What is managing performance?

Managing performance is about creating a balance between employee happiness and productivity. Your HR team is an essential part of maintaining organisational performance. Providing your HR with the skills, data and targets to follow performance strategies is part of your overall business strategy.

Performance management systems are structured frameworks that support these efforts by enabling regular evaluations, goal setting, feedback and employee development.

Examples of managing performance include, but are not limited to:

• Outlining performance objectives
• Setting performance expectations for employees to align with organisational goals
• Analysing employee data and working with feedback to find room for improvement
• Working with individuals and teams to ensure that they are rewarded and promoted
• Working with individuals and teams to ensure that poor performance is monitored, improved or dealt with appropriately, such as through warnings

Performance management as an ongoing process

A good performance management strategy may extend beyond an annual review. For example, your people managers support ongoing employee development, fostering open communication and conducting regular performance reviews to ensure ongoing improvement.

To encourage best outcomes, people managers have skills like diplomacy, listening and clear communication. They understand how to manage conflict and find concrete solutions for improvement.

Consider integrating your performance strategy with your HR strategy, since your HR teams are often responsible for providing ongoing feedback such as weekly, monthly and yearly objectives.

What to consider before creating your performance management strategy

A holistic performance management plan encompasses learning initiatives, data analysis, feedback meetings and objective setting. Implementing a continuous feedback system ensures regular, timely communication to support employee engagement and growth.

How should you approach the performance management process?

The best way to approach performance management depends on the nature of your business’s organisation and the individuals within it. There is no one simple solution for improving performance.

However, there are some useful components to effectively managing performance, which include:

• Working out departmental goals, starting from your overall business goals
• Working with people managers to build close relationships with employees and help them to develop individual performance plans
• Generating feedback and progress reports for entire teams in your business, making sure that HR retains and analyses the people data from them in order to set new goals

Consider the structure of performance management as a feedback loop. By collecting employee feedback and data following performance improvement plans already in place, you can decide what works most effectively for your employees.

Discover what motivates your employees to work more effectively

Consider learning what motivates your employees to work hard, whether it be flexibility or other perks. Regular and timely feedback is valuable for addressing issues promptly and maintaining employee engagement.

Gather data on which motivating factors work

Also, consider gathering information on which employees are improving, where employee performance is declining and why. This helps you identify employees who are not responding to your performance improvement measures.

Identify opportunities for learning and development

Opportunities for learning and development may not only help improve performance over time. They can also keep your staff interested and engaged with your business and company culture.

Allow employees to speak up about their team’s performance management

Although performance management is predominantly led by your HR management, employees can also be involved in the process of creating your overall performance strategy. When employees feel comfortable discussing improvements, they may suggest upskilling or other growth opportunities.

With this information, you can start to revise your performance strategy to fit the needs of your team. Monitoring and tracking progress are important to ensure goals are being met and to make necessary adjustments. You can also decide whether to warn some employees about their performance so far or give them additional support.

Professional development and learning strategies

A good performance strategy allows for learning and development, as well as reviewing past performance. Make sure that your learning and development strategy is integrated with your overall performance strategy. Consider giving your employees their own individual personal development plans (PDPs).

Your HR and people management teams can help create these by analysing current and previous employee performance. Collaborate with employees and managers to create development plans that support employee growth and align with organisational objectives.

Your employee PDPs could ideally also include references to relevant company policies. The following is a list of some of the important sections to include:

• Sections describing short-term, medium-term and long-term goals
• Work goals and personal goals for each section
• Skills required to meet these goals
• An action plan for building these skills
• A brief overview of the employee’s previous experience, education, interests and background
• Opportunities for career development and professional growth

Use a performance development review to discuss progress

You can also review an employee’s performance as part of an appraisal. This is known as a performance development review (PDR). A PDR is a type of performance appraisal and is often part of a broader appraisal system designed to ensure fairness and recognise achievements.

The benefits of using PDRs

A PDR gives an employee the opportunity to discuss their progress with their manager confidentially. This includes any areas that they may be struggling with or skills that they are looking to improve. Developing skills and continuous learning contribute to long-term success and adaptability in the workplace.

What does a PDR involve?

Performance development reviews can involve:

• A discussion regarding how an employee’s goals align with your company’s overall goals
• Opportunities for career progression, such as promotions or training courses
• Redundancy discussions
• A one-to-one talk about an employee’s own experience of their role so far
• Discussion of employee performance, improvement and career trajectory

In the past, performance reviews took the form of an annual appraisal. However, it is becoming increasingly common for modern businesses to conduct more regular performance reviews, with more and more companies using management performance tools. This could be at the end of the week or on a monthly basis.

How often should you review an employee’s performance?

How often you review your employee’s performance may depend on the kind of work that they do and whether you deem it necessary. You might decide to monitor an underperforming employee more closely during a particular month or instead conduct regular check-ins every week.

Creating objectives

The planning stage of the performance management cycle provides an opportunity to set clear performance expectations and align employee efforts with company goals. During this stage, well-defined job descriptions help outline what is expected from each role and serve as a foundation for setting objectives.

To achieve your business targets, you might set daily, monthly and yearly objectives for your teams and individual employees. These can include targets such as employee learning objectives, sales levels, completion of tasks, monthly projects or campaigns.

Using the SMART model approach to performance

Businesses commonly use the SMART model for communicating objectives. SMART stands for:

• Specific
• Measurable
• Achievable
• Relevant
• Time-bound

To effectively track progress toward these objectives, it is important to use performance metrics and key performance indicators (KPIs) that provide measurable data on employee performance and goal attainment.

When to use alternatives to the SMART model for performance goals

For more complex tasks, consider alternatives to the SMART model for inspiration. Some disadvantages of the SMART model include:

• It focuses on short-term gains rather than long-term aims
• The approach is not holistic and is rigid, focusing on individual SMART goals rather than how they feed into the broader strategy or how goals can be influenced by other goals and outcomes
• It encourages employees to relax once they have achieved a SMART goal
• Some employees may become overwhelmed by in the details of achieving individual SMART goals without focusing on the broader strategy
• SMART outcomes are framed as success and failure-based, when the outcome may be less clearly defined

To address these challenges, consider alternative performance management methods, such as 360-degree feedback or Management by Objectives (MBO), which can provide a more comprehensive approach to complex or long-term goals.

Use a strengths-based approach to manage low performance

Consider using a strengths-based approach when employees fail to meet their SMART targets. A strengths-based approach may be an effective tactic when an employee’s performance ratings are low. When employees feel comfortable discussing improvements, they may suggest upskilling or other growth opportunities.

Learning about what motivates your employees

According to Skinner’s behaviourist model, learners only learn through a combination of positive and negative reinforcement. As a manager, you may notice that many appraisals and reviews of employee performance incorporate both positive and negative reinforcement. Some motivations for high performance can be positive, such as feeling included in your company culture, while others may be negative, such as the fear of losing their job.

By focusing on what positively motivates your employees, they may perceive you as a leader they can respect and trust. This is because you are proving you are listening to them, considering their feedback and rewarding them when appropriate.

Use coaching to boost motivation

Coaching sessions can be a useful motivator, supporting employee development by providing targeted guidance and encouraging, constructive feedback.

Linking pay to performance

Employees are now much more motivated by flexibility. However, bonuses and promotions are still strong motivators for many employees.

Offer bonuses and promotions

Compensating their efforts with bonuses can be a great way to retain employees and minimise turnover. Employees who become increasingly competent in their job may look for other opportunities elsewhere if they do not feel like they are being compensated effectively for their efforts.

If you are using a pay band model, during an appraisal you might wish to consider whether an employee has moved up a band.

Use annual reviews to assess eligibility for promotions and pay increases

Consider using a system or checklist for deciding when someone is due a promotion or pay increase. You might decide to have training modules in place that enable staff to gain the skills required to move up through the pay bands.

Consider whether your employees have the skills necessary to justify a promotion and corresponding pay rise. That way, you can reward hard work while also optimising the potential of your most competent employees and build a strong internal communication process as you do so.

Other kinds of performance-related benefits

As mentioned above, many employees today are motivated more by perks like flexibility and work-life balance than pay. Some of the popular employee benefits and perks include:

• Opportunities to work from home
• After-work social activities
• Gym membership and wellness activities
• Pension schemes
• Paid sick leave

Since this can vary from business to business, consider conducting surveys to discover which perks your employees want the most. By offering benefits and perks that matter most to employees, you could significantly enhance employee engagement and team performance by fostering motivation and collaboration.

To maximise the performance of your employees, find out what motivates them most. Try not to assume that they are solely motivated by pay. Consider creative approaches and get to know their personal and professional development needs through regular appraisals and team discussions.

Implementing a strong performance management system and a strong performance management strategy helps drive business success and contributes to your company’s success by aligning individual and team goals with organisational objectives.