10 Steps for a Smooth Employee Performance Management System Implementation

From assessing the needs of your company to gathering data and feedback on progress: how to implement an employee performance management system

To make the most of your employee performance management solutions, you need to make sure they are correctly implemented. Failure to do so can significantly reduce the impact of your processes.

As a report from Deloitte observes:

“The gap between the potential for performance management to build organizational capability and its perceived effectiveness in doing so is enormous. Given that we spend billions of dollars on software, process design, and training, it’s a gap well worth closing. Brandon Hall Group’s research shows a significant difference in impact on customer retention, revenue, and employee engagement between organizations implementing performance management well and all others.”

Let’s take a look at the 10 key steps you need to consider in order to smoothly implement an employee performance management system.

1. Assess your current performance management system

Before implementing a new employee performance management system, you should conduct a thorough assessment of the current systems you have in place. By understanding the pros and cons of your existing performance management practices, you’ll have a much clearer idea of what you require moving forwards.

Consider what tools you currently use for adding and tracking individual and team goals, and whether or not they offer the flexibility and transparency you need. If you aren’t already adding and tracking goals and measuring them as key performance indicators (KPIs) or objectives and key results (OKRs), chances are your performance management system isn’t fit for purpose.

You should also consider how effectively your existing HR administration tools are complementing your approach to performance management. While it’s unlikely your company is still trapped in the world of paper-based HR administration, it may still fall short in terms of processes and integration. 

Finally, you should conduct an assessment of the methods of communication currently being used by employees, and how these can be improved. Have you adopted a hybrid work model? If so, your existing operations would likely benefit greatly from the implementation of multi-channel communications found in the best performance management suites.

2. Canvas feedback from managers, team leaders and employees on their performance management expectations

Once you’ve assessed your existing approaches to performance management, you should canvas feedback from your employees. The experiences of individuals in the various teams and departments within your organization will shed valuable light on how effective your processes are. This will help you to better understand the shortcomings of your current performance management strategy, and how it can be tweaked and improved with a new system.

One effective way to gather this feedback is through employee questionnaires. You can send the same questionnaire template to everyone, or tailor these depending on the roles and responsibilities of different members of staff.

Here are some examples of the kind of questions you should consider asking:

  • Do you consider the current methods of managing performance are effective? If not, explain why these methods aren’t working.
  • Are the current methods of communication between yourself and your colleagues satisfactory? What are your preferred methods of communication?
  • If you work remotely, either part time or full time, are you satisfied with the degree to which you are involved in broader discussions with colleagues?
  • Do you communicate consistently and clearly with your managers and team leaders?
  • Are you clear at all times as to which goals are your main priority?
  • Do you feel appropriately recognized and/or rewarded for good work?
  • Does the company offer the necessary support and training to help you excel in your role?

3. Define the company’s mission and cultural values

We try to have the kind of a culture that doesn’t value excuses in the sense that when you’re supposed to accomplish something, and you’re at a high level, then your job is to accomplish it, in spite of difficulty. And you’re rewarded for dealing with that.

Phil Libin, Co-Founder, former CEO of Evernote

A company’s culture should be an expression of its core values and mission statement. Successful performance management should reflect the essence of these cultural values as frequently as possible.

When implementing an employee performance management system, if you haven’t already carefully articulated your organization’s underpinning culture you should take the time to do so. Broadly speaking, culture reflects a combination of the organization’s principal stretch goal and the values which drive its success.

For example:

Organizational goalCorresponding value
Research and development for a new product lineEmbracing and nurturing innovation
Reducing employee turnover by 20%Encouraging emotional and physical wellbeing
Increasing market shareOptimizing the customer experience
Increase productivity rate by 10%Recognizing and rewarding A-players

By defining and articulating the core aims and values of the company, employees are more likely to remain consistently aligned and motivated towards accomplishing their objectives.


4. Model the behaviours you want from your employees from the top of the organization

The top-down modelling of positive behaviours is a well-established method for improving performance. When implementing a new employee performance management system, business leaders, managers and team leaders should be seen to embrace the new tools and processes. 

As the old adage “show don’t tell” implies, employees are far more likely to follow suit when they witness best practices in action. There are a number of ways managers and team leaders can play this role when implementing a performance management system. For example:

  • Clearly communicate expectations. Individuals and teams work best when they have a clear path to success. Leaders should marshall all available channels of communication to broadcast desired expectations loudly and clearly to relevant employees.
  • Be transparent. When employees understand the leadership process is fair and transparent, higher levels of motivation are experienced and staff feel more thoroughly invested in a given goal or project.
  • Use the available tools consistently. Performance management software delivers a range of tools for tracking goals, scheduling feedback and conducting reviews. Business leaders should encourage management and HR professionals to maximize the utility of such tools on a daily basis.
  • Recognize and reward with regularity. Employees who are recognized for great performance are motivated to continue to deliver their best work. Make rewards and recognition a part of the daily work process to boost morale and drive productivity.

5. Set clear and achievable goals at the individual and team level

Clear and achievable goals can be powerful motivators, giving employees something to focus on and driving better performance. Performance management tools allow managers and team leaders to set goals for both individuals and teams, strengthening peer-to-peer cohesion and encouraging collaboration.

One way to do this is to nest individual goals within broader team goals. You can use the team goals to help bring structure and guidance to each member of the team. This group context can then be used to help individuals craft their own goals in a way that contributes to the overall success of the team.

Managers, team leaders and employees can establish and track these goals through performance management software. This allows for real-time feedback from everyone involved and the ability to correct course at any given moment.

6. Ensure all employees have the means to effectively communicate with each other

The two words ‘information’ and ‘communication’ are often used interchangeably, but they signify quite different things. Information is giving out; communication is getting through.

Sydney J. Harris, Chicago Sun-Times journalist

Effective communication is needed to drive performance across a range of measures. An employee performance management system comes with a selection of communications approaches integrated into the tools, connecting staff wherever they are working. 

This multi-channel communications platform, combining laptop/desktop comms with mobile phone alerts, allows business leaders and managers to:

  • Communicate objectives and goals clearly
  • Deliver real-time feedback on performance 
  • Distribute valuable resources and training material to employees instantly
  • Offer guidance for employees when performance is lapsing
  • Receive feedback from employees about any concerns they may have
  • Coordinate tasks and distribute information across teams and departments

Additionally, performance management software applications allow users to send critical alerts and receive confirmation that they have been read and understood. Problems can be dealt with swiftly as and when they arise, and business leaders can be confident their workforce is kept up to speed.

7. Integrate coaching and development throughout the performance management process

Ongoing coaching begins when a new hire puts together their Personal Development Plan, and continues throughout their time at the company. It should be integrated into their workflow so that it ties directly to their roles and responsibilities, driving continuous growth.

A study from Texas Tech University outlines why managers should make coaching a part of their daily processes:

“A key role of every supervisor is to coach each member of your team to achieve his or her best job performance. In essence, opportunities for coaching your team will occur daily, both formally and informally. By practising this approach, you can create an environment of teamwork and collaboration, recognize effort and celebrate success, and enhance your team’s overall performance.”

Development goals, training resources and access to mentors can all be coordinated through a performance management system so that all learning opportunities can be adopted.

8. Put mechanisms in place which allow for continuous feedback

With an unprecedented number of companies adopting a hybrid work model, old methods of communicating feedback no longer cut it. While managers and team leaders can easily check in with staff when working together on-site, remote workers require digital solutions to make sure these touchpoints are maintained.

Some examples of feedback mechanisms you can use with performance management software include:

  • One2one check-ins. Managers and employees should meet regularly for one2one check-ins. These are great opportunities for managers to check up on an employee’s wellbeing, as well as keep up to date on their overall progress.
  • Intranet and forums. Peer-to-peer feedback and discussion can be facilitated through intranets and forums, creating dedicated spaces to discuss a wide range of topics and offer innovative solutions.
  • Microsoft Teams channels via integration. Many organizations already use MS Teams to help their employees communicate, so if this is the case for you, consider implementing performance management software which allows you to integrate Teams.

9. Review regularly – complement annual appraisals with monthly and quarterly reviews

The top-performing companies today no longer rely exclusively on annual appraisals. Instead, they have adopted quarterly or even monthly appraisals in order to minimize the biases inherent in annual reviews and significantly reduce the time and resources spent putting reviews together.

Implementing a performance management system allows you to plan, schedule and conduct regular reviews with ease. By setting up custom templates, managers and HR leaders can save time by automating tailored reviews for a specific scenario. Any data and evidence relevant to the review can also be gathered and sent to the employee to review before the meeting.

10. Gather and assess data across a wide range of performance-related metrics

The collection and analysis of data can help drive the best decisions across a range of metrics. Performance management software allows users to gather data relevant to their objectives, filtering out what matters the most with data analytics tools.

Business leaders can use this data to:

  • Track turnover by level of performance
  • Analyse links between performance, compensation and promotion
  • Diagnose the strengths of the workforce and pinpoint developmental requirements
  • Identify employees with the highest talent potential
  • Evaluate the effectiveness of staffing
  • Measure the effectiveness of managers and team leaders
  • Predict staff turnover and attrition and take action to mitigate 

The more managers are encouraged to make the most of the available data to support their decisions, the more effective the use of this data becomes. Over time, the quality of both the data and the responses to it will continue to improve.

Implementing an employee performance management system: FAQs

If you’re still unsure about what a performance management system involves, this FAQ will help to clarify the core concepts:

What are examples of performance management systems?

Performance management software is versatile and can be applied across a range of systems to achieve different outcomes. Creating better alignment between employees and the company, driving higher levels of productivity, and helping individuals and teams meet their goals are a few examples of performance management systems.

What should a performance management system include?

A performance management system comes with a selection of interrelated tools to help you achieve your goals. You can use these to establish and track objectives, maintain continuous feedback with employees, and deliver performance reviews backed up with data.

How do you improve employee performance?

Effectively managing performance will lead to better outcomes from employees, and performance management tools help business leaders to achieve this. Communicating clearly with staff on their responsibilities, providing ongoing coaching opportunities, and recognising great performance can all be coordinated via a performance management system.