Definition and Goals of Performance Management
Performance management (PM) is a regular, ongoing activity that is carried out by managers and supervisors and is aimed at enhancing and maintaining employee performance objectives, however, often leaders struggle with how to effectively execute a management process because they aren’t clear on the role it plays in their organizational success.
An effective performance management process achieves three goals:
- It establishes measurable goals and objectives for employees
- It assesses achievement and attainment of objectives
- It uses this information to improve performance through coaching, compensation and development
At a strategic level, an organization’s performance management process should align to employee performance and to the different key business drivers of an organization. An organization will want to focus on how it translates key business drivers into actions, decisions and behaviours that employees can demonstrate on a day-to-day basis.
Without a strong performance management process, it becomes difficult for employers and managers to differentiate employees based on performance levels. Having a strong PM process helps identify high performers in an organization in an objective manner, rather than by identifying them based on each manager’s unique (and possibly subjective) criteria.
The Top Five Reasons for a Performance Management Process
- To create a high performance culture
- To equitably tie compensation and rewards to performance results
- To evaluate employee and organizational performance
- To support employees in meeting their performance goals
- To create aligned goals
The Four Stages of Performance Management
Performance management is an on-going process or cycle that takes place throughout the year. It typically has four stages.
- Planning: Setting of goals and objectives
- Managing: Managers monitor process and provide regular feedback and coaching
- Assessing: Formal review process, including taking into account how the employee met his/her objectives, not just that he/she met them
- Rewarding: Pay for performance
Enhancing Your Current Performance Management Process for all Generations
When building an effective performance management process, it is important to consider how the process aligns with other HR practice areas. Performance management is tied to employee career paths and succession plans as well as learning and development, coaching and mentoring activities. Therefore, it is important that all of your HR plans be aligned.
It is also important that an organization takes a holistic approach to ensure successful implementation and execution of the performance management process. Your PM program will need to extend across business units, managers and frontline staff in order to be effective.
Objectivity is also key. Having objective measurement criteria makes a performance management program most successful since employees are clear about how they are being evaluated and what success looks like. It is important that both managers and employees agree on the defined terms and level of performance expectations so that there are no surprises during the assessment phase.
As organizations recruit more Gen Ys and as a greater number of Gen Xers move into leadership positions, they will find that employees expect their employers to be increasingly transparent about their PM process, objective in their evaluations and provide learning and development to close performance gaps. Younger employees value objectivity and openness across the organization and want to be explicitly told which behaviours and accomplishments are expected and how achieving these goals will lead to career growth. Subjective performance reviews will not encourage employees to change their behaviours.
For more experienced employees, they will look to leaders to set performance expectations, to provide balanced feedback – with a focus on their strengths and successes – and to formalize PM discussions. All employees need a leader that will focus on providing timely, relevant and specific feedback that helps employees improve. Performance management can be a great tool to enhance employee engagement by involving employees in what they can do to enhance their performance while improving overall team / department / organizational results.