Performance management: everything you need to know

What is Performance Management?

Performance management is the process of setting goals, measuring progress, and providing feedback to employees in order to improve their job performance.

When you ask people about performance management, you get a variety of responses. Some people think it’s a wate of time – a mere tick-box exercise. Some people fear it; they find it intrusive and stressful, worrying about being found to be under-performing. Others welcome it as an opportunity to discuss how they are getting on, receive valuable feedback and set goals for the coming year.

Done well, it’s a valuable tool to ensure that employees are best placed to contribute to the success of the organization. Regular check-ins and feedback sessions help employees stay on track and improve their skills, while performance metrics provide valuable insights into areas where improvements can be made.

There’s nothing worse, as an employee, than being in the dark about how well you’re doing. You think you’re working hard and doing a good job, but you’re left to try to pick up soft signals from people around you to work out if things are going well. Any criticism is taken to heart, and you’re never sure about which new skills to learn and what responsibilities to take on.

Good performance management fixes this.

This article will take you through why Performance Management is needed. I then look at the Performance Management Process itself, including the six stages of the Performance Management Process. I take a look at a couple of alternative ways of doing Professional Development. Finally, I’ve given a handy Personal Development Plan Template for you to consider.

Why is Performance Management Important?

Performance management isn’t a stick to beat people with. People are a business’s most valuable resources, and they need to be efficient, skilled and motivated. Good Performance Management Techniques provide a the key focus for ensuring that this can happen.

These are the key benefits:

1. Aligns employees with organizational goals. Performance management helps to ensure that everybody is working towards the same goals and objectives as the organization. This ensures that everyone is working towards a common purpose, which can lead to increased productivity and efficiency.
2. Provides regular feedback. Regular feedback is essential for employees to know how they are performing and what they can do to improve. Performance management techniques provide a safe and formalised way to give this feedback.
3. Identifies training and development needs. Performance management helps to identify areas where employees need additional training and development to improve their skills and knowledge. This can lead to increased job satisfaction, as employees feel valued and supported in their career development. It is also a chance to discuss career progression and what needs to be done to make the next step.
4. Motivates employees. Performance management can be used to set challenging but achievable goals for employees. When employees meet or exceed these objectives, it can lead to a sense of accomplishment and motivation to continue performing at a high level.
5. Supports decision-making. Performance management techniques provide data and insights that can be used to make informed decisions about promotions, pay raises and training needs.

The Performance Management Process

Your Performance Management Process should be a key part of your organisation’s Management System.

What is a Management System?

Your Management System sets out in an organised way how your company runs, covering everything from health and safety to how you produce your products. Every member of staff will want to know how they will be assessed, along with any do’s and don’ts that apply at your company. Having this clearly defined in your Management System will bring consistency across all of your teams.

A good performance management process is clear in its structure and objectives. Staff should be clear that, although part of the aim is to pick up on any areas of concern, the main purpose is to support people in their role and help them to improve and develop.

Gallup have some interesting statistics on how good Employee Engagement can improve performance, including an 81% reduction in absenteeism between teams. They also found that 70% of the variance in team engagement is determined solely by the manager. Training your line managers can give a very good return on investment!

What is an Annual Appraisal?

An Annual Appraisal is a formal meeting where an employee’s performance and achievements over the last year are reviewed against targets that were set, and new objectives are set for the coming year.

You may want to consider how you name the process. Annual Reviews, Personal Development Reviews, Professional Development Plans, Personal Development Plans, Continuing Professional Development, Annual Appraisals all have different connotations.

The terms “Annual Review” or “Annual Appraisal” can be viewed negatively. They are all about appraising whether people have done a good job or not.

Annual performance meetings involve setting goals for the following year. Objectives set in an Annual Review meeting are not just to improve a person’s career, but are seen as “must-achieve” objectives. Failure to do so may have consequences.

In the US, the term “High Performance Management” is common. This emphasises that it is about getting the best from people, not about dealing with poor performance.

“Professional Development Plans” (PDP), “Personal Development Plans”, “Continuing Professional Development” (CPD) are all more positive as they are about developing the person (forward looking) rather than appraising performance (backward looking).

Obviously, if you have put a plan in place, the results will be measured during the coming year. This seems less intimidating, though, than going into a meeting that is solely focused on “Appraisal of performance”. It is all part of developing excellent performance management techniques.

The Six Stages of the Performance Management Process

The Six Stages of the Performance Management Process are:

1. Objective Setting
2. Performance Planning
3. Performance Monitoring
4. Performance Review
5. Performance Feedback
6. Performance Improvement
7. Performance Reward and Recognition

1. Objective Setting

This is the stage where the employee’s job responsibilities and goals are set and detailed in their Personal Development Plan. The goals should be specific, measurable, achievable, relevant, and time-bound (SMART).

Here are 4 things to keep in mind when setting objectives:

Define clear and specific objectives. Objectives should be specific and measurable, so that progress can be tracked and success can be evaluated. Vague goals such as “improve customer satisfaction” are not helpful because they lack specific targets or benchmarks to measure progress. Instead, set specific and measurable targets such as “increase customer satisfaction ratings by 10% within six months.”

Align objectives with organizational strategy. Objectives should be aligned with the organisation’s overall strategy and objectives. This helps to ensure that employees are working towards the same objectives as the organisation as a whole. It also ensures that resources are allocated effectively and that goals are relevant to the company’s mission.

Involve employees in goal setting. Employees should be involved in the goal-setting process. This helps to ensure that objectives are realistic and achievable, and that employees are committed to achieving them. It also creates a sense of ownership and accountability among employees.

Set challenging yet achievable objectives. Objectives should be challenging enough to motivate employees, but also achievable. Unrealistic goals can lead to frustration and demotivation, while overly easy goals can lead to complacency. It is important to strike a balance between setting challenging yet achievable goals.

Performance Planning

Once objectives have been set, time should be spent talking about how these will be met. Hopefully, some of the goals will be a stretch for the staff member. They may need support and training to achieve them. They may also need to be put onto specific projects, or be given time out of their working day to do research or company development.

Having clear action plans will help guide the person through the work. It will also enable progress to be tracked throughout the year, supporting a positive outcome.

Performance Monitoring

Create a schedule to track progress against objectives. This will help ensure the goals are met. This can include regular check-ins, progress reviews, and feedback sessions.

Little and often is a good way to go, so that these meetings are efficient but not onerous. A Bi-Monthly “Check-In” can sound more friendly than a “Professional Development Review”. Notes should be made in the Personal Development Plan to give a complete picture of any successes or difficulties at the end of the year.

There will likely be actions for the line manage to carry out that come from these monitoring meetings. It is vital that these are done in a timely way, or it will give the impression that the performance management process isn’t a high priority and lead to discouragement.

Personal Development Review

A year-end review is an important opportunity to reflect on achievements, setbacks, and lessons learned over the previous year. It is the key meeting in assessing how a member of staff is getting on, how their role needs to develop, and to raise and address any concerns.

See the section below for a suggested format.

Performance Feedback:

Feedback, delivered kindly, is probably the most important aspect of the process. It is what every member of staff needs to be confident and improve. The feedback should be specific, timely, and focused on both strengths and areas for improvement.

Performance Improvement:

Plans for improvement should be made where necessary. Provide support and resources to aid the employee in improving their performance.

There are 2 sides for performance improvement – correcting poor performance and improving high performance.

Correcting poor performance can be difficult – often the most challenging aspect of a line manager’s role. It needs to be done sensitively and fairly, but at the end of the day, poor performance needs to be addressed to be fair to the rest of the team.

This is where a structure Performance Management process really helps. By working through the Professional Development Template, you should have ample opportunity to raise parts of the job that the staff member are struggling with, discuss any issues and put a plan in place to help things to improve. A formal meeting helps to keep any emotion to a minimum.

There may come a point where you need to explain that the level of performance isn’t what is required. This should be done calmly, and every attempt made to find out if there are underlying issues that can be helped with. Don’t hesitate to close the discussion and get support from HR if you feel uncomfortable in how the conversation is going.

Improving performance that is already good – or high performance management – is much more straightforward. Setting achievable but challenging goals, and planning how to achieve them, is the bread and butter of good management. Doing this with successful, motivated staff should be a rewarding experience.

Performance Rewards and Recognition:

Finally, good performance needs to be recognised and rewarded. This can include bonuses, promotions, or other forms of recognition that align with the your company’s values and culture.

Regular check-ins, emails saying ‘well done’, praising people in team meetings all feed into this process and don’t cost a penny. A good employee who is meeting all of their targets will expect to progress both their career and pay scale. Clear structures for this give clarity, and a good basis for discussion during the review.

Personal Development Review Format

Here are some steps you can follow to carry out a successful year-end review:

1. Set aside dedicated time. Choose a specific date and time to conduct your year-end review. Make sure to allocate enough time to go through all the necessary steps.
2. Reflect on the goals. Before the meeting, the member of staff should review the goals that were set at the beginning of the year. Consider which goals were achieved, which ones fell short, and why.
3. Review accomplishments. Make a list of the achievements over the past year, both big and small. Celebrate the successes and take note of the skills and strategies that helped to achieve them.
4. Assess any setbacks. Identify any setbacks that were experienced over the past year and consider why they happened. This can help avoid similar mistakes in the future.
5. Evaluate growth. Reflect on how the person has grown and developed over the past year. Consider any new skills, knowledge, or insights that have been gained.
6. Set new goals. Use these reflections to set new goals for the upcoming year. Make sure the goals are specific, measurable, achievable, relevant, and time-bound.
7. Plan action steps. Once goals have been identified, break them down into smaller action steps. This can help to stay motivated and on track throughout the year.
8. Training needs. Review any training that is needed to achieve the goals. Training can be formal or self-managed. Any training that is required should be noted and the manager should be proactive in helping to arrange this.
9. Discuss personal needs. People look to their line manager to help them navigate personal challenges with work, whether this be difficult relationships with colleagues, medical requirements, stress, anxiety or any number of any other things that may get in the way of doing a good job. Be prepared to ask open questions to find out if there is anything that the person needs help with. If you can’t help, identify somebody who can, and be sure to follow up.

Overall, a year-end review is a valuable tool for personal and professional growth. By reflecting on achievements and setbacks, team members can learn from their experiences and set themselves up for success in the year ahead.

Continuous Performance Management

Continuous Performance Management builds on the Regular Check-In part of the process and takes it to the next level. Annual Reviews are dispensed with totally, and performance management becomes an embedded process that happens routinely and continually, not part of an annual cycle.

This is a more natural way of communicating and improving. Objectives can be short-term, and are more easily aligned to projects and workplace cycles. It turns the focus onto employee growth, rather than having a tight link to rewards – pay rises and promotions.

While certainly not something for all companies, it’s interesting to look at how different performance management techniques can give good results. Take a read of how Deloitte have reinvented their performance management.

What is 360 Degree Feedback?

360-degree feedback is a type of performance evaluation. It involves feedback from different sources, such as colleagues, managers, direct reports, and customers or clients. The term “360-degree” means feedback is given from all perspectives. This gives the person receiving the feedback a comprehensive overview of their strengths and weaknesses.

The process typically involves the use of a survey or questionnaire that asks respondents to rate the recipient’s performance on various competencies or skills. The survey may also include open-ended questions that allow respondents to provide more detailed feedback.

360-degree feedback can be used for a variety of purposes, including performance evaluations, leadership development, and team building. It is often used in organizations that prioritize a culture of continuous improvement and development.

Some of the benefits of 360-degree feedback include:

• Providing a more complete and accurate view of an individual’s performance
• Increasing self-awareness and understanding of how one’s behavior impacts others
• Fostering open communication and trust within teams and organizations
• Identifying strengths and areas for improvement that may not have been apparent through other forms of evaluation
• Providing valuable feedback for development and growth opportunities

However, it is important to note that 360-degree feedback is not without its limitations and potential pitfalls. For example, it can be time-consuming and may require a significant amount of effort to collect and analyse the data.

It is important to ensure that feedback is delivered in a constructive and supportive manner to avoid causing harm or discouragement.

Personal Development Plan Template

Personal Development Plans will vary from company to company, and will no doubt develop over time to suit your needs.

However, here are some headings to consider for your Personal Development Plan Template:

Professional Development Plan

1. Professional Assessment
   1. Assess your current skills, knowledge, and experience.
   2. Identify your strengths and areas for improvement.
   3. List your career aspirations.
2. Career Goals
   1. Define your short-term and long-term career goals.
   2. Identify the steps you need to take to achieve each goal.
   3. Set a timeline for achieving each goal.
3. Professional Development Goals
   1. Identify the skills and knowledge you need to develop to achieve your career goals.
   2. Create a plan for acquiring these skills and knowledge, such as attending training courses, workshops, or pursuing further education.
   3. Set a timeline for achieving each professional development goal.
4. Networking and Mentoring
   1. Identify individuals within your industry who you can connect with for networking opportunities.
   2. Identify a mentor who can provide guidance and advice on your career path.
   3. Set up regular meetings with your mentor to discuss your progress.
5. Performance Goals
   1. Identify areas in which you can improve your job performance.
   2. Create a plan for improving your performance in these areas.
   3. Set a timeline for achieving each performance goal.
6. Action Plan
   1. Create an action plan that outlines the steps you need to take to achieve your professional development goals.
   2. Prioritize your actions based on importance and urgency.
   3. Assign responsibilities and deadlines for each action item.
7. Review and Monitoring
   1. Regularly review and monitor your progress towards achieving your professional development goals.
   2. Adjust your plan as needed based on changes in your personal or professional life.
   3. Celebrate your accomplishments and learn from any setbacks or challenges.

By following this professional development plan template, you can create a comprehensive roadmap for achieving your professional goals. Remember to regularly review and update your plan to ensure that you stay on track and continue to grow and develop in your career.