Performance Management

People Management vs. Performance Management

July 9, 2021
November 7, 2023
Manasi Patel
Lattice Team

In his bestselling book on all things People strategy, Lattice CEO and co-founder Jack Altman discusses how a company’s people are its competitive advantage. Putting people first, keeping them connected, and aligning their personal growth with business objectives is key to company success. To achieve this, businesses have traditionally relied on performance management solutions that drive engagement and keep employees on track. But as the needs of the workforce change, companies are starting to realize the importance of delivering a positive employee experience through People management.

What is People Management?

When you think of what makes a good workplace, some things that probably come to mind are ethical policies, thoughtful leadership, respectful communication standards, work-life balance, and more. All of these aspects of a healthy work environment fall under the growing umbrella of People management.

People management is defined as a set of practices that encompass all aspects of how people work, behave, engage, and grow at work. 

By aiming to make the everyday lives of employees easier and more impactful, People management can have a direct impact on retention, engagement, and other important facets of the employee experience. Simply, People management is what turns a bad employee experience into a good one, which is why businesses are starting to take it seriously.

Elements of People Management 

1. Trust

A strong company culture can’t exist without trust. Your employees spend most of their week driving progress on company goals, so it’s important that they see work as a place of stability and support. When teams feel like their manager has their back, they’re more likely to take calculated risks that can pay off in the long run. Most of all, building trust between the business and its people fosters transparency and boosts employee engagement.

2. Active Listening

Effective People management involves understanding the challenges, strengths, goals, and motivations of your employees –– and this begins with active listening. Leadership and managers can practice active listening by having proactive, frequent conversations around employee experience. Empathetic, reflective, and open discussions at both the company-wide and individual levels often yield nuanced insights that can’t be discerned through data alone.

3. Training

When you invest in training your people, you’re building loyalty in your workforce. Managers are key to motivating and retaining employees, so it’s essential that they are trained to give and receive useful feedback — helping employees feel heard, supported, and equipped to succeed. At the same time, actively supporting employee development establishes a strong employer brand, which translates into commitment from existing employees and interest from strong candidates.

4. Recognition 

Recognizing employees for their efforts, wins, and personal achievements is integral for building a motivated workforce. When businesses highlight positive accomplishments, they give people the opportunity to see the direct impact of their work on their peers and the organization as a whole. Establishing a culture of frequent and consistent recognition also sets a standard for what success looks like at all levels and creates a workplace where expressing gratitude is the norm.

Altogether, these elements of People management establish a cohesive company culture and create an employee experience that attracts and retains the right talent.

What is Performance Management?

Performance management is the process of ongoing communication and feedback between managers, peers, and employees in the interest of accomplishing organizational objectives. Traditionally, performance management has been more of a retrospective function based on evaluation of past employee work. Today, advances in HR technology have evolved performance management into a continuous process that identifies and corrects performance issues.

Elements of Performance Management

1. Goals

A key component of any performance management system is setting and communicating goals across all levels of an organization. There are a number of ways you can structure the relationship between company, team, and individual-level goals. But regardless of which goal-setting framework you use, the purpose of performance management is to ensure that everyone’s work is aligned with a larger objective. Goals also serve as benchmarks for progress and should be dynamic in response to changing needs.

2. Data

Data is the reason performance management has become a continuous process for most organizations. Performance management software provides businesses with granular transparency into employee performance patterns so that they can respond proactively rather than reactively to issues. If a manager observes an uptick in incomplete or delayed tasks from a certain employee, they can rely on data-driven insights to restructure objectives or build a performance improvement plan to get the employee back on track. Data also provides an reliable foundation for feedback conversations by eliminating performance biases.

3. Compensation

Just as People management is tied to recognition, performance management at most organizations is tied to compensation. This seems relatively intuitive –– if an employee’s performance is meeting or exceeding expectations, they should be compensated appropriately. Rewarding strong performance signals to employees that they have the ability to grow at your organization. Effective performance management systems have a standard compensation structure in place that is visible across the organization, creating clarity and accountability. It’s important to keep in mind, however, that employee contributions come in many forms, all of which should be factored into compensation.

4. Accessibility

One of the first steps to managing performance is ensuring that all employees have access to crucial information needed to achieve their goals. Whether it's through a knowledge base, onboarding presentation, mentorship program, or employee resource group (ERG), you want to make sure that everyone in your workforce is fully equipped to do their job. Important things like process documentation, organizational charts, login information, branding assets, and messaging guidelines are tools that equip your employees to communicate with each other and tap into shared knowledge.

A Winning Combo

Performance management and People management serve different but symbiotic functions that, when implemented together, create a workplace that is healthy, safe, and productive. Aligning your performance management and People management strategies isn’t just beneficial for your employees –– it translates into improved business outcomes. Your managers need a system for setting goals and tracking progress in order to provide constructive feedback to employees, and your employees need a mindful and responsive company culture in order to take risks and grow as individuals. 

People Management Performance Management
• Focus: Employee needs

• Purpose: To address issues that affect employee experience and morale

• Managing employee database and logistics

•Drivers: HR, Leadership, Managers

• Goal: Alignment and progress on overarching objectives

• Focus: Company and team needs

• Purpose: To address issues that affect employee performance

• Drivers: HR, Leadership, Managers

• Goal: Employee engagement, loyalty, and retention

Having the right technology in place is key to enabling the continuous processes of performance and People management. But it’s important to acknowledge that these strategies are people-centric and driven largely by open and constructive conversations about the employee experience. To learn more about how to build an engaging company culture, check out the Wall Street Journal bestselling book, People Strategy.