“When feedback is included as part of regular, ongoing performance discussions throughout the year, the employee, the manager and the organisation are all better off.”
Shawna McKnight
What is performance management?
According to the CIPD, it is to:
- Identify the objectives in which individuals and teams will see their piece in the organisation’s strategy and mission
- Increase performance among workers, teams and, the organisation itself
- Hold individuals to account for their performance by connecting it to pay & reward, career progression and termination of employment.
In an organisation, regardless of size, you will need to determine what your workers are doing, the way they are doing it, and why they are doing it.
Not having a process set up to define roles, understand a person’s strengths and weaknesses, supplying feedback, trigger interventions and reward good behaviour, will make it difficult for managers to lead their employees effectively.
The importance of performance management
Managing people and their performance is an essential subject for every organisation. Typical problems that organisations face are:
- keeping employees engaged
- retaining the best talent
- developing leaders internally
Performance management aims to alleviate these
1. Keeping employees engaged
Engagement of employees is an aspiration for many managers out there. In an annual appraisal system, goals would be set at the start of the year and then reviewed 12 months later to see if they had been achieved. This long period without any feedback or check-in is an absolute engagement killer for many.
According to a study by Growth Divide, 94% of workers would prefer for their manager to give them feedback and development opportunities in real-time. 81% would prefer at the minimum a quarterly check-in with their manager.
Research shows that people are most effective with feedback given to them on a monthly or quarterly basis, with regular check-ins serving as an excellent basis to problem solve, adjust objectives as necessary, and to renew their focus. Firms where workers meet to evaluate goals quarterly or more often are around 50% more likely to have better financial performance.
Research shows that employees have negative feelings about a yearly review system:
- 74% feel that they would be more productive with increased frequent feedback
- 68% of managers don’t discover employee concerns until the performance review
- 62% of workers think that their performance review was not complete
- 61% feel the process is out of date
- 48% do not feel comfortable raising issues with their line manager in between reviews – This all adds up to a lot of neglected opportunities to solve concerns and increase employee engagement and performance during the year
Research by Gallup shows as employee engagement goes up, eight key performance indicators show successful effects. Absenteeism, health and safety incidents, shrinkage, turnover, and quality defects are lessened by at least 25%, and often more, across the board. Customer experience, profitability and productivity also show a positive correlation.
2. Retaining the best talent
Those people who have consistent meetings with their manager to talk about performance, tackle challenges and receive appropriate training are more likely to stay with the organisation.
If employees see that their management team are working hard to develop them professionally, help them succeed with their goals, and reward performance consistently, then they are more incentivised to stay with the company and work harder.
3. Developing leaders internally
This consistent feedback framework between managers and employees, allow for the development of new leaders from within.
Recruiting costs can be quite high, as are expenditures for onboarding and training new workers. To be able to develop new leaders from inside the organisation would require that there is already a proven culture fit with the individual. Also, the time spent and training costs developing this person is not lost.
This succession path also can serve as a motivating factor for employees, who will see that hard work is rewarded accordingly with promotions and increased benefits.
Performance management creates the need for management to focus on company objectives and goals consistently, and also to consider how best to accomplish them. This constant reviewing of individual objectives ensures they stay relevant, as goals will be adjusted in light of new tech, changes in the external environment, or other factors during the year.
According to Forbes, ‘companies that set performance goals quarterly generate 31% greater returns from their performance process than those who do it annually, and those who do it monthly get even better results.’
Can you performance manage remotely?
A question I have had from my clients recently is “Can I performance manage my employees remotely?”
The simple answer to this is Yes. You have a duty of care to manage the performance of your employees continually. By actively managing and monitoring performance, it will make it much easier to move to a formal process later down the line, when performance is consistently below the level of expectations.
Managing performance should be a continuous process of feedback and not just preserved for the usual annual/ bi-annual appraisal cycle.
What do you need to take into account?
What about you had performance issues tracking back over the last year. Can you performance manage now in the new world of work?
Again yes you can, but they’re several factors you should take into account:
Have they been given time to adjust to remote working?
Do they have all the tools to do their job to the same standard as before?
Have you given them the appropriate training?
Are they facing any challenges at home? Homeschooling kids for example
How have other teams members performance been impacted? If the targets are tangible has it got worse since the switch to remote working, an if so, what are the causes?
How has your business been impacted positively or negatively? Do the targets and objectives line with these changes? For example, if your business revenues have decreased by 10%, should customer acquisition targets be reduced by 10% to reflect the external environment?
Whether managing the process remotely, or face to face, the principles of performance management remains the same.
How to effectively performance manage?
Performance management should be based on regular, honest, and supportive feedback and discussion of progress towards objectives.
Performance management is simply a set of processes. It brings together many principles that enable good personnel management practice, including learning and development, organisational development and performance metrics. It can, therefore, at times, be complicated and misunderstood.
It relies on both formal and informal processes. It requires planning; and activities such as;
- Identifying and reviewing objectives
- Linking ways of achieving those objectives to the business plan
- Setting success criteria.
Performance management is also about developing a culture in which people and groups take responsibility for the continuous improvement of business processes and their personal development, behaviours and contributions.
This list will help ensure that your performance management framework is the most effective.
1. What are the goals of performance management
You need to identify what you want to accomplish.
Asking the following questions can help you:
- Is increased productivity a priority?
- Do you want to identify leaders of the future and develop them?
- Do you want to streamline the pay & reward process?
- Are you seeking to improve retention and engagement?
If you know what you want your program to do, it will be easier to build it to accomplish that goal.
2. Define and describe each role
It is difficult for an employee to be “successful” if they don’t understand what is fundamentally expected, how they should do it, and what the final result looks like.
3. Monitor progress towards targets
Review vital areas of performance. Make use of metrics and analytics in your favour, tracking how objectives are progressing to ensure that interventions can take place early if required.
4. Frequent check-ins
Check-ins will help determine and fix problems before they get too big to resolve. Monthly or quarterly meetings need to be held to help keep workers on the right course.
5. Have a clear policy for managing performance
Ensure you have written documentation and supporting materials that tell employees how their performance will be managed. Including informal and formal processes. Supporting documents should be used by managers to ensure they are following a consistent process
6. Managers should offer appropriate feedback
During check-ins, tensions can develop if the input is not given in a constructive, actionable way.
7. Keep it professional, not personal
Giving difficult feedback is a challenge for both managers and employees. It’s one of the reasons that performance reviews tend not to be a favourite task for managers. Feedback should be professional and bear in mind to focus on behaviour, as opposed to personal characteristics.
For example, pointing out that Karen regularly turned in important reports late is feedback regarding behaviour. Stating that Karen is lazy, and that’s why the reports were often late is feedback about a characteristic. One of these can assist an employee in owning their role in a project’s success, and the other will make them instantly defensive.
8. It’s not only employees that need training
Management should be trained too. Coaching and offering feedback is not easy. For managers to lead well, they should be taught in these skills.
9. Take advantage of 360 feedback
Ask employees to collect feedback from each other. It will give management a more holistic view on the employee performance, understand the issues that teams are facing, and be able to offer feedback better.
10. Issues are not always employee-based
It can be simple to assume that employees always cause issues, but that simply is not always the case. Problems can develop from external factors such as availability of materials, internal procedures that are causing issues, or organisational policies not fit for purpose Root cause the source of a problem to fix them the first time.
11. Recognise and reward performance publicly and frequently
Management cannot expect staff to stay motivated if they are never rewarded and recognised. However, many companies overlook this. Ensure that workers are compensated and recognised for their hard work, and they will continue delivering for your firm. The Benefits of Performance Management
Impact of the manager
Line managers are critical to successful performance management. They will enhance the links between organisational and individual objectives and give feedback that motivates employees, that enables them to improve, and holds them to account. Managers have to be competent in performance management processes and ensure these processes fit for purpose. How performance is discussed will be shaped by cultural norms: senior executives will set a precedent. Line managers relationships will form how colleagues speak about performance.
“Performance Management isn’t dead. The old way of thinking about it is”
Anita Bowness
How to set targets
Setting performance objectives for individuals, departments, and the organisation is an integral part of managing performance. These objectives can be stated as targets to be met (such as customer acquisition targets), ad hoc duties to be completed by set dates or ongoing standards. They could be directly linked to the team or organisational KPI’s or personal objectives; for example, taking the form of developmental objectives.
Nowadays, many organisations do not just rely on measurements of employees’ outputs. Rather, they balance these with learning and development objectives and assessments of employees’ behaviour, such as how supportive they are of co-workers. These can be of longer-term value to the business. There is evidence that social cohesion is a critical factor driving performance in knowledge companies. Hence, organisations need to promote collaborative behaviour.
Objectives should be SMART – typically, this means, Specific, Measurable, Achievable, Reasonable, and time-stamped.
Objectives need to be relevant to the overall purpose of the job, team and business. Workers have to be committed to them, but they do not need to set their own goals and objectives.
Businesses can choose objectives on team-level performance instead of individual level. Both forms can work well; the main thing is to match goals to the nature of the work. In one role, excellent performance may be a factor of individual application. In another job, it could rely more on teamwork. Managers need to be careful that individual and team objectives do not undermine each other.
Regular developing and reviewing of goals ensure that the organisation and keeps up with the ever-changing external environment Clear expectations will set employees up for achieving goals from the start.
Benefits of Performance Management
Performance management has numerous benefits for managers and employees, as well as for the company in general. If a business can create a culture of engagement where customers/clients are just as engaged as employees on the front line, their outcome can be even better.
Employees who feel that their organisation is invested in their success stay with their companies, increasing retention.
Consistent coaching and feedback from managers lead directly to increased engagement from employees while developing the capability to provide good coaching and feedback. This leads to more skilled and more rounded “people” managers.
As employees become more competent, they can move up through the business, creating a talent pipeline.
Productivity will increase thanks to improved engagement, clear goals and upskilling of personnel.
Employees remain incentivised to perform long-term, as they are adequately rewarded for working hard.
Case Studies
This business has always been innovative and not just in tech. Their performance management framework is one that relies on data, as well as making sure that their managers are adequately trained.
When evaluating their performance management system, Google launched a project dedicated to assessing their management, which has led to a full-on training and future development programme that sets managers and its employees for success.
They also use a platform for setting goals that have been replicated now in multiple industries. Using their Objectives and Key Results system, they reframe the goal-setting process, with excellent results.
You can read more about Google’s approach here
The social media giant, Facebook, has a performance management process that puts a heavy emphasis on peer-to-peer feedback. In semi-annual reviews, they use feedback to see how well teams are performing and understand where collaboration is occurring – and where it is not. They also have developed internal software to provide real-time feedback. Which helps employees solve issues before they become problems.
You can read more about Facebook’s approach here
Final thoughts
Performance management often concentrates almost purely on assessing employees’ past performance and linking it to administrative decisions (for example, about pay). This is an oversight. If the ideal aim is to improve performance, there should also be a strong focus on how employees need to develop. Performance conversations should help workers to learn from their experiences and identify other applicable learning and development opportunities.
Several organisations use personal development plans (PDPs) to set out actions they propose to take in connection with this. Sometimes, a review of employees’ development requirements is grouped with the performance assessment and called a performance development review (PDR).
There are an array of factors in performance management to try and get right. Performance management is not a single approach. One example that I think is positive is bringing in a strengths-based approach when you’re looking at helping people to learn and increase their performance. The concept of this comes from appreciative inquiry. It’s the idea that your opportunities for growth and improvement don’t come so much from fixing your weaknesses or correcting what you’re not good at. It happens more from understanding what it is you’ve been doing that’s worked well. What was it that you did that contributed to this, and how can you extend on, build on, replicate this in other areas of your work.
