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Managing employee performance ensures that your workforce remains productive, engaged, and motivated. By setting clear expectations, providing regular feedback, and recognizing achievements, organizations can create a culture of high performance that drives business success. But without balancing the need for honest, critical assessments with the need to maintain positive employee morale — and ensuring evaluations are consistent and fair — employees may resist performance management initiatives, perceiving them as punitive, overly bureaucratic, and biased.
The right performance management strategy and tools can address these challenges and transform the process into a positive experience for both managers and employees. Let’s explore what great performance management entails, taking a look at each part of the performance management cycle and how your company can improve productivity and engagement across your entire workforce.
What is performance management?
Performance management is the process of assessing and improving employee performance. It revolves around setting clear expectations, providing regular feedback, and supporting employee development. When done right, performance management ensures that team members understand what your company expects of them and how their roles contribute to your organization’s success. By establishing a structured process for evaluating and developing performance, organizations can identify their most productive employees and support team members as they grow.
5 stages of the performance management cycle
The performance management cycle consists of five key stages, each of which plays an important role in enhancing employee productivity.
1. Create a performance plan
The planning stage involves setting measurable goals for employees, informed by their professional interests and company goals. Managers and employees should collaborate to define expectations, establish performance criteria, and outline the steps needed to achieve set goals. This cooperative approach helps build a common understanding of employees’ roles and responsibilities, while making it more likely that team members will buy into the performance review process. Managers should also empower employees by outlining the resources, training, and other support needed to meet objectives in the performance plan itself — and then provide everything they’ve promised, so team members can reach their full potential.
2. Monitor employee performance
After developing a plan, managers should monitor employee performance as they make progress towards the established goals. During this stage, leaders should gather data to concretely assess how well employees are performing — as well as how they feel about the performance management process and other key aspects of your company. Managers should also hold regular check-ins with direct reports to discuss performance and provide a channel for honest, two-way feedback.
By maintaining open lines of communication, manager will never lack an opportunity to motivate team members by offering words of encouragement and recognition. They’ll also be able to address issues or challenges that may arise in a timely fashion and provide any guidance needed to ensure employees stay on the track to success.
3. Help employees develop
Explaining what you want team members to do and telling them to “go at it” won’t result in the performance your organization is looking for. Instead, managers should work with employees to build personalized development plans that address specific skill gaps and align with team members’ career aspirations. Identify professional development needs through performance assessments, and then provide training opportunities targeted to meet those needs while matching employees’ individual learning styles. These development initiatives can include coaching initiatives, on-the-job training, and access to online learning resources.
4. Review employee performance
Conducting reviews is a core part of any performance management process. These assessments are an opportunity for managers and employees to reflect on achievements and ensure that both the organization’s and team member’s needs are being met. Managers must evaluate how well employees have met their goals and provide comprehensive feedback — highlighting the positives while discussing areas for improvement. Leaders should base each review on objective data and observations, staying alert for any biases that may impact their judgment.
As noted above, annual performance reviews aren’t sufficient. By the time they occur, much of the feedback from both sides’ will be largely irrelevant, unactionable, and, by extension, mutually frustrating to receive. Setting a relatively frequent cadence of performance-focused, one-on-one meetings with direct reports, supplementing these discussions with more formal reviews held quarterly or twice a year, and establishing a range of open feedback channels will ensure that both employees and managers can adjust their approach before issues become intractable.
Your company can facilitate this environment of continuous improvement by adopting performance management software that allows managers and employees to share feedback instantly, set goals, track progress, and document performance discussions. And don’t forget to adopt an employee engagement platform that lets employees provide feedback anonymously at any time. Otherwise, they’re likely to hold back some of their real thoughts they aren’t comfortable sharing with management directly, and your business will miss out on key ways to improve performance management and the employee experience.
5. Recognize and reward employees
Recognizing employees for their contributions, both large and small, is perhaps the most essential part of performance management — and certainly the one that should be most enjoyable for all parties involved. Recognition can take many forms, from a quick email of thanks, to a well-deserved bonus, to public appreciation during an all-hands meeting. But to make a real impact, your organization needs to streamline and scale its recognition efforts, so every team member can provide meaningful appreciation with the push of a button, no matter where they find themselves. The fastest way to accomplish this is with an employee recognition solution that brings everyone together in a communal space, where they can show thanks and react to others’ moments of appreciation.
Best practices for setting performance management standards
Effective performance management requires a balance between positive reinforcement and constructive feedback — between helping employees meet their own professional goals and empowering them with the resources and guidance needed to achieve those of your business. Achieving this ideal starts with establishing clear standards to measure employee performance against. There’s no need to reinvent the wheel when it comes to setting tangible objectives, though. Instead, use a popular, easy-to-adopt framework like SMART goals or objectives and key results (OKRs), both of which facilitate clear communication and accountability on the part of managers and employees.
SMART goals are specific, measurable, achievable, relevant, and time-bound. This framework helps employees understand exactly what is expected of them, how their performance will be measured, and the timeline for achieving their objectives. SMART goals provide a roadmap that team members can follow when prioritizing their tasks, and one that managers can use to track employee progress and provide targeted, relevant feedback.
OKRs involve first setting high level objectives and then defining measurable key results that indicate progress toward those goals. They encourage employees to set ambitious goals and keep their focus on outcomes rather than activities. By tracking and regularly reviewing OKRs, organizations gain a valuable, objective yardstick for measuring employee performance while maintaining alignment between individual contributions and shifting business priorities.
What to look for in a performance management solution
There are many aspects of performance management that can benefit from the right HR technology. First, ensure you’ve taken care of the basics. Look for a performance management solution that lets managers and employees set clear, measurable goals, track progress towards them, and easily conduct frequent reviews to maintain alignment and fast track employee development. It should also provide powerful analytics and reporting capabilities that help HR professionals and leaders gain insights into performance trends, identify high performers, and pinpoint areas for individual improvement.
Your company should also look for an employee engagement solution that provides a real time stream of honest employee feedback. The best engagement platforms offer a range of intuitively designed feedback channels, from focused pulse surveys to intelligent chatbots that are able to prompt employees for input. Leaders and HR professionals can then use built-in reporting capabilities and dashboards to see where their performance management system is working and where employees think it could use some improvement.
Last but not least, adopt an employee recognition and rewards platform that allows for both peer-to-peer and manager-to-employee recognition. Beyond the fundamentals, like a centralized place for all team members to provide public recognition, a mobile-friendly app, and integrations with the tools your employees use every day, select a solution that lets team members tie each recognition to meaningful rewards. This isn’t as difficult as it might sound — with a points-based reward system backed by a marketplace filled with millions of options employees actually want, your company can make every performance win truly memorable.
Transform performance management at your company
You can take performance management at your company beyond the norm and into the realm of real excellence with the Achievers Employee Experience Platform. It leverages the science of HR to make performance management an engaging and effective process, starting with Achievers Recognize, a comprehensive employee recognition and rewards solution. It provides the incentives needed to keep the performance management cycle running smoothly, with easy-to-use social recognition features and a rewards marketplace filled to bursting with exciting merchandise and experiences.
And thanks to Achievers Listen, your people leaders will never lack real time insights into how employees feel about the performance management process and what they can do to engage them further. By streamlining the collection and analysis of feedback, Listen provides leaders with a deep understanding of what drives team members, so they can make informed decisions that improve employee experience and performance.
See how the Achievers Employee Experience Platform can improve performance management for yourself with a free demo.
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