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The Performance Management Process: Tips & Best Practices

performance management process

The Performance Management Process: Tips & Best Practices

Measuring employees’ performance is a common practice in every strong company. It gives managers a closer look at their team’s performance and individual input.

The most crucial thing in the employees’ performance management process is to look at the details and patterns and not statistics. Because statistics sometimes don’t paint the whole picture. Although the employees’ grades may be a proxy for it, it’s not a perfect measuring system.

The main focus should be to identify if the employee understood the process and developed an interest or passion for their role in the company.

What is a Performance Management Process?

Employee evaluation requires a proactive approach from the company’s management structure that monitors the performance throughout the year. Hence, if the goal is to build a high-performance culture, managers will need to invest more time into the process by adopting a more systematic and manageable performance evaluation process.
This way, they can maintain accuracy and instantly resolve challenges before they become a problem. The question is, what is the ideal performance management process that delivers high-end results?

According to Michael Arm­strong in his Hand­book of Per­for­mance Man­age­ment, any HR professional can achieve this goal by following these four stages:

  • Plan – Set smart, attainable targets that lead to the organization’s overall objectives. After that, come up with a professional development plan and update the role profile
  • Act –Implement a personal development plan that considers what habits, skills, or knowledge the employee needs to improve to meet the goals and uphold the company’s values
  • Track – Keep track of the employee’s progress and provide daily input to keep them informed. Provide day-to-day coaching to recognize learning opportunities and promote performance development to mitigate barriers
  • Review – Examine the accomplishments, determine whether the employee can learn more from the whole process, and provide input

It is essential to know that these stages do not follow one after another, but they are a cycle. Hence, they should be continuous throughout the year.

How does the Performance Management Process
Help Managers and Employees?

Performance management is an integral part of running a business.

The review process helps managers communicate strategic goals and align the needs of the employees with the organization. Moreover, it provides them with insight into current performances. Hence, management can facilitate corrective actions for improvement and organizational change.

For employees, the performance management process clarifies the success criteria. It can increase motivation to perform and boost the employee’s self-esteem when their performance is good. It also provides them with a benchmark for improvement.
For both sides to be satisfied, the performance management process needs to have a perpetual flow.

The Evolution of Performance Management

In the 1990’s Rober Cupler and David Norton noted that companies have a very unbalanced perspective of employee appraisals. Businesses were focused on financial measurements, not on employees’ capabilities. As a response, they proposed the “Balanced Scorecard.”

The balanced scorecard uses four perspectives for employee appraisal:

  • Financial perspective – Earnings, revenue, return on investments, manufacturing cost, cost of work quality
  • Customer perspective – Customer satisfaction, complaint rates, and market share
  • Internal business perspective – measures the direct performance of the company’s operations. It tracks process quality, product quality, scrap rights, speed, efficiency, and a whole other range of metrics
  • Innovation and learning – It measures how the current data has an impact on future outcomes

The balanced scorecard reminds companies that the financial reviews are dependent on how a company uses its assets to meet demand.

Peter Drucker, one of the most influential management thinkers in the last decade, proposed a way of management based almost entirely on performance management. He called it “Management by Objectives.” According to him, a KPI-driven organizational structure needs to account for employees’ needs as much as it accounts for its customers.

Tips & Best Practices

Today many companies have adopted highly effective performance management systems that help them develop and maintain a positive performance evaluation process.

These are the best practices that successful companies frequently use:

  • Being realistic about past accomplishments and future goals
  • Avoiding references to age, race, ethnicity, gender, or disability
  • Avoiding implied promises
  • Considering the performance during the entire review period and not just during the last few months
  • Avoiding the use of other people’s names during performance reviews. It is better to use job titles and organizational terms
  • Making sure that employees understand the criteria on which they are being evaluated
  • Reevaluating goals with each employee a few months before the final evaluation. Modifying goals as necessary to reflect shifting priorities or responsibilities
  • Keeping notes on the performance of employees throughout the year; saving emails or other correspondence that document excellent or lousy performance. Keeping notes on completed activities and the circumstances of absences or disciplinary actions
  • Allowing employees to evaluate their own performance
  • Showing respect to each employee by preparing for the performance review. Scheduling meetings at least a week in advance at a time that is convenient for the employee. Conducting performance reviews in a private office or conference room. Having all documentation completed and provide a copy to the employee
  • Treating a performance review meeting as a focused business meeting and keep all conversations confidential
  • Not waiting until the meeting to inform an employee of unsatisfactory performance. A manager should not raise any surprise issues during the meeting
  • Maintaining a professional approach when completing the evaluation documentation. This document can be used as evidence in grievance hearings and other legal proceedings. A manager should not include humorous anecdotes, personal information, judgmental statements, or offensive or discriminatory language
  • Including all pertinent information. Not omitting information because it is uncomfortable to discuss or potentially contentious
  • Keeping control of the meeting, not entering into a debate with an employee. The manager needs to decide the ratings, and if he has been fair in his assessment
  • Providing a copy of the evaluation to each employee before the meeting, allowing the employee time to review the ratings/comments. Providing a recap of the employee’s overall performance in a positive and supportive manner. Explaining that the remainder of the meeting will focus on accomplishments, areas of concern, and setting future goals
  • Encouraging employees to share their thoughts and suggestions. Being open-minded and looking for opportunities for improvement

A well-established performance management process combined with excellent performance management software that streamlines and simplifies the process is the perfect combination for a strong company. A happy employee can go a long way for an organization to succeed.