What Is Performance Management?

Performance management is the process of continuous feedback and communication between managers and their employees to ensure the achievement of the strategic objectives of the organization.

The definition of performance management has evolved since it first appeared as a concept. What was once an annual process is now transitioning to continuous performance management. The goal is to ensure that employees are performing efficiently throughout the year, and in the process, address any issues that may arise along the way that affect employee performance.

“Most workers perceive their organization’s performance management approach as confusing, subjective, and infrequent,” said Kathi Enderes (vice president, Talent, and Workforce Research Leader) and Matthew Shannon (senior research analyst) at Bersin, Deloitte Consulting LLP, in an exclusive with HR Technologist.

This is the current state of performance management. However, it doesn’t have to be that way. Automation now plays a significant role in performance management, and many of the processes involved can be streamlined so that employee performance can be strategically managed. This is the age of continuous performance management, and here’s everything you need to know about it.

Performance management differs from talent management in that the latter is a set of initiatives taken to engage employees to retain them. Performance management, on the other hand, is an initiative that guides employees towards establishing and achieving their goals in alignment with the organization’s immediate and overarching goals.

Why is performance management important?

1. Performance management supplements the annual performance review. This prepares both employees and managers about what to expect during the annual appraisal. It keeps both the manager and the employee in the loop about ongoing changes to the performance management process, what both can do to streamline it, and how performance overall can be improved.

2. To employees, continuous performance management indicates that managers value them. Employees believe that their managers are interested in their work and care about their goals and any issues they may face in the course of their job. They also become more open to receiving constructive feedback.

The Performance Management Cycle

The performance management process or cycle is a series of five key steps. These steps are imperative, regardless of how often you review employee performance.

1. Planning

This stage entails setting employees’ goals and communicating these goals with them. While these goals should be disclosed in the job description to attract quality candidates, they should be communicated once again when the candidate becomes a new hire. Depending on the performance management process in your organization, you may want to assign a percentage to each of these goals to be able to evaluate their achievement.

2. Monitoring

In this phase, managers are required to monitor the employees’ performance on the goal. This is where continuous performance management comes into the picture. With the right performance management software, you can track your team’s performance in real-time and modify and correct course whenever required.

3. Developing

This phase includes using the data obtained during the monitoring phase to improve the performance of employees. It may require suggesting refresher courses, providing an assignment that helps them improve their knowledge and performance on the job, or altering the course of employee development to enhance performance or sustain excellence.

4. Rating

Each employee’s performance must be rated periodically and then at the time of the performance appraisal. Ratings are essential to identify the state of employee performance and implement changes accordingly. Both peers and managers can provide these ratings for 360-degree feedback.

5. Rewarding

Recognizing and rewarding good performance is essential to the performance management process, as well as an important part of employee engagement. You can do this with a simple thank you, social recognition, or a full-scale employee rewards program that regularly recognizes and rewards excellent performance in the organization.