Performance Management

20 Performance Management Best Practices: Your Ultimate List

By on October 17, 2022

A report on performance management identified similarities and differences in performance management processes between industries. Many surveys and research have gone deeper into understanding how to make the most of your performance management. How employee performance evaluation is conducted went for an overhaul overnight when a large chunk was expected to work from home in 2020. With data playing a more significant role in the decision-making processes of organizations, it’s essential to identify a few performance review best practices that organizations can adopt. But before that, here’s a short primer on performance management and planning and how they mark an improvement over the traditional annual performance reviews.

What is Performance Management?

Performance management is more than performance appraisals. It is about planning, executing & then reviewing the plan. Managers in any organization must look at performance management best practices and multiple aspects of people management – from hiring and onboarding processes to employee offboarding. No matter the type of business or the organization’s size, these tasks must be performed in some capacity. These methods usually oversee employee productivity and outputs. Organizations can identify faults in their processes and success factors through employee performance evaluation.

Importance of Performance Management

Supervising the employees’ work and managing their performance can be tricky without adequate tools. Managers can struggle to get a clear picture of what is expected of the employees and what they are capable of.

Performance metrics track progress towards specific goals and keep a close eye on the health of teams and how they function. Getting these metrics right at the start is essential. Otherwise, organizations can measure the wrong attributes and end up worse off than before. Good performance metrics give factual data and results, which can be tracked against organizations’ overall goals and objectives. Annual performance review processes sorely lack this transparency, mainly because they are conducted after lengthy intervals. Meaningful performance metrics are based on an organization’s vision, mission, and objectives – translating them into specific team goals or individual ones promotes effective performance. Employees clearly understand what is expected of them and can pace their performance accordingly.

Performance Management Best Practices

Outdated performance management approaches hinder employees from reaching their full potential and strangle organizational growth. Employees thrive in an environment conducive to fairness, transparency, and continuous feedback. They make employees feel connected to the rest of the organization and motivate them to do their best work. Ongoing performance management is one of the frameworks that is being enthusiastically adopted by organizations and employees alike, and here are some performance reviews best practices.

Performance management best practices

1. Starting a performance management program with clear objectives and targets:

Creating an effective performance management program requires understanding what the organization wants to accomplish – in the short and long run. Clarifying the reason for a new process by asking questions about organizational priorities, nurturing leadership, streamlining processes, and improving retention and engagement can shed light on what the program should do and guide how the initiative unfolds.

2. Agile goal setting and the use of OKRs method:

Agile goals and the objective key results (OKRs) combination work well together and combine operational efficiency with strategic success. By regularly evaluating core deliverables, agile management processes make product scope changes – and OKRs represent the key results to be achieved, ensuring alignment with specific goals. Agile methodologies streamline the work process, and OKRs assist them by helping to share and achieve goals that are set. Both introduce meaningful principles into the system that promote collaboration and proactive iteration in work.

3. Align employee and organizational goals:

Organizational alignment differentiates high-performers from the rest – research by LSA Global supports it, too, as organizations, where employees are highly aligned with the vision are 72% more profitable and grow revenue 58% faster. Their scores in employee engagement, customer satisfaction, and retention are high too.

4. Understanding the purpose of performance management:

Organizations reluctant to give up annual reviews might think of performance reviews as a way to improve the bottom line in the next quarter. However, approaching the process with that mindset can alienate employees. Performance management should ensure that employees and teams get the resources necessary to succeed and provide them with the accountability to develop confidence in their abilities. All team members aligned on priorities ensure the organization’s values are practiced. Focusing on individual employees is essential for this system to progress quickly, as improving in some areas might be more critical than others.

5. Supplementing performance plans with goals:

A performance plan details the goals set for employees and outlines areas of growth, achievements, shortcomings, learning, and opportunities, among others. Managers can have discussions with their team members individually or as a group to help them align their goals with that of the organization. They show employees that their organization values long-term relationships, builds trust, and promotes long-term thinking. Being honest with the employees allows them to understand their weaknesses and ask for help. Admitting when wrong helps managers set an example for their team members and leads to the whole team communicating effectively.

6. Building trust between managers and team members:

Establishing trust between managers and employees requires an apparent show of goodwill. After all, managers are shown to be after their subordinates’ lives (according to pop culture, at least). Organizations can kickstart the process by giving managers autonomy to clear the issues their team members face so that the individuals know that their manager wants what is best for them. Taking care of problems leads to employees slowly speaking up on other aspects, and these suggestions can be discussed among the team members, and a consensus can be drawn.

7. Providing continuous performance feedback with actionable tips:

Managers who take time to help employees identify their strong points, and nudge them towards improving their future, foster a culture of learning and development where every team member can step in and help someone else and take the idea forward. The frequency of the performance feedback has to be consistent. Otherwise, employees can get confused about their job responsibilities & how they are performing on them.

8. Ensuring fair performance evaluation:

The environment of trust is built when every team member feels they are being treated fairly. Managers who air out matters and discuss them democratically help their team members understand their differences, appreciate each other’s strengths, and work towards achieving the goal as a whole. Regular formal and informal check-ins can make a huge difference to team members working on complex projects.

9. Conducting coaching sessions regularly:

Not everyone needs help all the time, but someone may undoubtedly do – and how organizations approach employee performance either assures or alienates employees from the overall mission. While seasoned employees may not have any issue calling out a tricky situation and asking for help, new joiners and first-time employees might panic, thinking they have to know about the issue and delay reporting. With constant coaching, managers can assure every member of the team about how their attitude towards problem-solving matters the most, and not full-fledged technical knowledge (which they can gain by interacting with their managers or more experienced colleagues).

10. Build trust between Leaders and Employees:

Managers and leaders can show that the organization is serious about helping individuals succeed by taking rapid action on employee complaints and issues. Insisting on two-way feedback can help leaders get their team members out of their shells and identify areas where they need help. Employees who get valuable pointers on their performance can also provide their opinions on the leadership style and issues they’ve been facing.

11. Monitoring progress toward performance targets:

Setting goals and identifying key results that indicate objective completion are good starting points, but a good performance management process insists on the ‘management’ part. By asking employees to identify their growth trajectory, organizations and managers should closely help their team members to stay on course. The responsibility also means taking a call on when to stop so that teams don’t get disillusioned.

12. Crafting a performance-aligned culture:

Aligning organizational goals with individual employees requires clear thought so that the vision and mission are easily understandable. Performance reviews without any benchmarks leave employees confused, as they have no idea what they should be aiming for. By persuading employees to look closely at the mission of the organization and its goals, managers can shift focus to the bigger picture and motivate their team members to contribute to a performance-oriented culture.

13. Work on documentation:

The regular meetings between managers and team members have been highlighted enough times. Still, these meetings can amount to nothing if no record is kept of points discussed or progress achieved. Managers must interact with multiple stakeholders and their team members, and the critical factors can be forgotten. With proper documentation, managers can balance recency bias and other hindrances – they will have a record of employee wins, shortcomings, areas of improvement and progress made, and more.

Maintaining such records can become cumbersome, where dedicated tools such as UpRaise for Employee Success come in. The tool is natively integrated with Jira, making the performance management process a breeze. Managers can set and monitor OKR from their Jira instance, and adding information about employees or coaching them on specific issues is as simple as raising a ticket. The tool allows managers to focus on the ‘how’s’ of the job rather than scratching their heads on concentrating on what needs to be done.

14. Training the leaders as much as the employees:

The culture of learning and development should apply to employees at all levels. Like individual team members can learn from their managers and other organizational leaders, the reverse can hold too. Organizations that encourage learning from one another can also introduce initiatives where most junior members of the organization’ mentor’ the seniors on the changes in culture and market perception and receive job-specific inputs from them in return. Not only does this reduce the stiffness in the workplace or workplace video calls, but it helps teams come together faster.

15. Identifying bottlenecks in performance management:

The standard approach to performance management has been to hold employees responsible for their growth and reward them at the end of the year if they succeed. The biggest drawback of this process is that the employees suffer consequences even if they give their 100%. The roles of managers have expanded since the pandemic, and they are now asked to find out reasons for failure rather than employees who may be causing the issue. From dealing with the hybrid or remote nature of work to tight deadlines, employees have more areas where they can go wrong. Managers who understand this and allow employees the leeway to err develop confidence in them, bringing down the error rate.

16. Recognizing performance frequently and rewarding it publicly:

Unlike the annual review, where employee compensation improves based on performance, the latest performance management processes insist on more events highlighting the inputs and differences made. Helping employees map their goals with their organization gives them the motivation to start, and constant recognition of good work keeps them engaged to learn more and perform better. Coupling it with monthly and quarterly rewards can give more mileage, as employees are now financially motivated to contribute better.

17. Having continuous development conversations:

One-on-one and group discussions that managers have with their team members can fuel growth. Teams that trust each member and are unafraid of admitting their weaknesses can get help from others, and managers can tailor a learning plan for them after discussing it with HR. Keeping these conversations open-ended also allows managers to learn and grow.

18. Asking for employee input and multiple-source feedback:

The process of goal setting and getting ready for the future is tiring, to say the least – the amount of planning involved can floor even the most vital strategic planners. That’s why leaders who involve employees in the process manage to get more out of the process. The collective effort of team members can spring up many better ideas that can be used to upgrade the performance management framework chosen.

19. Involving employees in designing performance management processes:

Typically, employees who set goals in frameworks like OKRs usually get no say in selecting the framework. Instead of deciding on the tool for performance management, leaders of the organization can conduct surveys or ask employees to send in their suggestions on performance management solutions. Leaders can evaluate agile methods by involving employees in the selection process and taking in their recommendations on tweaking it to suit the organization’s needs. Collaborating on the process makes employees invested in the outcome and focus on the goals they need to achieve. Top objectives visible to everyone ensure that the organization’s values are clear, encourage them to collaborate better, be responsible for their job duties, and chart a unique growth path that aligns with the abovementioned mission/vision.

20. Keeping things professional:

Maintaining the work-life balance has been an essential topic of discussion ever since working from home became a mandate. According to surveys, employees have voiced opinions that they’re ready to quit if that gets jeopardized. Combined with the need for constant feedback, managers can find themselves wondering what to convey and what not to. The general rule they can follow in such scenarios – is to establish an environment where team members feel OK to ask for help and provide assistance when that happens. Keeping track of the progress and the employee output can show interception opportunities, and having honest conversations around them can further understanding on both sides.

Wrapping up

Following the best practices in performance management is not a ‘check items off a list’ activity but a nuanced process that considers individual employees and their aspirations to create an achievable roadmap. Managers and leaders can ensure mutually beneficial growth by streamlining these goals and objectives within the organization.

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