Have you ever purchased a smart watch and instantly become motivated to hit exercise targets? Right before bed you are walking around the house just to hit your 10,000 steps? Many of us have been there, and it is a lesson on the power of effective performance management and goal setting in the business world too.
Performance management isn’t an easy field to get right. Get it wrong and it can cause frustration and reduce engagement with employees and managers. Thankfully, more and more companies are understanding the importance of effective performance management.
But what is effective performance management? In this article we will look to understand what elements are necessary for effective performance management and address the following questions:
What Is Performance Management?
Firstly, the term annual performance appraisal process is not interchangeable with performance management. A performance appraisal is just one component of what is considered to be performance management. One of the best definitions of performance management is composed by Michael Armstrong in his Handbook of Performance Management:
“The definition of performance management is the continuous process of improving performance by setting individual and team goals which are aligned to the strategic goals of the organisation, planning performance to achieve the goals, reviewing and assessing progress, and developing the knowledge, skills and abilities of people.”
As a result the key takeaway from this definition is that effective performance management is a continuous process rather than a once off or annual event. Could you image if your smart watch target was 3,650,000 steps a year? Out of sight, out of mind!
What are the basic elements for effective performance management?
The basic elements that form an effective performance management framework include:
You need to set goals the right way. Firstly, they need to be meaningful and understood. Secondly, employees should have context as to why these individual goals matter and how they are furthering organisational objectives. Employees will care much more about their roles and be much more engaged when they know — and truly understand — how their job matters.
Goal setting should be a collaborative process. Where once goals trickled downwards from the higher-ups in an organisation, modern companies are aligning goals upwards. So goal setting should involve meeting with employees and being transparent about company goals, direction and obstacles. It is a simple formula – by involving employees in goal setting, they become more passionate and accountable to them.
Transparent communication and collaboration
Employees want their managers and leaders to be open and authentic about performance. For example, when a business is going through a difficult time, being transparent with employees brings with it a sense of ownership and accountability. On top of this, they want real-time communication while building healthy relationships with their colleagues and managers. This will involve regular feedback and honest discussion in the form of catch-ups or 1-on-1’s.
An effective performance management system will include employee recognition and reward. As a result, employees will feel valued and appreciated for the work they do and the effort they put in. Using technology, it has never been easier to deliver recognition. Secret: shout outs can be automated to a certain degree!
Honest and regular performance feedback and reviews
The more frequent and precise the feedback, the better individual performance. We’ve all had the regular weekly meetings with the word’s “sync” or “align” in them. While grinding at times, if delivered properly it will boost performance significantly. Employees want regular insights into their work and the better-informed employees are regarding their performance, the better able they are to improve and excel.
Employee performance development
No ambitious top performer wants to remain at a company long-term without honing and developing skills. Advancement and development are important to employees — not to mention, companies stand to benefit when employees are more skilled and capable.
So what is effective employee performance management?
Having all of the elements of the performance management process in place is very important, but this will not necessarily lead to effective performance management for your organisation. As a result there are many other factors in play, such as:
- Having the proper buy-in from senior management to performance management.
- Ensuring the performance management cycle is continuous rather than annual or ad hoc.
- Ensuring performance conversations are engaging and not ‘tick-box” exercises.
- Having leading performance management software significantly reduces the administrative pain involved with performance management.
- The skills and willingness of your managers to deliver effective performance management on a day-to-day basis.