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Performance Management: 2021 Comprehensive Guide

performance management

Performance Management:
2021 Comprehensive Guide

Performance management can be a complex area to master because the industry is constantly changing and evolving. Every year, a new performance management trend pops up, and HR departments across the country jump on the bandwagon.

However, most businesses are evolving so quickly that the goals set at the beginning of the year might change by the end of it. Because of this fast pace, employees sometimes feel disengaged, leaving managers dissatisfied with the results.

Thankfully, an increasing number of companies realize the importance (and benefits) of effective performance management systems.  Implementing an effective performance management sys­tem is the first step toward revitalizing and improving the existing performance processes.

What is Performance Management?

Even though many employers think of the annual performance review as the core of performance management, that’s just one aspect of it. In fact, it is an ongo­ing method of improv­ing per­for­mance by:

  • Set­ting indi­vid­ual and team goals consistent with the organization’s strategic goals
  • Per­for­mance plan to achieve goals
  • Review­ing and assess­ing progress
  • New ways to develop­ people’s knowl­edge, skills, and abil­i­ties

In practice, a robust performance management system aligns and pursues measurable goals. It also creates a constant feedback loop for coaching and promotes engagement through recognition. With the introduction of a performance management system, employers conduct meaningful performance discussions more regularly, which means employees can improve and climb up the ladder faster.

The most important thing for managers to know is that performance management is not a once-a-year activity. On the contrary, it is a perpetual cycle of micro-managing activities that, in the end, will benefit the employees. It’s a process created out of four stages that establish a baseline of communication between the employee and the employer.

The 4 Stages of Per­for­mance Man­age­ment

Michael Arm­strong best describes these stages in his Hand­book of Per­for­mance Man­age­ment:

  • Plan
  • Act
  • Track
  • Review

Let’s break down these stages.

Plan

The goal is to set smart and achievable objectives. Each objec­tive should specifically contribute to the achievement of one or more of the organization’s goals. After the goals are set, both the employee and the employer agree on the personal development plan.

Act

In the act phase, the employee strives to achieve the previously discussed objectives. After this phase is in motion, the employer can implement a personal development plan. Note: Personal devel­op­ment planning should consider what behaviors, abilities, or knowl­edge a person needs to develop to achieve their goals and maintain the company’s values.

Track

During this process, the employer tracks the employee’s progress and maintains communication by providing regular feedback. If there are milestones that the worker will need to achieve, the manager can mitigate the obstacles by providing day-to-day coaching. Managers can employ coaching to assist team members in identifying learning opportunities and fostering performance improvement.

Review

The employer reviews the employee’s achievements, identifies learning possibilities, and gives feedback. After completing the review, the employer should discuss career goals and take on actions so that the work process can carry on.

Knowing the basics of how a performance is executed is a valuable resource for managers who need to prepare for implementation.

In real­i­ty, the stages do not flow one after the oth­er. On the contrary, they should be con­tin­u­ous through­out the year. Managers must communicate the reasons for the adjustment and consistently share performance management objectives with their employees.

Performance management should be a perpetual process that allows discussions, improvements, and adjustments based on employee performance.

Elements of a Performance Management System

These five elements unveil the critical performance management points that managers need to stick by. By applying them in employee appraisals, there’s no room for mistakes and miscommunication.

Setting Goals

Managers need to set goals that are meaningful and well-understood. Employees should understand why these indi­vid­ual goals are essential and how they relate to the organizational objectives.

When employees know and understand how their jobs matter, they care more about their jobs. In fact, only 7% of employees are fully aware of their organization’s corporate plans and what is required of them to help them achieve these goals.

When employees are placed in the driver’s seat and given the freedom to develop their priorities, they feel a greater sense of autonomy and ownership over their role. This inevitably leads to better employee performance.

Transparent Com­mu­ni­ca­tion & Col­lab­o­ra­tion

Employees expect and deserve their leaders to be transparent and honest at all times. Communication is crucial for building and maintaining healthy relationships with coworkers and managers. Even when it is difficult or unpleasant to communicate, regular feedback and open discussions are beneficial.

Employ­ee Recog­ni­tion

An effective per­for­mance man­age­ment sys­tem should make employee recognition and compensation a high priority. Employees need to feel appreciated for the effort they put in. If employee recognition isn’t a top priority, it will almost certainly harm the company’s turnover.

Regular Feed­back & Reviews

The more frequent and straightforward the feed­back, the better will the employee performs. If employees are well-informed about their performance, they tend to improve and prosper.

Employee Development

No ambitious top performer wants to stay with a company for the long haul without perfecting and developing their skills. Employ­ees value development, not to mention that companies benefit when their employees are more skilled and competent.

When these elements are put into work, team building will not be an out of work experience. The shire process will form close connections and trust among employees and managers. And with that, move the work process to a more productive level and drive the business in the right direction.

Performance Management Technology

Many performance management software solutions on the market offer a simplified approach and manageable routine that can boost performance. According to current projections, the talent management industry will be worth $16 billion by 2024, with a 16 percent annual growth rate.

Performance management tools help companies track employee performance consistently and measurably. They offer the best opportunity to manage teams, set smart goals, regularly analyze performance, and reward excellence. They include a complete system of goals, reflection, and rewards that enable teams to do their best work. The multifunctionality contained in the performance management tools also provides context for individual performance.

Employee Development

No ambitious top performer wants to stay with a company for the long haul without perfecting and developing their skills. Employ­ees value development, not to mention that companies benefit when their employees are more skilled and competent.

When these elements are put into work, team building will not be an out of work experience. The shire process will form close connections and trust among employees and managers. And with that, move the work process to a more productive level and drive the business in the right direction.

Software

Goals

Mobile App

Analytics

Career Planning

Oracle HCM

yes

no

yes

yes

Workday

yes

yes

yes

yes

Cornerstone OnDemand

yes

yes

yes

yes

Namely

yes

no

yes

yes

Engagedly

yes

yes

yes

yes

EmpXtracks

yes

no

yes

no

ClearCompany

yes

yes

yes

yes

BambooHR

yes

yes

yes

no

Saba

yes

yes

no

no

Bizmerlin

yes

yes

yes

no

Suppose the company decides to create a long-term performance plan for the employees and the team. In that case, a performance management solution can keep the data centralized and ensure managers don’t miss out on crucial points.

Performance Management Features

  • Coaching management  – Managers use coaching management software to coordinate their reports’ priorities, create career plans, monitor training and evaluations, store contact, and input each of their reports.
  • Performance assessment  – Companies use a performance assessment module to store, assess, and monitor how employee performance improves over time.
  • Goal-setting, alignment, and management  – Managers and individuals use target resources to write goals and monitor their progress toward them in a centralized and consistent manner.
  • Feedback management  – Tools for managing feedback gather and coordinate reviews based on objectives or success measurements.
  • Competency management and skill assessment – They keep track of certifications, skills assessments, and permits to ensure that the organization complies with local and state regulations.
  • Development planning  – A robust performance management software includes tools that support HR teams and managers in planning long-term career moves for employees.
  • Performance and productivity analytics  – Analytics tools assist businesses in aggregating performance indicators and efficiency KPIs to plan the next steps and measure the progress of current initiatives.
  • Performance-based compensation  – Companies base bonus and commission rates on individual performance toward goals accomplishments.
  • Talent profiles  – Without sifting through reams of performance records, talent profiles provide a comprehensive view of an individual’s strengths and abilities.
  • Multi-rating feature  – This feature helps set the stage for various viewpoints on an individual’s success. They provide feedback from peers and members of other teams on performance and give reviews about capabilities.
  • Mobile-friendly version  – It allows managers and workers to complete performance tasks outside of the workplace.
  • Reporting and analytics  – This feature generates reports and analytics that provide information about the tool’s effectiveness, employee success, and company development.

Conclusion

  • Today’s top workplaces are more open, engaging, and employee-focused than ever before. Companies evolved past old-school approaches to employee performance reviews, and for a good reason. When the coronavirus threat became apparent last year, feedback became much more difficult for companies across the country.

    In 2021, there’s no doubt that companies have to adjust their typical methods when it comes to hiring talented employees so they can stay viable in this increasingly competitive and volatile market.

    Therefore, a performance management system’s ultimate goal is to retain talented employees by enabling their growth.  Performance management means supporting employees continuously, not only through annual performance reviews. It must be a day-to-day activity. Continuous mutual collaboration and understanding can give workers a sense of appreciation and belonging.