Performance management is central to many companies’ HR strategy. There is continuous discussion around what works and what doesn’t, and new strategies to pilot. At the same time, I find that there is a lack of conversation around why:
According to the balance, “…performance management is the process of creating a work environment in which people are enabled to perform to the best of their abilities.” Although it’s changed a lot, the concept of performance management can be traced back almost 100 years to the Time and Motion Study.
The Time and Motion Study is a method for establishing employee productivity standards in which a complex task is broken into small and simple steps. These steps are then measured to detect and eliminate unnecessary motion, compute production times and prices, and create incentive schemes.
The 1960s was the first time we saw traces of performance management as we know it today. This is when performance management strategies started to use goals and objectives to account for an employee’s future success. At first, measurements for this tactic were highly dependent on opinion based appraisal. This changed in the 1980s when companies began to use metrics such as self-awareness, communication, teamwork, conflict resolution, and composure.
Fast-forward to today, and most structured performance management strategies are centered around 360 degree feedback. This method incorporates multiple sources of feedback, contributed by employees’ direct supervisors, teammates, and peers. The 360 Degree Feedback strategy has been known to instill the value of an equal working environment and stronger company culture.
Since performance management strategies have been around long enough to evolve, I think it’s safe to say they matter. Managers agree too, and they are increasingly prioritizing performance management strategies. On average, they spend 210 hours a year on performance management. Furthermore, millennial managers are spearheading the push for more frequent conversations, with 58% holding weekly performance conversations with their employees compared to only 39% of baby boomers managers.
When researching the topic myself, I read nearly 20 ways performance management strategies can positively impact a company and their employees. The following stood out to me the most.
Employee Engagement & Productivity
Did you know that 69% of employees said they would work harder if their efforts were recognized? As an employee, I’ve always valued performance management strategies. I appreciate that there is time dedicated to talking about my performance with the people who are part of my professional growth. It’s an opportunity to ensure that my efforts are aligned with my company’s overall mission. I’m not alone. Nearly 76% of employees want monthly feedback to ensure that they are on the right track. Additionally, 70% of employees who gave their managers “best” ratings rated their performance management strategies as “very good.”
The Hiring Process
Although often overlooked, performance management strategies can be crucial in improving the caliber of your company’s employees. A solid performance management strategy helps you identify what attributes to measure and testing methods to use during the recruiting process. Determine what top performers scored well in and look for similar results in your future candidates.
Growth and development are two of the most important things millennials look for in a job, and performance management is one of the best ways to measure those factors. If millennial employees, soon to be the largest group in the workforce, do not feel like they can learn and grow in your organization, they’ll start looking for opportunities elsewhere. Companies that implement regular employee feedback have 14.9% lower turnover rates than those that don’t.
Every company is different, and there is no one size fits all approach for a performance management strategy. If you’re looking for a place to start, the strongest performance management strategy follow three phases:
What to Keep in Mind
Below you’ll find a collection of strategies we recommend you keep in mind, whether you’re improving or creating a performance management strategy.
If you’re designing or restructuring a performance management strategy, I recommend beginning with the metrics that matter most to your company. A good exercise for this is to think back to when a candidate was hired. What were you looking for this person to accomplish? Did they perform satisfactorily on those tasks? Did they do more? Common areas to reinforce performance management include teamwork, collaboration, responsibility, and motivation.
It’s important to understand that successful performance management strategies are not a once-a-year thing. They are characterized by ongoing conversations where managers and employees have opportunities to set expectations, ask questions, provide feedback and work on optimizing skill sets. As an employee, this is what I value the most. If I do something wrong, I’ll know right away and can work on improving right away. If I have questions or concerns, I can address them while they are fresh in my mind.
Can’t forget about Technology
I can’t stress the importance of electronically tracking performance. While this may be a no-brainer for some of you, 58% of companies are not tracking performance automatically. They’re using excel or paperwork. Not only is this process more prone to errors, but it makes performance management even more tedious for managers to keep up with or refer to. It also makes it difficult for employees to remember feedback and implement it.
It’s a mistake to theorize anything before data. Technology helps organize all of your performance management data in one place so you can measure which employees are ready for a promotion or which traits should be added to the recruiting process.
Since there are so many platforms out there, here are our recommendations for picking one that works best for you:
Performance management is a positive pillar for developing employees. It’s not something that you have to do. Rather, it’s something that you should want to do.
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