What is performance management?

First, let’s explore a quick overview of performance management . What constitutes performance management changes over time, with new trends dictating what drives employees, and how we should look at performance alongside other factors, such as engagement. While the term ‘performance management’ often encompasses how well employees fare during an appraisal or performance review, it also includes any ongoing management that is sustained throughout your entire business year.

Ongoing performance management is key

This is because employees often benefit from much more than just occasional meetings about performance throughout the year. Instead, checking in on them regularly helps you to keep track of their professional goals, as well as their overall career trajectory. It also gives you the ability to successfully coach employees, as well as to avoid any issues regarding performance which may arise as time goes on.

While getting performance management wrong can have huge consequences for retaining top talent, making sure that you have an effective performance management system in place can help improve your strategy. Listed below are five examples of key performance management systems which can help bring about positive change to your business:

1. Performance appraisal

One of the most commonly used forms of performance management system is the performance appraisal. This gives employers the opportunity to discuss an employee’s performance with them, in a one-on-one meeting. Your managers can go into a performance appraisal more effectively by making sure that they have thoughtful feedback prepared in advance. This gives them the opportunity to identify the key strengths and weaknesses of an employee. They may also want to bring documentation with them, and examples of the employee’s work.

While performance appraisals can be a great opportunity to identify the reasons for issues with an employee’s work performance, it can also be useful in helping you to spot and reward top talent in your team. By providing employees with a clear vision of their career path, you can help boost morale and increase retention in the long-term.

2. Balanced scorecard

If your managers are dealing with intense workloads and large amounts of information, then it’s likely that performance reviews aren’t too high a priority. With the help of a balanced scorecard, however, your managers can hone in measures which are crucial to the success of their team – in relation to your business’s main objectives. It essentially helps to make sure that you’re all on the same page.

A balanced scorecard is an effective visualisation of the ways your business strategies align with different projects throughout the company. This type of performance management system is easy to understand, meaning that managers can easily present these to the rest of the team when explaining the importance of meeting certain objectives. It also helps managers to better understand the steps that their team needs to take in order to achieve your company’s overall vision.

Balanced scorecards are beneficial as they help managers to design employee training programmes that better help in reaching company goals. This could be identifying a skills gap, and finding out whether certain goals aren’t attainable yet due to employees not having all of the right skills – especially if your business is undergoing a digital transformation.

3. Objectives and key results (OKRs)

OKRs are particularly useful if you want to be able to measure progress towards a goal in real-time – crucial if you need more regular updates about employee performance than a just few times a year.

Each employee has their own individualised objectives relevant to their role within the organisation. Key results are whatever their personal objectives contribute to the overarching objectives of your business. These objectives are usually part of a hierarchical structure: once a team of employees has achieved their objectives, their manager has then achieved theirs – usually to encourage their team to meet expectations.

There’s no minimum or maximum of when to take reports on OKRs. You might want to collect these on a weekly basis, or according to each business quarter. The more reports you take, the more detailed a picture you’re able to build on whether your employees are meeting their objectives or not.

Another benefit of OKRs is that it involves clearly allocating duties and responsibilities to employees, according to their role and skill set. It also helps you to set goals which are easily reachable by these employees, and is flexible enough that you can update these if employees are promoted or if the nature of their role changes over time.

4. Management by objectives

If you want to analyse an employee’s overall performance within their role, you can use management by objectives (MBO) to do so. Here’s a step-by-step guide showing you how to use this performance management system:

1. Assess how your employee’s job requirements match the overall objectives of your company;
2. Create a plan for setting of realistic goals for your employee to achieve;
3. Collect employee performance data in accordance with them meeting these goals (with adjustments if necessary);
4. Provide feedback to employees using this data.

Providing feedback to employees not only helps to give them an indication of what their strengths and weaknesses are, it also provides them an opportunity to discuss any aspects of the role they’re struggling with. It may also help you to identify avenues for further training, and whether there are any skills gaps emerging. It may also help you to tell whether employees are successfully managing their workloads, and whether some tasks need to be delegated to other employees in their team.

5. Project evaluation appraisal

If you want to monitor the success and outcome of one project in particular, a project evaluation appraisal can be useful. While this doesn’t involve directly assessing an individual employee’s performance, it can help you analyse how successful the overall contributions of a team are to a project’s outcome.

You can also use this type of appraisal to keep stakeholders in the loop about a project’s development progress, and it is also useful for budgeting and scheduling.

Some of the key benefits of a project evaluation appraisal are that it helps you to manage your teams better as a whole – it shows how its key players work together. It also means that you can keep track of who is accountable for which aspects of a project. Project evaluation can also lead to more efficient delegation of tasks to teams, which can boost your team’s overall performance.

Whether you’re looking to identify training opportunities and skills gaps, or reward your employees for their hard work, performance management systems are a vital part of your overall business strategy. While these different performance management systems can work effectively alone, you might find that a combination of the suggestions above leads to better performance outcomes. By looking at how well individuals are functioning, as well as how your teams work through projects, you can gain a better understanding of performance at every step of the way.