Performance Management 101: Everything You Need to Know Read More >>
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Performance reviews are an essential tool for developing employees, building better teams, and growing your business. If not done correctly, the process can be inconsistent, ineffective, and time-consuming—leaving you with a lot of data, but little insight.
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- Compare scores between individuals and teams
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Performance Management 101
Performance reviews are a long-standing staple of businesses everywhere. Dating as far back as the 1920s, employee reviews grew to become a valued and widespread business practice by the post-war 1950s.
In the decades since, performance reviews have expanded to encompass more than just basic evaluations of employees. These were added in an effort to create a more thorough appraisal of employees on all levels.
Now included are primary and secondary skills like:
These were added in an effort to create a more thorough appraisal of employees on all levels.
Performance reviews—when done right—are a highly useful way for employers to:
- Assess employees
- Uncover strengths and weaknesses
- Identify workflow issues
- Implement positive change
Furthermore, performance reviews have potential to motivate your best employees and improve the weaker ones. They are also a useful way for managers to check-in and connect with their employees on a direct, one-to-one level.
As these reviews evolved into a universal and crucial tool for measuring performance company-wide, a process was needed to plan, deliver, and analyze. From this, the concept known as performance management began to take shape.
I. What is Performance Management?
Performance Management is the continual process of assessing and improving performance between a supervisor and an employee. Through ongoing evaluation and communication, performance management elevates every interaction with an employee into a more valuable learning opportunity.
Guided by communication and data, both individual and team goals are discussed and mutually set by both parties. These goals and the plans set forth to achieve them should align with the overall strategic goals of the organization.
The performance management process includes:
- Defining expectations
- Setting objectives
- Identifying goals
- Reviewing and assessing progress
- Providing positive and constructive feedback
- Developing the knowledge, skills, and abilities of employees
The main takeaway here is that performance management is a continuous process—not a once-a-year activity. Performance management is a whole work system that begins on an employee’s first day and only ends after an employee leaves your company. It provides the backbone of your interaction with an employee and demands continual communication throughout the year.
II. What are the Benefits of Performance Management?
Implementing performance management software has innumerable benefits to your company and your employees. These include things like:
Developing employee talent
By monitoring employees’ abilities, companies can cultivate an agile environment working towards a common goal with the ability to shift priorities.
Identifying training needs
Whether improving skill sets or increasing industry knowledge, performance management can help identify shortcomings or future training requirements.
Aligning individual, department, and company goals
Personal goals must align with overarching team and company goals. Regular check-ins are crucial and provide an opportunity to:
- Discuss progress
- Provide support
- Ensure success
Timely and constructive communication amongst all employees enables greater cooperation and productivity throughout the company.
Improving motivation and morale
Performance reviews should always include positive feedback, including celebrating success and recognizing achievements. Confident and fulfilled people make happier employees.
Improving employee engagement and retention
Employee engagement is key to boosting productivity, developing satisfied employees, and maximizing ROI. Engaged employees are more invested and have longer tenures.
Making sustainable change
Performance management is an ongoing process. Employees need to develop and results take time to show. A small sustainable change is better than an employee floundering and quitting.
III. The Problem with Performance Management—And How to Fix It
As the criteria for employee reviews becomes more encompassing, the process to manage it all needed to evolve along with it. Unfortunately, the performance management process has failed to grow at the same rate over the years.
Recently, an unexpected trend has emerged revealing performance reviews have fallen to the wayside by companies large and small. And truthfully, it is easy to see why this is happening.
The employee performance review process can be susceptible to breakdown due to:
- Inaccurate data
- Unprepared management
- Time-consuming process
- Lack of transparency
- Infrequent use
- Inability to enact change
So, how can you fix the way your company conducts performance reviews?
While performance reviews remain a crucial tool, it is actually the method and management of the review process that is often outdated, lacking, and in need of serious overhaul.
Using HR software specifically designed for the task of performance management makes the process significantly easier and more productive. With the right technology in place, employee reviews can prove worthwhile once again with improved collaboration, efficiency, and job satisfaction among your employees.
Don’t abandon the performance management process. Your company’s performance reviews can be re-built for a modern, diverse, and more integrated workforce—and prove far more beneficial than ever before.
IV. How to Improve Your Performance Management Process
Conduct reviews more than once a year
The old way of doing things had employee reviews occurring once a year—typically around the end of the year. But today’s workforce demands more feedback. Formal assessments should occur at least twice a year, if not quarterly. Additionally, weekly one-on-ones should focus on:
- Developing teams
- Checking key performance metrics
- Maintaining open communication
Give employees advance notice and invite their input
When you have the right system in place, the review process should be open, transparent, and anticipated. Instead of letting managers do all the talking, engage in a more collaborative conversation with employee input, including opportunities for staff to rate their own performance.
Be honest and as transparent as possible
If weekly one-on-ones have included productivity checks and addressed any issues, the semi-annual review should rarely include surprises. When employees have failed to meet or risen above expectations, those events must be included in reviews. Employees who are more sure of their current standing will be more confident and satisfied in their jobs.
Standardize the process and scoring
Performance management software allows companies to develop custom evaluations that track the metrics that are most relevant for your company. When employees are rated with the same metrics as other employees with every review, it is easier to identify and address issues while measuring improvements over time.
Emphasize strengths and successes
Reviews shouldn’t focus exclusively on the negative. Performance reviews should also be the opportunity to celebrate success and recognize employee achievements. Positive feedback acknowledges hard or exceptional work. Focusing on shortfalls, employees become discouraged and less invested in the role and the company.
Set professional development goals
Most employees are motivated to learn new skills and improve their job performance. Rather than continually striving for improved scores, it is helpful to ask employees what they want to explore. There may be special projects and other opportunities for each employee to focus on their preferred skills.
Invest in performance management software
When using a performance management system:
- Company and individual goals have a better chance of succeeding
- Improvement and learning plans can be implemented more effectively
- The entire process can be managed more comprehensively and efficiently
Before you can begin to leverage performance reviews, you’ll need to find a system for collecting the data most relevant for your company. But what data should you be collecting?
Most employees have a role that can be measured in a standardized way. When employees are assessed with quantitative reviews instead of subjective summaries, it’s easier to compare performance over time and identify employees with greater untapped potential.
Quality of work
Existing QA scores can be sorted for individuals and built into your process. There will likely be additional metrics that accurately reflect the quality of an employee’s work (such as client feedback). Make sure all available numbers are integrated into the review process.
Peer reviews are great for identifying which employees collaborate well with others. While keeping things as objective as possible, these metrics still reflect an employee’s ability to work as part of the team.
Performance reviews are an opportunity to address issues that you don’t typically tackle on a daily basis. These often include things like:
- Arrival times
A performance management system with an integrated time and attendance tracking solution will do the heavy lifting collecting this data.
Properly use performance review data
Your data must include both individual contributions and organizational processes. With the right data, performance reviews can be used to improve nearly every aspect of the employee experience. Without the proper metrics, the review process can feel arbitrary and subjective, but meaningful data provides a framework for real objectives.
When team managers can position themselves to help employees achieve goals, then an otherwise adversarial review process can be more collaborative and beneficial for all. Accurate data collection makes it possible for reliable analytics to guide the business toward improving efficiency and achieving future goals.
VI. How to Conduct a Performance Review?
Performance reviews can be stressful and daunting not only for employees, but also managers. For those conducting the review, there are numerous actions that must occur before, during, and after the review to ensure a positive experience and overall effectiveness.
Here’s a brief overview of how to plan, conduct, and follow-up a successful employee review (the full version can be downloaded here):
Before the review
Prior to conducting an employee review, managers must complete several tasks in order to properly set up the meeting, including:
- Collect and review applicable performance data
- Solicit feedback from co-workers, other managers, and customers/clients
- Send and review employee self-assessment
- Develop an action plan based on current performance and proposed development
During the review
Likewise, during the actual review, managers have a lot to do to ensure a successful meeting takes place, including:
- Create a private, comfortable environment
- Maintain meeting agenda and flow
- Discuss performance and improvement/development
- Encourage employee’s active participation in the meeting
- Set a timeframe for formal follow-up
After the review
- Follow up with performance feedback regularly
- Use development/improvement plan as a guide during weekly one-on-one meetings
- Forward appropriate documentation to HR
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