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Performance management is defined as a continuous process of communication and feedback between a manager and employee toward the achievement of organizational objectives. The objective is to make sure that staff perform well over the whole year and resolve any problems that might emerge in the process. Performance appraisal is a key tool of performance management.
The traditional perspective of performance appraisal is used to validate compensation design and other HR-related decisions like promotion, demotion, transfer, etc. It has now shifted towards HRD activities like the identification of training needs and providing performance feedback directly to employees to enable them to make an informed choice about their career development opportunities.
The performance management cycle consists of four main stages:
In this stage, it is time for the managers to sit down with their employees to align on the performance expectations and agree on goals and objectives. This should be a cooperative process because employees are more likely to be motivated to succeed in their assigned duties and goals if they are aware of the reasons behind them. There are multiple goal-setting framework techniques like SMART goals, MBO, and other methods to define what they are trying to achieve and how they are going to achieve them.
The management can also create an employee development plan where the management can help the employees to strengthen their skills which makes them more valuable in the organization.
It is a key function to check and achieve the goals set in the planning stage. Once the performance expectations are set, the real task begins. It is generally advisable for the management to meet their employees on a weekly or monthly basis to check in on their progress, help them if any assistance is needed, solve problems that might have arisen, and adjust or set new goals if required.
Setting a yearly goal may lack proper planning and motivation as a plan of action may not be clear for the employees. Breaking the goals into monthly and then weekly subgoals can smoothen the process and make it more manageable as well as achievable.
A weekly one-to-one session with the employees can help in exchanging real-time feedback that ensures that they are on the right track, while also giving managers the chance to oversee the targets and adjust targets if needed. These one-to-one sessions can also be utilized to give constructive feedback to employees, help them professionally, know more about them personally, and have a direct check on their experience in the organization. All these activities can help employees reach their maximum potential and become an asset to the organization. Companies that switch to a continuous performance management process outperform their competitors by 24%.
This stage involves evaluating an employee’s overall performance for the last quarter, half year, or year depending on the time the company plans to conduct a review meeting. If the management was involved in proper monitoring from time to time, then there is no surprise element in the meeting. The review is the chance for the management and the employee to evaluate both the result and the process used. These reviews help the organization to identify standout talent and reward their work as per their outstanding performance.
The employees can put forward their perspective on how well they did during the year and accordingly receive feedback on the same from the management. Whether they were able to meet the goals and expectations set by the company or not and future increases in compensation or bonus could be discussed at this stage.
To avoid any biases during these performance reviews, many organizations have started to use 360-degree feedback which incorporates peer and self-reviews that can give more context for a person’s performance and broaden the review process by including a wider range of viewpoints.
This is the most important stage of performance management, and it cannot be neglected. It leads to employee motivation, increases productivity, and boosts company loyalty. Recognizing and rewarding employee’s efforts and accomplishments can promote and build the culture of the organization. They feel valued and stay loyal to the company.
The rewards should be merit-based. When the management fairly rewards employees and gives them recognition the employees will be motivated to work hard and achieve organizational goals. If some employees are rewarded without contributing much, then it could lead to a loss of motivation and effort by people who are worthy.
Some ways through which the organization can celebrate employee’s achievement are giving them a promotion, increasing their salary, awarding stock options, offering a bonus, and many others.
Use SMART goals:
Employees who create goals are 6.5 times more likely to say their workplace allows them to master the necessary skills to do their job. Goals attaining the SMART type have a 70% higher probability of achieving their goals.
When employee goals align with the overall objective of the organisation, everyone is working towards the same goal, which is advantageous for both parties. Employee commitment to the company is 3.6 times higher when they have goals. This aids in the organization’s effective use of its resources and tracking of its progress toward its goals. For instance, if the company’s purpose is to deliver exceptional customer service, HR specialists might collaborate with staff members to establish objectives linked to customer happiness, such as cutting down on wait times for customers or raising the number of favorable evaluations.
Employees who understand how their objectives fit into the overall mission are ten times more likely to feel inspired and motivated.
For employees to set objectives, monitor their progress, and realise their full potential, they must understand what is expected of them. There should be precise deadlines attached to the expectations. This keeps the workers engaged and focused. Their comments, either weekly or monthly, can assist the employer in understanding and bridging the expectations of the organization and the employee.
When workers are involved with the development of their own work, they are more likely to be dedicated to achieving their objectives. Their beliefs that they have a say in the objectives they are pursuing and that these objectives are relevant to their interests and professional growth are the cause of this. Employee goal-setting participation is another technique to ensure that objectives are SMART (Specific, Measurable, Achievable, Relevant, and Time-bound). When workers create their own objectives, they are more likely to take all these things into account and create attainable targets.
Feedback has a lot of direct impact on our work in the following ways:
There are different types of feedback- positive, negative, developmental, and constructive. The importance of constructive feedback will be highlighted now.
Giving employees comments on their performance might help them become more skilled and behave well. This is known as constructive feedback. A unique feature of this feedback is that it does not seem to be demeaning even when employers give negative feedback. Some of the benefits are:
There are certain ways that could be put into practice to improve performance management.
Thus, after these insights, we can say that in addition to improving business outcomes, highly motivated staff can be achieved by matching managers with people skills capable of providing regular feedback through an efficient performance management system.