Performance management, a corporate management tool, enables managers to track and assess employees' performance. It is a process of continuous communication and feedback between a manager and employee in order to achieve individual and team goals that are aligned with the strategic goals of the organization.
Performance management also involves setting job responsibilities, priorities, and performance expectations, and providing coaching and assessment tools to help maintain or improve job performance. Measurement leads to action, and the company nurtures a collaborative culture where employees set goals together.
Common elements of a performance management system include:
Developing and improving
How does Performance Management Work?
Performance management systems have evolved in recent years, with many companies dropping the traditional model of annual performance reviews for employees in favor of regular manager check-ins and informal feedback sessions.
This type of performance management system allows managers to track and develop performance with team members on an ongoing basis, providing feedback and helping employees understand and align with company goals and objectives.
This system of frequent feedback and small adjustments throughout the year is proving to be more effective than the traditional annual performance review model.
The shift away from traditional annual performance reviews towards a system of regular check-ins and informal feedback sessions has been driven by research showing the effectiveness of frequent feedback.
This approach helps employees understand and align with company goals and objectives regularly, providing an opportunity for smaller adjustments to be made over time rather than one large course correction at the end of each year.
Benefits of Using a Performance Management System
Some of the benefits of using a performance management system include the following:
Increasing employee morale and retention
Making it easier to identify training needs
Helping employees define career paths
Setting clear goals and expectations
Gathering progress on goals and development plans.
Performance management systems are designed to provide ongoing feedback to employees. They typically consist of three components:
Managers and employees must have regular check-ins.
Formal or informal feedback sessions.
Follow-up conversations after formal feedback sessions.
Managers who want to improve their performance management skills should focus on providing effective feedback and encouraging open communication. The key to success lies in understanding the difference between positive and negative feedback and learning to give constructive criticism without being judgmental.
How Should Managers Approach Performance Management Differently?
Managers should approach performance management with a more humanized approach, focusing on speed and agility and tailoring goals and expectations to individual employees.
They should also ensure that two-way conversations are occurring between managers and employees, with goals being communicated verbally and in writing and conversations that focus on personal goals and growth opportunities.
Ultimately, performance management should be a continuous process of improving performance that is closely aligned with the strategic goals of the organization.