How to put together a comprehensive performance management system to achieve the best results
The greatest leader is not necessarily the one who does the greatest things. He is the one that gets the people to do the greatest things.Ronald Reagan, former US President
Getting the most out of your employees requires careful leveraging of the performance management system at your disposal. When done right, performance management can achieve more than increasing performance at an individual, team and company-wide level. It can also boost engagement, increase motivation, and provide the foundation for a workforce capable of bringing creative solutions to the table.
Let’s take a closer look at some of the key performance management tools and techniques which business leaders can utilize in order to increase performance and maximize results.
1. Personal Development Plans (PDPs)
Personal Development Plans (PDPs) are a valuable foundation for ensuring alignment between an individual’s goals and ambitions and the broader aims and strategy of an organization. HR leaders and managers should ensure that PDPs are established as part of the onboarding process and taken into consideration as part of any review processes.
With Gallup reporting that 87% of millennials rate “professional or career growth and development opportunities” as important to them in a job, PDPs offer the bedrock from which this growth can occur.
HR leaders and managers should consider asking the following questions when helping new hires with their PDPs:
- How clear are you regarding your goals in life?
- Do you consider yourself to be competent when tackling new challenges?
- Are you an effective communicator who leads with confidence?
- Are you comfortable asking others for help when you need it?
- Do you consider yourself to be a creative person?
- What do you want to be remembered for in this role?
- What skills do you feel you should practice more? Are there any skills you currently don’t have but would like to add to your talent stack?
By adopting a sincere approach to an employee’s personal ambitions, managers can help steer them towards achieving their goals in a way that benefits themselves and the company.
2. Goal setting techniques
Performance management tools are specifically geared towards the setting and tracking of goals. These can be set at the individual, team and company level, and are often closely linked to one another to ensure alignment.
There are a number of types of goals businesses can adopt to improve their performance management capabilities, including:
Stretch goals are ambitious long-term goals that seek to challenge employees to go above and beyond the baseline requirements of the role. Intentionally difficult to achieve, these sit above day-to-day goals and can be broadly linked to the ambitious objectives outlined in Personal Development Plans.
SMART goals are among the most widely used types of goals in the business world since their establishment by George T. Doran in 1981. SMART goals are:
These goals should have a clear endpoint at which they can be said to have been completed.
What are the metrics which will be used to track progress towards the completion of these goals? Understand these for tangible progress.
SMART goals need to inspire motivation, so make sure they can be achieved reasonably with the time and resources available.
These goals should be appropriate in how they related to the broader aims of the organization.
Unlike the ambitious stretch goals, SMART goals should be set with clear deadlines in mind.
Triggers for adjusting goals
Understanding when to adjust goals is key to ensuring they are focused on what matters the most. HR Leaders Monthly reported in its March 2021 issue on the five key types of triggers you should be aware of which lead to an adjustment of goals.
- Strategic/financial. Great/poor financial performance and changes in market share relative to competitors will necessitate discussions on employees’ roles and expectations.
- Human capital. Changes in staff composition may require a readjustment of employee roles.
- Environment. Legislation, regulation and other related factors could trigger new behavioural requirements.
- Workflow. Restructuring and modification of business units may affect the roles and expectations of employees.
- Personal. New work settings and personal/family issues may affect an employee’s ability to achieve expected performance levels, requiring adjustments to compensate for new challenges.
By establishing and tracking goals within a performance management software system, any such trigger can be readily identified and acted upon.
3. Key Performance Indicators (KPIs)
Key Performance Indicators (KPIs) offer quantifiable metrics by which managers and employees can track progress towards goals. KPIs link the organizational vision to direct action, providing a broad strategy with clear targets and allowing employees to manage their time and energy in an optimal manner.
Establishing and tracking KPIs is relatively simple, particularly when done through a performance management toolkit that offers users dashboards for regular monitoring in real-time.
Establish the KPI to be measured
Whether you’re measuring time to market, employee turnover rates, or conversion rates, make sure these metrics are clearly understood.
Set the time-frame
Establish a clear end date the individual/team are expected to meet these targets, linked to any scheduled reviews in the pipeline.
Choose the measure of progress desired, whether a simple yes/no indication of completion, or a percentage scale indicating the rate of progress being made.
Feed KPIs into a leaderboard
Help employees better understand who is meeting their goals and where issues are arising. Such information can be invaluable for managers making decisions about where to focus their energy to increase performance and address concerns.
4. Employee feedback mechanisms
Understanding the strengths and weaknesses of a given employee’s performance requires more information than tracking of objectives can provide. It requires a better understanding of the context in which the work was undertaken.
HR leaders and managers can gather this essential context by putting in place feedback mechanisms that draw upon the opinions of the wider workforce.
Real-time feedback mechanisms can be integrated into business performance management systems through 360 feedback and peer feedback processes.
360 feedback provides information from a wide variety of sources both within a given department and throughout the wider workforce. Such feedback aims to give managers a holistic overview of an employee’s impact at a micro and macro level.
Such feedback can draw upon colleagues with whom an employee works closely on a regular basis, but also team leaders, managers, supervisors and customers. This broad array of sources can help to shed light on issues affecting performance that might otherwise be easily overlooked.
While 360 feedback gathers information from a wide variety of sources throughout the company, peer feedback allows managers to focus on the opinion of colleagues who are performing the same duties as the employee in question.
Since this feedback comes from those who have the closest experience of the requirements and challenges of their role, they encourage “radical candour” and help target areas for improvement without creating anxiety.
Real-time feedback mechanisms can help boost performance in a number of ways.
- Promoting ongoing learning and development by identifying skills gaps and opportunities for additional training.
- Removing the recency bias and halo effect by offering objective views from different perspectives.
- Recognising and reaffirming competencies which leaders can then work towards strengthening.
- Drive engagement and progress towards objectives through a clearer understanding of what challenges an employee is facing.
5. Performance appraisals
Performance appraisals are important now more than ever before. With many employees still working remotely due to the coronavirus pandemic restrictions, keeping on top of the challenges they are facing points to an increased need for effective and consistent communications.
Appraisals come in a variety of forms, and scheduling and conducting these reviews requires a performance management appraisal system to ensure these conversations don’t slip through the net.
Regular one2one check-ins
Regular conversations between managers and employees not only help monitor performance and development, they also strengthen relationships and improve morale.
By conducting these on a weekly basis employees are given a clearer understanding of their short-term obligations and an opportunity to show off accomplishments that might otherwise be lost through less frequent reviews.
It’s important to make sure these one2one sessions are regular and consistent. Conversations around progress, expectations and upcoming targets need to be ongoing if they are to be meaningful.
Keeping track of the outcome of these reviews means that both managers and employees can pick up where they left off from previous sessions and keep those discussions on point.
Monthly and quarterly reviews
Monthly and quarterly reviews give HR leaders and managers to bridge the gap between day-to-day feedback with employees and long-term annual planning. As such, they should focus on reflecting back on the previous month/quarter to look at performance gaps and areas for improvement over this time frame.
These reviews should include:
- Open discussion of any topics which the employee or manager feels are most pertinent to the previous month/quarter and how this relates to performance for the upcoming month/quarter.
- A review of the upcoming time frame’s OKRs (objectives and key results) and KPIs, whether these are ongoing or if new goals need to be determined.
- A brief assessment of the employee’s skills, and if relevant an action plan for adding new skills to their talent stack.
- If relevant, a discussion regarding an employee’s work anniversary and any compensation adjustments being considered.
While annual reviews are falling out of favour due to the increasingly unpredictable nature of the business landscape, they are still a core process of most businesses’ performance appraisal processes.
Annual reviews can be tied into an employee’s Personal Development Plan as part of an ongoing strategy of alignment between employee and company. Provided they are adopted in conjunction with regular ongoing feedback and review mechanisms, the problems usually associated with annual reviews (for instance recency bias) can be overcome.
HR leaders and managers can use the data gathered throughout the year, giving employees a clearer insight into how their progress relates to the bigger picture.
A key component of a performance management toolkit is the ability to generate automated appraisals. Such automation allows managers to regularly schedule one2ones, monthly and quarterly reviews, gather the relevant performance-related data and generate reports.
6. Reward and recognition programs
Research indicates that workers have three prime needs: Interesting work, recognition for doing a good job, and being let in on things that are going on in the company.Zig Ziglar, motivational speaker
Recognizing and rewarding employees for a job well done is a surefire method for encouraging more of the same behaviour. Amplifying this recognition throughout the company allows these positive attributes to be replicated in other individuals and teams.
The traditional method of rewarding great work through monetary compensation has been augmented with the use of reward schemes built into performance management systems for employees. Personal goals can be logged and shared, and peers can use such systems to highlight great performance from their colleagues and share this with their teams.
With much of the workforce accustomed to instant feedback and gratification via social media platforms, awards badges and other points of recognition integrated into software managing their performance creates a familiar sense of immediacy.
7. Well-being initiatives
With many employees struggling to find the right work-life balance working remotely, well-being initiatives are crucial now more than ever before. HR leaders and managers lack the visibility afforded through working together in an office, so well-being initiatives need to be a part of their online performance management system.
Such programs can be used to:
- Encourage flexible work schedules to help with running a household.
- Offer fitness programs, whether on-site or via remote fitness workshops.
- Provide mindfulness training to alleviate stress.
- Establish emotional intelligence training sessions.
- Help provide access to healthier food, either by providing this in the office or linking employees up with organic food delivery services.
- Create networks of employees to participate in sports and exercise, for instance cycling groups or weekend excursions to the countryside.
Engage in eco-friendly initiatives to help offset carbon footprints.