How to Develop an Employee Performance Management Plan: 10 Steps to Success

Developing under-performing employees and strengthening A-players with a comprehensive employee performance management plan

If you wish to achieve worthwhile things in your personal and career life, you must become a worthwhile person in your own self-development.

Brian Tracy, motivational public speaker

Central to a successful strategy of performance management for employees is the development of the individual. Yet a report from Gallup revealed that “only 2 in 10 employees say their performance is managed in a way that motivates them to do outstanding work.”

Effective performance management is known to boost motivation and engagement as well as reduce absenteeism and improve overall retention. Businesses that adopt a strong policy on continuous performance management are set to put themselves ahead of the competition.

By coordinating employee growth through the development of an employee performance management plan, organizations help individuals thrive in tandem with the company.

1. Meet up with the employee to identify performance and behavioural issues which need to be addressed

Before putting together an employee performance management plan, the manager or team leader responsible should consult with the employee in question. The plan should be a coordinated effort between managers and employees so that the employee understands areas of concern that need addressing. 

Approaching the employee with a positive attitude is key to ensuring the process is oriented towards their personal growth. These conversations help to determine the employee’s level of self-awareness and can shed new light on performance-related issues. 

These conversations should be designed to help managers and employees:

  • Define the problem or area for improvement. Whether this is poor attendance, client dissatisfaction or a failure to meet deadlines, the issues affecting performance need to be clearly articulated. Employees with a strong record of performance can identify weaknesses they wish to overcome. 
  • Solicit feedback from the employee. Find out if there are any hidden reasons why performance might be lacking. Managers should make sure they understand how issues in their personal lives might be having a negative impact.
  • Discuss potential solutions. Employees may be well aware of their shortcomings and have a road map towards rectifying them already in mind. A mutually agreed upon plan of action can then be put together.

Framing the foundation of the employee performance management plan as an opportunity for growth and improvement sets the right tone. Involving employees from the beginning gives them a sense of ownership and responsibility.

2. Enter into consultation with colleagues and other key players to put the plan in a broader context

A holistic view of the problems inhibiting high performance can be gained from soliciting feedback from colleagues, team leaders and other members of staff. HR leaders and managers need to cut to the heart of the root causes, and other team members may be able to shed fresh light on the situation.

Performance management tools allow HR leaders and managers to set up templates for questionnaires that can be sent to the appropriate members of staff. Colleagues who work closely with the employee in question may be familiar with factors affecting performance that others are not. This puts them in an ideal position to offer ongoing support once the plan is put into action and act as a mentor to help them achieve their goals. 


3. Mutually agree upon achievable goals and an action plan

With the problem identified a mutually agreed-upon plan of action needs to be crafted. As with any performance-related goal, this needs to be realistic and achievable so that the employee feels comfortable with the expectations moving forwards.

These goals may vary greatly depending upon the performance issues being addressed, but should all follow these key rules:

  1. Be based around observable behaviours and outcomes which can be easily measured.
  2. Broken down into smaller goals so that progress towards improvement doesn’t feel like a daunting task. These will act as milestones and give managers and employees something tangible to focus on when conducting regular feedback sessions.
  3. Set to a specific timeline. When the employee understands when results are expected to be delivered they can focus on effectively managing their time.
  4. Constructed with training and development in mind. Employees are far more likely to improve performance when they have the necessary support available. Coaching and training goals should be integral to the employee performance management plan.
  5. Understood in terms of the consequences should the employee fail to meet their goals. While a performance management plan should generally be oriented in a positive manner, employees need to understand the course of action should they fail.

4. Determine the metrics to measure success …

Having determined the goals, it’s now time to set the metrics by which success will be measured. These metrics can cover a wide range of factors depending on the specific plan of a given employee.

Examples of metrics that can be used include:

  • Number of units produced
  • Product defects/logged errors
  • Handling time/first call resolution
  • Absenteeism rates
  • Lead-to-sale conversion rate
  • Customer turnover rate
  • Percentage of tasks completed
  • Missed milestones

With these metrics now defined, managers and employees then need to be able to track them in real-time. 

5. … And the mechanisms through which these metrics can be tracked

Performance management software allows users to track these metrics in real-time across a shared platform. Employees are able to see on a day to day basis how they are improving and can identify problems before they become overwhelming.

Whether these metrics are expressed as KPI objectives (key performance indicators) or OKRs (objectives and key results), their status towards completion is clearly highlighted within the system. Progress towards completion of a given objective can be displayed as a percentage, or a simple “yes/no” option. 

Digital dashboards – which users can access across all platforms, including mobile devices – add increased visibility to priorities. Employees can use these daily updates to hone in on the work which matters the most. HR leaders and managers gain valuable insights into the progress, performance and development of their workforce.

6. Regularly schedule and conduct progress meetings with the employee to offer guidance and support

Numerous studies have demonstrated the effectiveness of regular feedback. Motivation, engagement, trust and overall performance are all enhanced by ongoing conversations between managers and employees. 

As Josh Bersin Academy observes, a strong company culture is one that embraces constant productive feedback. They outline four key tips for implementing a continuous feedback system:

  1. Communicate early and often.
  2. Break it down into phases. 
  3. Build skills.
  4. Look for and highlight change.

These rules of thumb are crucial when conducting feedback sessions relating to an employee performance management plan. Some businesses embark on a program of continuous feedback with the best intentions, but let the process slide as day to day duties overwhelm managers and team leaders. 

Performance management software overcomes this potential roadblock by automating and scheduling the feedback process. Regular one2one check-ins and monthly/quarterly reviews can be set up well in advance so that managers and employees are well prepared to keep the conversations on point. 

This continuous engagement helps to keep employees oriented towards accomplishing the goals set out in their performance management plan. It also allows managers to touch base on issues such as health and well-being, strengthening interpersonal relationships and building trust.

7. Ensure the employee has the necessary training and resources available

All growth depends upon activity. There is no development physically or intellectually without effort, and effort means work.

Calvin Coolidge, politician

A core principle of an employee performance management plan is the development of the individual. Under-performing employees and highly competent A-players all benefit from ongoing training and development. 

A range of training and development methods can be integrated into a performance management plan. 


Performance management software allows business leaders to see an overview of the organization’s composition. Organizational charts and people databases reveal the distribution of skills and qualifications across teams and departments. 

Experienced employees can be paired with developing employees to offer coaching or mentoring. One on one mentoring allows the employee to ask questions and develop a relationship with their mentor. While it does mean the coach/mentor has to take time away from their primary role, the benefits of successful coaching are worth the sacrifice. 

On-the-job training

Few approaches to training are as effective as hands-on experience. It’s here where practical skills are acquired and real insight into the context and role requirements is gained. On-the-job training often incorporates an element of shadowing.

While on-the-job training is perhaps most often used for new hires, it is just as effective for helping employees build new skill stacks. HR leaders and managers can use this method of training to help identify potential candidates for promotion or different roles within the organization.

eLearning and online courses

eLearning – otherwise known as computer-based training (CBT) – comes in a wide variety of forms. Online training and courses, articles and videos can all be shared instantly to individuals, teams and departments via performance management software. 

New training material can be delivered directly to employees via the company’s news feed. Any digital training resources included as part of an employee performance management plan can be easily accessed. Forums allow employees to keep each other informed of any new training material relevant to their development.

8. Motivate the employee through recognition and rewards

Recognizing great performance is a powerful way to motivate continued improvements in employees. Raising the visibility of such recognition through awards programs brings with it the added benefit of influencing others to replicate the behaviours which trigger awards.

As employees work to fulfil their performance development plans, managers and team leaders should be clearly and, if appropriate, publicly praising their accomplishments. This could be a verbal “well done” or messaged as part of a performance management system’s digital awards mechanism.

Recognition shouldn’t be restricted to employees who achieve work-related goals or meet deadlines. Helping a colleague overcome a problem, effective public speaking, taking on duties outside their core job description, and other great behaviour should all receive recognition. 

9. Once completed, review the outcome with the employee

At the end of the designated time period managers should meet with the employee to discuss how things went. Were the expected outcomes achieved? What obstacles to success presented themselves? Is the employee satisfied they received the necessary support for their development?

Performance management software allows HR leaders and managers to make data-supported decisions. This ability to track progress based on clear metrics means that employees can see exactly where they failed or succeeded and better evaluate their strengths and weaknesses.

Further consultation with colleagues and other key players provides additional context when evaluating an employee performance management plan. Managers can make confident decisions based on a combination of data points and feedback, further assisting the development of the employee. 

10. Evaluate the successes and failures of the employee performance management plan

Effective performance management should be an ongoing process. Circumstances and expectations are constantly shifting, so in order to improve on how performance is managed moving forwards, the procedures should be analysed to see which areas could be improved upon.

Consider asking the following questions:

  • Is the plan boosting performance or improving the desired behaviours?
  • Has the employee been able to overcome shortcomings to be able to deliver the expected results? 
  • What unforeseen obstacles emerged throughout the process which need to be considered in future?
  • Is the employee contributing to the overall success of the organization?

Asking these questions and reviewing the appropriate supporting data will give HR leaders and managers a clearer picture of what makes a successful employee performance management plan. Once a clear understanding of what works and what doesn’t emerges, future plans can be adjusted and improved. 

This information can be used to update any review templates saved on the performance management system so that other leaders have access to the latest version. Each time an employee performance management plan is conducted should be an opportunity to iterate and refine the plan for the next time it is required.