The Australian Human Resources Institute defines performance management as:
“the practice that drives decisions about performance, remuneration, promotions, disciplinary procedures, terminations, transfers and development needs within an organization.”
This is the line of thinking we like to take at intelliHR when considering performance management; it’s proactive, focuses on reinforcing good work, and encourages improvement with the team member’s ownership. It’s not just about penalizing underperformance.
In fact, we would go one step further and say that in this way, performance management is far from something to be feared or avoided; it actually has the potential to empower employees and their leaders, when implemented effectively.
So if there’s more to performance management than warning letters and nerve-wracking annual review meetings – what else is there?
Let’s explore a more full-circle approach to performance management – different organizations will all have slightly different needs, but we’ve identified a number of key areas every business should be including in their holistic performance management process.
1. Continuous feedback
Your organization’s performance management journey would be best to incorporate continuous feedback captured every month. Gathering continuous feedback allows you to capture 360 degree insights from managers and their direct reports, allowing issues to be identified and dealt with immediately rather than waiting for a half-yearly or annual performance review. The other neat outcome is that the formal reviews become much more forward-looking, focusing upon strategic alignment and ensuring any skills gaps are identified and fixed via training.
An additional benefit of a consistent continuous feedback process is the insights you can derive from gathering this data. Using intelliHR, these rating responses will be tracked in your analytics where you can then look at aggregate ratings to get a measure of progress and happiness across teams, allowing you to drill down to understand individual teams and consider trends over a period time.
Key words and phrases from qualitative responses will also be analyzed for sentiment providing insights into the emotional tone behind the responses of individuals or teams.
2. Goal setting and tracking
When measuring an employee’s performance, it’s also critical to ensure everyone in your organization has clear goals to work towards every day.
Not only does this give your people clear boundaries to operate within keeping them aligned to organizational objectives, but it also reduces the expectations gap between managers and their direct reports. Everyone knows what is expected of them and their team, and there is transparency in how each person’s performance is measured.
Allowing employees to set their own goals, in line with overarching organizational strategy, has the added benefit of empowering them to feel in control of their role and their success. Ideally, these goals should be set and tracked online so everyone can view goal progress in real-time. intelliHR’s goal management feature is designed using gamification concepts, to keep the process enjoyable and encourage employees to keep progressing towards their goals.
FREE DOWNLOAD: Employee SMART goal setting worksheet
In order to give employees the best possible chance of achieving their goals, skills gaps must first be addressed.
Your continuous feedback forms should ask staff if there are any areas they feel they would benefit from additional training in. This can also be supplemented by looking at the training their peers have received, compared with performance across the team, to ensure everyone is getting the same learning opportunities they require to do their best work.
intelliHR’s training needs analysis dashboard will take all of this information and highlight key areas where specific teams and team members will benefit from additional training.
4. Performance monitoring
Once goals are defined for every employee, performance can begin to be monitored with goal progress as one source of benchmarking. The end goal here should always be to identify areas for improvement proactively, and offer solutions to help people improve, before problems escalate.
It is also an opportunity for the employee to be “rated”, both as a self-assessment and by their manager. Keeping in mind that we want to take a more proactive approach, it may be worth considering your rating scales as well. You will want to ensure that the ratings being applied reflect a “positive action”.
If an employee is struggling, they may feel apprehensive to hit a “below expectations” button, but “needs help” is much more welcoming and shows that the result of their selection is more likely to lead to improvement, rather than result in a warning letter!
5. Diary notes
There will, of course, be some occasions where it is necessary to record serious breaches or lapses of judgment from an employee. This is an important step in the performance management process to build a case for warnings or terminations where necessary.
By recording diary notes, further value can be extracted by analyzing these diary notes for key themes or trends. For example, if a particular policy is being ignored time and time again, it may be necessary to update or reinforce it among staff.
After meeting with a team member, diary notes can also be used to record automated reminders to check in at a later time and gauge if improvements have been made.
6. Performance improvement plan
Performance Management typically involves sitting down with a team member to discuss how they are progressing and areas they need to specifically address, but what happens next is the important part. intelliHR offers a Performance Improvement Plan workflow which is kicked off by the team leader following such a meeting.
This prompts the team member to write their own performance improvement plan as an outcome from their meeting. The plan can be approved by the manager, and will be automatically followed up with the team member over the stipulated time to complete. This structured process allows the team member to “own” the improvement process, making it much more likely to succeed.
Diary Notes can be used to record recognition as well. According to research from Deloitte, organizations who reinforce employee achievements with recognition see 14% higher productivity and performance compared to those who give no recognition. Beyond simply having recognition systems in place, it’s important for managers to understand what motivates their employees to provide them with recognition accordingly. Some people may enjoy receiving public recognition, while others would prefer receiving this feedback one on one.
While it doesn’t motivate every employee, compensation and benefits are another facet of recognition which can be used to reinforce positive performance. By comparing all of the performance measures mentioned above against business outcomes, employees can be awarded pay increases or bonuses in-line with the value they bring to the organization.
9. Performance reviews
Once you are gathering all of the above information in a central place, then you will have the means to pull all of this data together into an instant Performance Summary Report for any given employee.
By implementing all of your performance management processes in one place, you can ensure that every review is free from bias, and gives the full picture of performance. This makes for a performance management process that can respond to issues proactively as well as empower employees and their leaders.
FREE DOWNLOAD: Performance review template
Those are our must-have performance management process components. What does the process look like in your organization?