Performance Management

Everything You Need to Know About Performance Management

By on August 23, 2022

‘Performance.’ The word seems so – righteous. Add ‘manage’ to it, and we have pandemonium. Who is allowed to evaluate this ‘performance’? What standards are these performances measured against? And finally, what does it do?

The sections below take a hands-on approach highlighting the path performance management programs take.

What Is Performance Management?

It is as simple as managing the performance of employees, period. But simple doesn’t mean easy – and the performance management process has, at least in people’s minds, become a complex affair. From the traditional annual reviews to specialized frameworks like OKRs, there are umpteen ways to manage employee performance, and all of these methods have failed at least once. Their successes are celebrated many times (the ‘at least’ part is to highlight how failure is pushed under the rug, but more on that later).

Which one of these performance management frameworks is better than the others? There’s no definitive answer to that because the processes adopted should meet the needs of the companies adopting them. If the organization’s goal is to show growth every quarter and if their employees are undergoing annual reviews, we can see a spike only in the 4th quarter like clockwork. Does that mean the employees of the company are bad? If they were, the goals shouldn’t be achieved so close to appraisals. The lack of a good performance management process kills the motivation of even the most enthusiastic employee.

In the end, the process which helps employees and the organization feel like they have achieved their goals and made inroads towards where they want to be in 2/3/5 years is the best performance management process for the organization.

Why is performance management critical?

When the goals of an organization need to be met, employees have to perform up to the expectation to achieve the results – and there are two ways they can meet their deadlines: because they have to or want to. An organization with a robust performance management process often achieves its goals because its employees actively try to contribute to collective success – not just hitting the targets to get a good appraisal. 

Performance management often impacts other organizational processes, like strategic planning, team and employee development, and succession planning. Performance management measurements can be used to assess the workforce impact, and this score indicates if the organization can attract high performers. According to Gallup, successful organizations engage their employees and see a 240% jump in performance-related business outcomes. The HR department is essential to execute these tasks successfully and efficiently so that the managers in the organization are equipped to conduct performance reviews.

Benefits of performance management

Setting up an efficient performance management process is hard work. The benefits more than makeup for it: the changes of an effective performance management system can aid in documenting employee growth and identifying areas of strength and improvement, allowing managers to make informed decisions based on factual information about employee goals. It also simplifies creating a fair evaluation process for workers and ensures everyone gets the same treatment during one-on-ones.

Performance management can form the base of a robust training practice as well. Managers can step in to assist situations to improve performance; they can also rely on past performance and provide proactive coaching. Discussions about past performance and positive talks about improvement help employees stay engaged at work. Increased engagement leads to better productivity, as employee contribution increases and team morale improves.

What are the five stages of performance management?

General or project-based reviews can be used to finalize training and development opportunities, as they set clear goals and outline performance expectations. With project-based assessments and a regular feedback mechanism, they ensure learning is on par with the industry developments for each employee. While the process is somewhat less formalized than its predecessors, the increased focus on feedback and coaching means the effectiveness is much higher. An efficient employee performance management includes:

The five stages of performance management

• Planning phase, where work is outlined and expectations are set

• Monitoring phase, where managers track employee performance and progress

• Learning and development phase, where employees and managers fine-tune their knowledge and approach to better suit the project needs

• Feedback phase, which happens parallelly with the monitoring/learning phase

• Rewards phase happens after project completion (be it successful or otherwise).

Managers and organizations who take care to align broader goals to that of individual ones excel in all phases of the process. Work is planned, goals are set, and progress towards those goals is continuously tracked. While the standards set are high, employees also get opportunities to develop their skills through one-on-one coaching by managers, dedicated training sessions, or something else. When coupled with a robust rewards structure, employee motivation and productivity improve.

Why Performance management fails

Performance management systems are vulnerable to the same problems that any other organization-wide initiative would face. The flip side in the case of performance management systems, though, is much greater, with potentially catastrophic consequences for the organization.

Why Performance Management fails?

Lack of leadership support spells the death knell for any initiative, and performance management is no different. If leaders convey, directly or indirectly, that performance management activities are not worth their time – managers and other leaders will follow suit too. It is vital for the organization’s future that its leaders are seen actively participating in the work environment – be it one on ones, coaching or mentoring, helping employees understand what organizational goals mean – or any other activity that is geared towards employee well-being. Without a commitment from the leaders to the process, employees will not have a clear understanding of how performance management contributes strategically to their growth. If they don’t feel invested, they’d chalk it up to busywork and try to get it over with.

Lack of clarity on specific goals and expectations confuses employees and reduces their confidence. They’re supposed to be working on something, but if they don’t know why, they’ll try to get it off their plate, which can severely impact the product or solution. That’s why managers should discuss and agree upon employee goals and keep the door open for any help required. Implementing an agreed-on plan is much less stressful for employees. If managers take time to help them understand how these goals contribute to the bigger picture, their motivation to get positive results will be high too. Regular one-on-one between managers and employees can keep track of progress and reinforce specific goals.

Inconsistent rating mechanisms tend to creep in, mainly because individual managers can unknowingly be biased. It is the responsibility of the HR team to train managers in using a standard rating system so that inconsistencies are reduced (not eliminated because differences in the rating scale interpretation and application are inevitable). Calibrating project-based reviews can be a good step toward ensuring consistency between ratings given by different teams and departments. 

Incoherent feedback frequency can be one of the silliest yet most important reasons (behind leadership buy-ins, of course) for performance management initiatives to fall apart. According to the Growth Divide Study, 94% of employees prefer managers to provide regular feedback and training and development opportunities while the projects are ongoing. 81% prefer quarterly check-ins with managers, indicating a wide feedback gap. According to UpRaise Research Council Future of work-study, about 61.1% of employees feel coaching and feedback are essential to motivate them and make them future-ready.

Performance management best practices

addressing talent shortages and employee preference changes needs a humanized approach. The difference in the mindset of people over the last couple of years has hastened the progress toward modern performance management frameworks. The best practices to gain the most out of these frameworks focus on people, not processes – so that organizations can help their employees give their best. Imbibing a sense of purpose by aligning company goals with an individual employee improves loyalty and leads to a growth-oriented environment.

Performance Management Best Practices

Adopting an agile goal-setting process helps everyone involved see the big picture and what their contribution can do to improve it. Organizations can set the foundation for an employee-centric, future-forward performance management practice with a robust goal-setting framework like Objectives and Key Results (OKRs). By breaking down long-term objectives into key results represented by segmented, attainable steps, OKRs simplify progress tracking.

The manager and their team members agree upon OKRs, and they keep in constant contact through informal meetings or one on ones to track progress. While this can be done by setting regular meeting invites and other related tools, having a dedicated OKR tool to review and act upon goals and manage real-time feedback saves managers a lot of mental loads. It helps employees stay compliant with the needs of the performance management process. In our UpRaise research paper, 66.1% of employees think that OKRs that tie up the employee goals to the corporate strategy need to be leveraged to make them future-ready.

Frequent one-on-one meetings should be scheduled between employees and their managers to discuss performance and goals and how to improve. Engaging in these conversations collaboratively is essential so that employees understand how aligned they are with the goals and feel free to provide constructive feedback to their managers.

Managers who practice regular and continuous performance management (and feedback) are 3.2x more likely to have a motivated team eager to produce great work. Continuous feedback helps employees better understand what’s expected of them and gives managers guidelines to match performance. Also, the feedback should be both ways – where employees at all levels can request and receive feedback in real-time from their colleagues, managers, or other stakeholders.

Recognizing efforts and enabling a culture of kindness can have ripple effects on morale and productivity. According to a Gallup survey, having a continuous appreciation cycle where good performances are highlighted, and sub-par performances are provided sufficient support – adds a sense of loyalty to the workforce. A simple ‘thank you for the effort’ mail from managers after the project boosts employee confidence. 

Performance management tools & resources 

There is no dearth of tools or solutions that help organizations with performance management. They all have positives, but choosing the right tool can differentiate between embittered compliance and enthusiastic participation. No matter how convinced employees are with the goal-setting method or how aligned they are with the organization’s objective, adding a steep learning curve to their already busy work days will deflate any enthusiasm. With the right tools that integrate seamlessly with their workday, managers can easily manage and monitor the progress of their team members.

UpRaise for Employee Success enhances performance and team management by connecting individual achievement to organizational success. The tool lets employees grow without operational overheads based on OKRs and boast enterprise-grade flexibility. Its tight integration with Jira also brings down the effort required to use it and adds to the daily schedule of employees. Features like continuous feedback let managers coach whenever necessary, recognize achievements, provide ongoing feedback, and have contextual conversations. Employee Success features also allow for data centralization, enabling better analytics and easier management of employee records. Org charts and other features simplify publishing user & team profiles and can assist in many ways.

When performance management excels

It is all fun when the ideas are being discussed, but real-world examples drive the point home for managers and HR leaders looking to adopt a new performance management system; real-world examples ensure higher probabilities of leadership buy-ins. One of the tools which can be helpful is adopting OKRs. Here is a masterclass designed to learn everything about OKRs- planning, execution, and expected outcomes with your company, group, or team by Madeleine Silva, OKR Coach and Founder of OKR University.

Here are a few success stories that can set the ball rolling.

Google has been pushing the world towards innovative solutions – and it is no wonder they are also the frontrunner in adopting innovative systems. Being one of the early ‘well-known’ adopters of OKRs, Google supplemented the adoption process with thorough training and future development. Setting goals at Google follows OKR principles, where 70% completion is considered successful. This allows employees to innovate better methods to achieve more.

Facebook’s performance management process emphasizes feedback, especially from peers. Managers can use them to evaluate performance and collaboration and provide continuous, real-time feedback. 

Adobe arrived at a better performance management system through data – which showed that its managers were spending about 80,000 hours a year on performance reviews, taking a toll on them and employees – and led to high attrition figures. To change the situation, managers were given training on frequent check-ins with their teams and offered actionable guidance. The managers were given the reign to lead as they deemed suitable, and the program bore fruit – involuntary turnover was reduced by 30%.

Accenture is a shining case of the ‘never too big to change’ adage. Their switch to a new performance management system saw a 90% reduction in the old process structure. The latest performance management process provides a fluid feedback mechanism that is both ongoing, timely, and can be communicated with an app.

Conclusion

Performance management can help organizations transform into nimble, employee and customer-centric entities. By focusing on the performance of employees, organizations can be future-ready instead of fighting to stay on par. With regular assessments, honest feedback, and pointed coaching – employees will perform better, and managers will see improved productivity.

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