To get the most out of your team, you need to have a solid performance process in place.
Admittedly, employee development often isn't at the top of the priority list for small businesses. However, to keep employees from feeling stagnant in their careers and unsure of how their performance compares to that of their co-workers, having a strong performance management process in place is critical.
Having such a process in place is crucial not only to employees' growth and development, it also impacts a company's bottom line. To create a valuable employee performance process, keep your company's mission and strategic goals in mind, as well as individual goals for each employee. The goals you set for your employees should tie in with your company's overall strategic goals.
What is a performance management process?
A definition of performance, in terms of human resources, constitutes standards by which employees are evaluated on their ability to complete tasks. The term process in "performance management process" pertains to the communication that is determined by managers and that takes place between managers and employees concerning an employee's performance and the employee's goals for their job position.
To best understand this concept, consider these examples:
Attendance: If you own a limo service company and your limo drivers are consistently late, it affects customer service. Limo drivers must report to work on time.
Communication: Clients who hire a marketing agency to mitigate damage caused by negative Google reviews expect clear communication so damage can be mitigated right away.
- Adaptability: If you run a medical practice, it's valuable to have nurses who can adjust their schedules on short notice to accommodate unexpected walk-in patients.
What are the steps involved in the performance management process?
The performance management process involves considerable planning. It's easier and more manageable to implement when the four steps below are followed.
An effective performance management process ideally occurs before an employee filling a position; it's the time when the management team evaluates the following aspects of a job position, including:
- A definition of the job
- The short and long-term performance goals of that position (Remember, goals should be clear, measurable, attainable, and relevant.) Performance goal examples may include time management, productivity and adaptability.
- What the performance evaluation of the position will look like.
Coaching falls in line with employee development and is commonly done in sales positions, but everyone in any job can benefit from it. As a manager, set time aside to provide constructive coaching to your direct reports.
In many companies, a formal performance review is held with each employee to assess their performance over time. That review generally includes giving and receiving constructive feedback. Some companies, however, offer a formal review twice a year.
During this step, recognize and reward employees for a job well done.
What are the benefits of the performance management process?
It may be unsettling to employees who are used to an annual evaluation to transition to this new process. However, by being transparent with your employees and communicating the benefits of a performance management process, they can be more accepting of it (and perhaps even excited about it).
The performance management process has benefits for both employers and employees.
It can boost morale. Employees like to know when they are doing a good job. A performance management process provides more timely feedback and praise to employees who are performing at a high level.
It can identify areas for improvement. Often, employers and employees get so caught up on their daily tasks that they forget to spot areas where improvements can be made. A revised process helps managers and employees identify and set new individual and department goals.
It supports company expansion. In a case where certain employees are going above and beyond delivering excellent results, a performance review helps employers identify possible opportunities for company expansion by promoting staff members and hiring additional staff.
- Companies boost their employee retention rate. When companies implement a performance management process, it fosters honest communication between managers and employees. Employees understand how their performance compares with that of their co-workers, they can feel good about the work they do, and they feel appreciated through the feedback they receive from their supervisor.
What are the different types of performance management systems?
According to TechFunnel, there are seven types of a performance management system:
- General appraisal
- 360-degree appraisal
- Technological performance appraisal
- Employee self-assessment
- Management performance appraisal
- Project evaluation review
- Sales performance appraisal
An example of a conversation to have when giving an employee mixed feedback could be:
"Thank you for your hard work this past year. I'd like to start your review by going over the three main big projects you spent the year working on. I acknowledge that you did a lot more than these projects, but considering the importance of these projects surrounding our yearly business goals, I wanted to focus on them. Can we proceed?
First, I applaud you for staying in budget on all three projects and completing them ahead of their deadlines. Your timelines for them were on point. Well done. Per the other department managers' feedback, the communications and directions you provided their teams with were clear, detailed, and organized.
However, on the new product launch, the creative director felt like you were a bit demanding with your requests. For your upcoming projects, how can we work on establishing your needs in a more welcoming way?"
An example of the type of conversation not to have when giving a negative appraisal might be:
"We have high standards at this company, and your big yearly projects had problems. Instead of waiting on me to give you direction, you started on your own. I also heard that your tone of voice was aggressive due to the lack of sleep you've been getting from your newborn child keeping you awake at night."
How does performance management fit into an organization?
Performance management ties into the bigger picture of an organization's viability. The benefits of an effective performance management process have been linked to administrative and developmental purposes that can be used to:
- Make smarter compensation decisions, such as salary increases and bonuses
- Identify promotion opportunities
- Hold employees accountable for their actions
- Identify opportunities where employees need further training
- Increase employee engagement
Should you use a performance management system?
Some companies find that investing in performance management software is helpful. To help you decide if you should invest in one, ask yourself the following questions:
- How will my company measure employee performance?
- What is my budget? Can my company afford software?
- How will the system elevate employee performance?
- What data will the software provide that my company is currently lacking? Will it truly resolve issues with employee performance and retention that I'm currently experiencing?
Additionally, as you talk to software companies, ask for a demo or if a free trial is available so you can better assess if the software program is right for your company.
What are some popular performance management system tools?
We spoke to business owners and an HR professional about the performance management tools they use and what they like about them. Here are the programs they named.
Asher Primrose, director of human resources at Continued, said her company uses NamelyHR for its human resources management system, goals management, and performance reviews. She chose NamelyHR over other tools due to its user-friendly interface and the ability to easily customize performance reviews to fit the company's culture and processes.
"We also use it to set annual goals, which are easy to align and link to team and company goals, and [it] provides transparency across the company as to what we are all working on," Primrose said. "Goals then seamlessly integrate into performance reviews for evaluation. Reporting and tracking is super simple, with filtering by team, manager, and year. It includes visual charts and more that can be accessed by managers and department leads."
"It has been tremendously helpful in keeping tabs on individual performance and tracking progress. What's really cool about Samewave is its promise-based management software," said Wilde. "The idea behind it is modeled after the concept of social discipline."
Wilde added that with the platform, there is an open and transparent environment where each member sees the duties and responsibilities of one another. Everyone knows who's responsible for what, and a worker is held accountable not so much by higher-ups, but by their peers.
"Each role is interrelated, so the work from one person cannot move forward unless another member fulfills his/her part," Wilde said. "If the project hits a roadblock, everyone will know who's responsible. I can take a step back and evaluate the progress of each project and see the conversations taking place."
"We mainly use it for tracking performance, payroll, and onboarding training, but it has also become a great tool for enabling employees to provide feedback as well as give 'shout-outs' to each other for work well done," she said.
What are examples of companies with a good performance management process?
Valamis offered five real-world examples of companies that have implemented a performance management process to much success:
Google: The company launched a project strictly dedicated to assessing managers. The pilot program was then carried over to employees to set them up for success.
Facebook: This social media giant emphasizes peer-to-peer feedback with its performance management process.
Cargill: This food producer and distributor created the Everyday Performance Management system, which incorporates daily feedback from managers to employees.
Adobe: After discovering that company management was spending more than 80,000 collective hours each year on performance reviews with increased employee turnover, the software company implemented a system that implemented more frequent check-ins between managers and employees, with the company giving managers more leeway to lead their teams and employees.
- Accenture: This company found that offering a fluid performance management process that provides employees with ongoing, timely feedback from their management team to be a more effective solution than the one the company had been using for years.