Performance management importance: how to review employees

By Indeed Editorial Team

Published 25 May 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Performance management assesses how well individual employees work, considering teamwork, leadership potential and the ability to handle constructive feedback. Good performance management is a way to ensure the success of a team and the company. If you're a manager, you might focus on performance management when assessing your team's work. In this article, we consider performance management importance, annual appraisals vs continuous performance management, the benefits of ongoing performance management and how to develop your strategy.

Performance management importance

Performance management importance is something that you may consider if you manage employees. It's a process that assesses different employees' work and progress. By working with each employee, you can analyse their working style and see how they can improve and develop. It's also a chance to assess if they are helping to meet company goals.

What to analyse in performance reviews

Performance reviews typically analyse the following:

  • Goals: Each employee may have specific goals, and a performance review can assess how close they are to achieving them.

  • Response to feedback: Part of a performance review may include any feedback from previous reviews and whether the employee has adapted in response to it.

  • Successes: It's important to highlight successes in performance reviews, so employees can feel proud of what they are doing right and repeat this success in the future.

  • Room for improvement: When there is room for improvement, an employee might receive constructive feedback about how to improve their work.

  • Growth potential: Another part of performance reviews is analysing growth potential, assessing how the employee could develop in the company and their career.

Annual appraisals vs continuous performance management

One type of performance review is the annual appraisal, although many businesses conduct performance management continuously, which is a holistic way to review staff members' performance. Here's a definition of both types of review:

Appraisals

Appraisals take place once or twice per year. The manager considers each employee's performance over the last 6–12 months and writes a full report. As appraisals may require managers to complete all reviews simultaneously, unlike continuous performance management, they may find remembering an employee's performance levels over a whole year challenging. This style of performance review can also add pressure in a workplace at appraisal time, as it may increase managers' workloads and can make employees self-conscious about their performance.

Related: A guide to 360 feedback questions (with example questions)

Continuous performance management

In contrast, continuous performance management is a more holistic review process that may feature weekly or fortnightly check-ins to assess how an employee is progressing. Most managers add these check-ins to their weekly work and can quickly adapt to the routine. Many workplaces are moving to continuous performance management because it can ease some of the pressure from reviews and give a well-rounded representation of an employee's performance.

Benefits of continuous performance management

Here are some benefits of continuous performance management:

Increased productivity

If employees have weekly or fortnightly check-ins with their manager, they may be more productive in their day-to-day work. Frequent reviews may help them stay focused on tasks, which naturally increases productivity. Increased productivity generally means progress for the business, so this can help employees and companies alike.

Related: What is a performance review template? (4 templates to use)

Reduced pressure

Employees may feel less pressured if their manager reviews their work continuously. This way, a less productive day may not affect their entire performance management review if their overall approach to work is positive. When employees are under less pressure, they may be more productive at work. This could also increase general productivity and positivity in the office.

Improved team engagement

Having continuous performance reviews may help employees engage and focus on their tasks. If you consistently discuss what they are doing well, they may feel more motivated to work hard. Plus, constructive feedback can motivate them to improve. If all employees have performance reviews around the same time, they may work well together and inspire one another to succeed.

How to develop a continuous performance management strategy

Here are some tips for developing a continuous performance management strategy:

1. Make a list of behaviours to look for each week

The first step is to analyse what to look out for each week. These elements could differ depending on the business and department, but you could include things like:

  • how well each employee collaborates

  • whether employees are on track to meet their goals

  • action on previous constructive feedback

  • improved performance and achievements

  • leadership skills shown by individual employees

Related: How to Prepare for a Performance Appraisal

2. Decide how often to speak to each employee

Depending on the company and department, you may decide to speak to each employee weekly, fortnightly or monthly. It's important to keep reviews consistent, so you might find it easier to commit to once every fortnight or once a month initially. Try to find a time, preferably the same every week, and put it in both your and the employees' calendars.

3. Take notes regularly

Throughout the week or month, make notes on each employee's performance. You can then refer to these notes during the interview. Try to focus on positives and constructive feedback, ensuring you note things they do well.

4. Conduct each interview at the time you arrange

Try to stick with the times you arrange for each meeting. If you have lots of meetings with multiple employees, maybe schedule each for just five or ten minutes, enough time to go through your notes and establish some goals for the week and month ahead. Deliver each review in a productive, optimistic manner, focusing on positives wherever possible.

Related: How to conduct employee performance reviews (with steps)

What to consider when developing your performance management strategy

Below are some things to consider when developing your performance management strategy:

Set achievable and practical goals

It's a good idea for a company to set achievable and practical goals for its departments and employees. To create these goals, managers might adopt the SMART guidelines, allowing them to make goals:

  • Specific: You can use specific language to ensure your objectives towards the team's goals are clear. For example, a goal for someone on a branding team might be to design a new logo.

  • Measurable: You can use numbers or dates to ensure goals are measurable. For example, a goal for someone on the sales team could be to make £5,000 in sales in the next month.

  • Achievable: Ensuring team members' goals are achievable helps avoid disappointment. For example, you might expect a senior member of staff to make more sales than somebody who's just joined the company.

  • Relevant: You can ensure each individual's goals lead to a larger team goal or benefit the workplace somehow. For instance, if the company experiences a staff shortage, the goal for an HR manager could be to hire three new members of staff in the next month.

  • Timely: It's usual to bind SMART goals with a date for reaching each objective. You might state whether it's a goal for a month, two months, six months or a year.

Assess the motivation of staff members

Ask each staff member to fill in a survey to assess their motivation. If you make these anonymous, they could include questions like:

  • 'How motivated do you feel about coming to work?'

  • 'What do you think could motivate you more?'

  • 'What can the company do to improve its management style?'

Think about the feedback and consider implementing some of these changes into the workplace if feasible. Having a more motivated team usually leads to more positivity and productivity, which could be a key focus of your performance reviews.

Consider who has leadership potential

Part of the importance of performance management is helping people become leaders. When assessing each employee's performance, consider whether they have management qualities. During the reviews, you can discuss whether each employee wants to become a manager. If they do, you might offer them some extra training or suggest further qualifications to develop their leadership capabilities. Discussing leadership possibilities could help employees feel more motivated to succeed in the workplace.

Related: Why is communication important? (And how to improve it)

Be transparent

It's a good idea to be as transparent as possible when conducting performance reviews. Go through the entire process with each employee, answering questions and inviting any comments. Transparency may encourage more cooperation from your team to ask questions and raise any issues they have in the workplace. Transparency also ensures that employees understand that you're likely to conduct reviews each week or month, encouraging them to work more productively.

Related:

  • What is a 360 review? (With advantages and disadvantages)


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