Performance management is a process or system that a company uses to engage its employees. It aligns a company and its employees’ objectives and expectations.
The performance management process generally involves:
planning work and setting expectations
monitoring employee performance
training and employee development
periodic performance feedback
rewarding achievement of goals and expectations
By establishing a performance management system, a company ensures that its employees clearly understand the overall mission and values of the company. Performance appraisals don’t take place annually, but rather management collaborates with an employee on a frequent basis and evaluates performance daily, weekly or monthly. In the past, management provided goals at the start of a project and feedback at the end of a project. However, under a performance management system, management is expected to work continuously with an employee; providing ongoing feedback and support when needed. Continuous involvement ensures that project goals are clear and that objectives are completed timely and within expectations.
Performance management begins during the hiring process. Expectations are clearly delineated in the job description and when an employee applies for a position within a company. Once an employee is hired, management must provide an effective new hire orientation, assign a mentor, and effectively integrate the new employee into the workplace. Training and additional education is provided on an ongoing basis. Coaching and guidance is provided to the employee when needed. Performance is evaluated periodically (monthly or quarterly) to ensure that an employee receives clear objectives for his goals and to determine if further training is needed. The company is also responsible for designing a progressive compensation and recognition system. A successful reward system will compensate employees as they fulfill goals. Companies should provide promotion opportunities to its employees including working in other areas of the company. Lastly, a company’s HR team should assist with exit interviews that gather information on the reason an employee is leaving the company.
Research has found that effective performance management improves business and organizational results by reducing overall costs and boosting incentives for employees. Overall, employees feel more engaged and in-tune with the demands of the company and goals of the company as a whole.
Learn more about workforce management and talent management.