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Performance Management: How To Do It Right?

5 min read
Last Updated on 28 January, 2021
Performance Management: How To Do It Right?

Effective performance management is the key to unlocking your employees’ full potential.

The term “performance management” is used widely without understanding its true meaning.

So, what exactly is performance management?

Performance management can be defined as a process which continuously identifies, measures and develops the performance of the workforce in the organization.

With the help of performance management software, companies have the ability to simplify and accelerate performance reviews and performance appraisal while giving some power back to the employees.

As a leader, it’s your responsibility to conduct development planning, redefining performance standards and endowing employees’ with compelling development opportunities.

But, an effective performance management system is more than just about setting goals. The ultimate goal of performance management is improving the quality of work. A great performance management system knows how to :

  • Set relevant performance objectives i.e. not setting unrealistic goals.
  • Balance individual and organizational goals. Individual growth should be given as much importance as the company’s growth.
  • Ensure that employees understand and are comfortable with their performance objectives. Also making sure that the performance period allocated to the employees’ is sufficient.
  • Conduct frequent and timely employee reviews.

Why Performance Management is so hard?

In fact, only 14% of businesses are happy with their current performance management system.

Most of these systems have been in use for several decades. But the needs of today’s workforce have changed drastically. And the changing nature of organizations calls for an entirely updated performance management system.

Google has “open-sourced” its manager training slides, and they have a great framework for diagnosis. In their framework, performance problems tend to be caused by:

Unclear expectations: Your employees are unclear about their expectations. Maybe their manager hasn’t set expectations for them clearly, or a team-mate has not clarified that every team-member is dependent on the team’s performance as a whole.

Lack of skill: Your employees are unaware of how to perform the tasks expected of them and do not have the proper training to achieve those tasks.

Lack of will: Your employees are not motivated or interested in doing those tasks (they lack understanding or agreement of why they should be doing those tasks).

Must-Have Features In A Performance Management Program

However, not every performance management solution is created as an equal.

If you’re looking to upgrade to a more up-to-date solution, modern solutions for performance management are employee-centric.

An efficient performance management takes into account the ease of use for not only the HR personnel but also for the employees’. Such systems seek to provide:

  • Real-time and consistent feedback.
  • Goal sharing and agile goal management.
  • Recognition of stellar employees’ achievements.
  • Integration with communication tools that people use every day.
  • Mobile access.

7 Ways To Build An Efficient Performance Management System

Whatever obstacles you may be facing, here are some strategies to make things run more smoothly and efficiently in the workplace.

1: Goal management

To achieve results and improve performance, employees need to have well-defined, SMART goals. With clear goals, workers know exactly what they need to do and get more satisfaction from their work.

In many companies, goal setting happens only once per year. When the year ends, these companies revisit the goals they set a year ago. But often those goals are no longer relevant.

According to Deloitte, companies that look at goals every quarter see 30% greater performance and retention than companies that look at goals yearly.

Your performance management system needs to help users manage their work objectives continuously. Employees should be able to set weekly, monthly, and quarterly goals. They also should be able to share their goals with managers and track individual progress.

2: OKR Management Methodology

John Doerr originally presented OKRs to Google’s leadership in 1999 when Google was less than a year old. And they’ve been in use ever since.

The idea of OKR, which stands for Objective Key Results, is to connect the work of employees to the company’s strategic goals.

The objective is an ambitious goal that an entire organization wants to accomplish. Key Results are measurable tasks or milestones that define how a given employee can help to accomplish their objectives.

Here are a few keys to what makes OKRs work at Google:

  • Objectives are ambitious and should feel somewhat challenging.
  • Key Results are measurable. They should be easy to grade with a number.
  • OKRs are public. Everyone in the team should be able to see what everyone else is working on and how they did in the past.

3: Recognition

Recognition features are very important for a performance management system. Appreciating employees motivates them, increases their productivity and boosts self-confidence. Most existing performance management systems include recognition functionality.

4: One-on-One Meetings

One of the most under-appreciated tools of any managers toolkit is that of the one-on-one meeting.

It’s the time you take out to connect with each employee in your team, get a sense of what they’re working on, where their priorities are, any obstacles that are in their way, share information they need to know and develop a relationship with them grounded in trust.

Here are some tips to run productive one-on-one meetings:

  • To begin with, be consistent and regular with these meetings.
  • One-on-one meetings are a two-way street. Listen to what your employees’ have to say. Try not to superimpose.
  • See a one-on-one meeting as a bonding opportunity.
  • Particularly keep track of what you discuss.
  • Regularly discuss future expectations.

5: 360 Degree Feedback

360-degree reviews let employees receive feedback from their peers. In small improvements, employees can indicate who they want to be reviewed by. A reviewer then gets a notification to their email with a link to the review.

Reviewers answer questions and can view historical feedback about the employees. This feedback puts the review in context and includes records of one-on-one conversations, praises, check-ins, and other forms of feedback.

6: Ease Of Use

Your performance management solution needs to offer a simple user interface. Also, has to integrate with tools that employees use every day such as Slack, Gmail, and Outlook.

Your performance management app needs to be more employee-focused. And because the majority of your users will most likely be millennials. Thus, it needs to appeal to their preferences and needs.

7: Ongoing Feedback

Ongoing feedback is an important pillar of modern performance management systems.

Providing feedback is critical to engagement and retention. But to be effective, feedback needs to be regular and on the spot. Millennials want immediate recognition of their efforts. And they value feedback not only from their managers but also from their peers.

To Conclude

In brief, effective implementation of performance management system can propel your organizations to new heights. Thus treat the above point as a checklist to build a more productive workforce.

This article is written by Barasha Medhi who is a part of the marketing team at Vantage Circle. Barasha can be found either searching for interesting HR buzzwords to write about or looking at pictures of cozy Bel Air mansions. For any related queries, contact