The performance management process is an essential part of managing employees. In this article, we will give a brief overview of what the performance management process entails before giving five science-based tips to ace your performance management process.
What is the performance management process?
Performance management is a set of activities, tools, and processes aimed at enabling employees to achieve their goals. Employee goals are often set at the beginning of the performance management cycle when the employee and his/her direct manager sit down to discuss goals for the next year. Performance management is the process of ensuring that the employee has all the knowledge, skills, and tools to achieve those goals.
The effectiveness of the performance management process can be measured in the (bi)annual performance appraisals. This is the moment the manager evaluates the employee’s performance. However, the results of this meeting should never come as a surprise to the manager. This is because good performance management involves active monitoring of progress towards set goals, as well as targeted interventions to improve performance. These interventions can be as simple as praise for good performance, on-the-job training, coaching, or more formal learning and development courses to (further) improve performance.
Performance management is a shared responsibility between HR and the manager. It is HR’s role to ensure that the performance management process is well-designed and that managers have all the tools they need to ace the performance management process.
It is the manager’s responsibility to bring this in practice. They are the ones having the conversations with their team and leveraging the tools given to them to improve their people’s performance. This means that one doesn’t go without the other.
Performance management doesn’t solely focus on individual employees, it can also focus on teams, departments, or even the entire organization. Most of the practices that apply to individual employees, also apply to larger groups. Let’s dive straight in!
5 Tips to ace your performance management process
1. Actively involve the employee
The time that performance management was a top-down exercise is long gone. Performance management is very much a shared responsibility between the employee and their direct supervisor.
Research shows that increased participation of the employee in the performance management process leads to higher satisfaction, higher commitment, and higher motivation to improve one’s performance (Cawly, Keeping & Levy, 1998).
2. Create a culture of continuous learning
Learning new skills and capabilities is an enabler of better performance. One theme that has been popularized in recent years is continuous learning. Continuous learning requires an environment that supports employee self-development. Self-development means setting development goals, seeking and using feedback to improve, actively participating in development activities, and tracking one’s process.
To stimulate this, organizations should create and foster a culture in which this is possible. According to a research paper on this topic, key ingredients for this include informational feedback, communication of organizational goals, behavioral choices with clear consequences, autonomy to make decisions that affect important outcomes for the employee and explaining the ‘why’ of actions in a way that is meaningful for the employee.
The paper continues to list several factors that create a climate for continuous learning. Employees should be able to freely interact with everyone else, objectives are set by those who make them happen, individuals and teams are accountable for their decisions, and the use of new skills and knowledge on the job is rewarded. Lastly, managers are expected to be coaches and are held accountable for continuous learning.
This shows how closely related continuous learning and proper performance management are. The performance management practices that we listed earlier, are key ingredients for empowered self-development of employees.
3. Create a robust 360-degree feedback system
360-degree feedback, also called multi-rater feedback, is a system where feedback from an employee’s subordinates, colleagues, and supervisor are combined with an employee’s own feedback. 360-degree feedback can be used for informal feedback but is increasingly used in performance evaluations and employment decisions like pay and promotions.
360-degree feedback shows moderate effectiveness. Some studies show that it can create behavioral change, while others show no measurable change in behavior, or even negative effects (Bracken & Rose, 2011). Bracken & Rose list four success criteria to make a 360 process work. These are:
- Relevant content. Questions and competencies assessed should align with the Key Performance Drivers of the organization.
- Credible data. The data that is collected should be credible. There are ways to ensure this, including having relevant raters, training them to give ratings the right way, standardized rating scales, and so on.
- Accountability. A 360 should never be a stand-alone. Ensure action and behavioral change by planning follow up and measuring progress.
- Census participation. Management has to set clear expectations and should be accountable for the completion of the feedback.
These four factors help to ensure that you gain the maximum benefits from the 360. For more information, read our full guide to 360 degree feedback.
4. Invest in a good performance management system
Performance management is a complicated process involving many facets. Streamlining this in a performance management system (PMS) offers many benefits. A good PMS includes both performance appraisal and employee development. These systems often offer continuous performance management through regular reviews, they help in setting goals, and should be customizable to fit the organizational culture, just like the 360-feedback discussed earlier.
Research shows that critical success factors for a performance management system include internal consistency, more communication, and tight control. This means that there needs to be a clear link between goals, monitoring, and evaluation. Second, there needs to be continuous and effective communication about the employee performance management system. Third, the performance management process should be tightly controlled, as this is shown to impact system satisfaction. This effect seems especially profound for people in roles with lower autonomy.
5. Create a workforce of one
Research by Decramer, Smolders & Vanderstraeten (2013) shows that in academia, employee satisfaction with performance management practices depends on the tenure type of university employees. Different policy types and procedures for different groups in an organization will maximize overall satisfaction. This has been dubbed the workforce of one, as explained by David Smith, managing director of Accenture and co-author of the book workforce of one.
Talent management becomes increasingly customized and individualized. David describes this as ‘mix-and-match’, where different segments of the workforce, like different generations, can to some extent choose and pick. When it comes to performance management, you can think about evaluation procedures that may differ between entry-level employees and more senior-level employees. Where entry-level employees may benefit from more guidance, more experienced employees are capable of setting their own goals. Another example, younger generations are often actively looking for development opportunities, whereas older generations may be looking for coaching roles where they can share their knowledge.
Addressing these needs helps to accommodate both groups while also offering the organization the opportunity to advance its workforce. Of course, the core performance rating procedure should remain identical for everyone as this makes the results generalizable throughout the entire organization.
Before you go
This wraps up this article about how to ace your performance management process. For additional reading, check out our other articles in this series, on the performance management cycle, and the performance appraisal, which is the formal moment during which the employee is evaluated.
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