Employees want their work and performance to be managed. They need feedback, they want to set goals, and they want to feel comfortable talking to their boss when they need help. That's why business performance management exists — it's a way for managers to support and develop employees to empower their work.

The key to business performance management is to not be a helicopter boss or demand perfection all the time. It's about instilling confidence and encouraging autonomy in employees so that, together, you can set challenging and meaningful goals. If this sounds hard, that's because it is. But it's worth it — the managers who nail business performance management are better at engaging, evaluating, and handling their teams.

This guide will serve as a foundation for business performance management. It gives an overview of key components and philosophies of business performance management and is packed with resources to help anyone transform their team.

If your company doesn't have a business performance management plan, read more about how to put together a blueprint for performance management here, or read more about the basics of business performance management:

  • The value of performance managementIf an employee is engaged, she understands how to contribute to the organization. . . . She’s been managed wellandshe’s managing well.
  • What is performance management? “Low employee satisfaction can permanently damage an entire organization, including the bottom line. . . . Organizations without positive employee-manager relationships suffer. In fact, bad management is expensive.

Be proactive about engagement

A key aspect of business performance management is that you know what your employees are good at and what they are excited about. This will help you find projects, roles, and career paths that invigorate employees, and make them look forward to their work.

It's also key for your business. Gallup's 2013 State of the American Workplace reported that active disengagement by employees costs American companies $450–$550 billion every year. Combine that with the fact that more than 60% of employee turnover is voluntary, and being highly attuned to engagement becomes a management fundamental.

You need to get to know your employee and stay on top of their developing interests through regular meetings, surveys, and performance reviews. This will give you a sense of how and when to challenge them to go for projects, clients, or roles that they actively want to be involved in.

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Think long term

Performance records and goals can be split into two categories: short term and long term. Both are important, but they are not equal. You need to look at long-term goals first and then work backward to smaller goals.

Having a long-term strategy will help your employee develop the skills they need to reach goals. A specific goal better enables you to give them support, focused opportunities, and work that's geared toward building them up for the next step. If you look only at short-term goals, you can unintentionally pile random work on employees without actually moving their career forward or developing their skills.

Starting with a long-term goal and strategy also provides a framework for ongoing conversation and evaluation of an employee's performance. According to a McKinsey report on performance management, “ongoing development conversations between managers and employees support better outcomes. In fact, 68 percent of respondents agree that ongoing coaching and feedback conversations have a positive impact on individual performance.”

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Set good benchmarks

Any effective goal needs to come with benchmarks. Benchmarks are a way to ensure that your employees are making progress, and they are a great way to boost your business performance management efficacy. A good set of benchmarks will:

  • Challenge your employees to learn and grow quickly, but not require punishing work to achieve
  • Be relevant to the employee's job and the business's goals
  • Measurably show strengthening of your employee's weaker skills

While it's up to you as a manager to help employees set and keep their goals, employees themselves should be a part of any benchmark-setting process. It will not only help them understand how to better shape their careers but also put you on the same page for expectations.

Monitoring benchmarks is as important as setting them. Each benchmark should have a deadline and a clearly defined outcome that's reviewed in a check-in meeting. If and when goals get off track, remind yourself and your employee that you are working on long-term outcomes. A few bumps in the road are to be expected, and a few diversions might be beneficial. Ultimately, you are there to help bring the train back on track.

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  • OKR 101: Everything you need to know about OKRsOKRs connect individual and team performance back to the shared company objectives, so management knows everyone is moving in the same direction. . . . This unique approach to goal setting was developed by Andy Grove at Intel and passed down to John Doer who brought the approach to Google. Today, OKRs power thousands of organizations from Spotify to the United States Navy.
  • How effective goal-setting motivates employees

Give feedback

Most of the feedback that managers give should come up regularly over the course of working with those underneath them. Project postmortems, prep for client calls, notes on a pitch deck, 1:1 meetings are all times when managers need to make a conscious effort to offer assessment and help. Yet while managers should be helping your employees craft their best work in more informal settings, formal feedback sessions are often when you have a chance to give employees the most concrete feedback.

These sessions should be employee-led, consistently scheduled, and focused on listening to your employees. In these sessions, you can be sure that employees will come with their pressing problems and their biggest questions. If you need to, you can ask them to prep a few things to help focus the discussion.

An easy question to check in on is what are your strengths and weaknesses?It will give your employee a chance to be introspective and choose one or two areas they need the most feedback on, giving you a great first step for moving forward.

Without all this feedback, it's harder to communicate with and develop that employee effectively — and 74% of employees agree that good communication from management was an indication that they had a strong performance management system. Employees need both positive and constructive feedback.

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  • How managers can deliver employee fe­edbackIf you want to continue to grow your team and accomplish the goals you’ve outlined, you’re much better off sharing constructive criticism—no matter how difficult that might be. How you deliver that feedback is sometimes just as important as the feedback itself.”
  • How to run a 1:1Research shows the main complaints employees have about their managers is not enough communication, particularly around both positive and negative feedback, clear direction, and making time to meet with the employee. . . . That’s why it’s so important to schedule routine 1:1 meetings.

Deal with underperformance

Unfortunately, there comes a time when an employee will need more constructive feedback and a larger evaluation scheme, one that falls outside of the normal scope of the feedback managers regularly provide, because the employee is underperforming. It can be uncomfortable to confront an employee who is underperforming or even actively slacking off, but it needs to be done. The longer you push it off, the worse the problem will be.

While this can be a tough conversation to structure, make sure you hit a few key points to keep things pragmatic:

  • Explain what the employee has (or hasn't!) done that is troubling.
  • Reaffirm the scope and responsibilities of the employee's role.
  • Work with the employee to figure out a solution that will get them back on track.
  • Schedule regular check-ins to ensure they are making progress.

This will set an objective and constructive tone and focus on moving the employee forward. It's important that the meeting is straightforward without being too harsh, and collaborative instead of preachy.

And when you see an employee working to get their performance back on track, reward their work and acknowledge their efforts. This will help your employee regain confidence and a sense of accomplishment.

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Get feedback

Just as you give feedback to your employees, your employees and your superiors will give feedback to you. When an employee feels something isn't working, or when you have your own yearly review, zoom in on your own areas of underperformance. Just as Michael Jordan is famous for working on his weaknesses until they became his strengths, good managers will constantly strive to improve their own performance.

This can be especially important when comments come from those who work under you. When a member of your team comes forward to give you feedback or asks to improve on a part of your working relationship, understand that your employee is doing so because they have the best interests of your joint success at heart.

Your employees want to be good at their jobs, and cues from those you manage can provide some of the most heartfelt and accurate feedback — they are, after all, the people that see your work the most.

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  • How to create a culture that encourages communication in both directionsGetting your organization to realize its full potential starts with creating a culture that encourages robust communication to flow in both directions. No matter how lacking a company’s communication skills may be, all it takes is a few changes to enjoy a more engaged workforce and better business outcomes.

Deal with conflict: working relationships

Sometimes, employees will clash with each other. It can be easy to categorize these clashes as personalities that don't work together, but that is actually not as common as you might think. Sharlyn Lauby, an HR consultant, says that most “personal conflict” in the workplace can come down to a disagreement about data, goals, or actions — not inherent problems with the other person.

These conflicts can be solved with deliberate realignment of the parties involved. Each employee should come away with a clear, defined understanding of the data and its analysis, the goal, or the actions at the core of the disagreement. Employees who are dealing with this type of conflict are people who want the best job done but can't agree on how to do it, so setting a clear path to success will greatly improve their working relationships.

Deal with conflict: interpersonal problems

For those remaining cases that truly are bigger problems between employees who are clashing for reasons other than their work, start by trying to resolve the issue on your own, where appropriate:

  • Meet with each employee separately, and listen to each side while reserving judgment.
  • Evaluate the severity of the problem and its effects on your team.
  • Craft a solution that will minimize or resolve the conflict.
  • Meet with both employees to ensure they are committed to the solution.

Easier bullet-pointed than done, but doable. The important thing to remember is that it's about ensuring that your team can work together without an issue, not turning employees into friends, or even into people that likeeach other. They have to be professional and respectful and get their work done — that's the goal.

If a more serious problem has come up or these steps do not resolve the problem, it may be time to get HR involved or shift roles to put space between employees. Especially when your team is feeling the strain of an awkward or hostile relationship, don't wait to get HR or your people manager involved.

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The best defense is a good offense

Business performance management is offense for your business. It is proactive work to develop and empower employees. When your team feels supported and has clear goals and the knowledge to reach them, big things will happen. As a manager, being truly invested in business performance management is a way to value employees and a rewarding way to help people grow and develop. It keeps you from ending up on the defensive and dealing with low engagement, turnover, or workplace conflict.