloud-based employee performance management software that enables meaningful, regular conversations. Our platform helps achieve the ultimate goal of high-performance company culture by creating a light-touch framework of developmental discussions, which are supported by agile goals and real-time feedback.
Clear Review facilitates developmental check-ins, helps managers and employees collaborate to set (and track) agile goals and provides the capacity for real-time feedback. Furthermore, our software has a“talent snapshot” feature, which enables managers to provide performance insights in minutes, without the arduous, administrative burden.
Take your first step today with Clear Review and book a free performance management software demo with us today.
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