You can have a lot going for your company — great ideas, innovative products, and cutting-edge technology. But when it comes down to it, if you want your organization to succeed, you need a high-performance culture, with high-performing employees.
“An organization’s greatest asset is its people,” said industrial and organizational psychologist Cabot Jaffee, PhD, CEO and President of hiring software company Alignmark. “A company can have great technology, processes, [and] systems...but without good people the organization will still fail.”
One of the best ways to empower a high level of performance with your employees is through employee performance management. Managing employee performance is a must if you want your team — and your company — to thrive. Below, we explain why employee performance management is so important, and break down the best ways to effectively manage employee performance — and empower your team to reach their full potential in the process.
Why Performance Management Is Important
Effective employee performance management has a variety of benefits, both at the individual and organizational levels:
- It improves employee retention. Employees tend to look for new opportunities when they’re feeling stagnant. An effective performance management system can help employees continually grow and evolve, which can keep them engaged and committed to your organization. “One of the top reasons individuals leave an organization is when [they] feel they are not being given an opportunity for development,” Jaffee noted. “The performance management process is a foundation for feedback, development, and growth to occur. So, with better performance management systems in place, retention should be positively impacted.”
- It gives employees direction and helps them hit their goals. Employees can’t perform at their highest level if they don’t have clear direction on what they’re trying to achieve. Employee performance management — which includes setting clear goals, developing an action plan to achieve those goals, and providing support along the way — can give employees the direction they need to succeed. “Employees need direction in order to know where to focus their efforts,” said Edie Goldberg, PhD, founder and President of consulting company E.L. Goldberg & Associates and author of The Inside Gig: How Sharing Untapped Talent Across Boundaries Unleashes Organizational Capacity. “Setting specific, challenging goals, and providing feedback on progress toward goals motivate employees to achieve more than they would without having goals. Providing continuous coaching and feedback on how to make progress toward our goals helps drive performance improvement that leads to goal achievement.”
- It drives results. Arguably the biggest benefit of an effective employees performance management strategy is that it drives real results, and empowers employees to reach their full potential. “Employee performance management is very important because it leads...to producing optimal organizational results,” said Russell Thackeray, PhD, business psychologist and founder and Director of UK-based organizational development firm QED. “Without employee performance management, people would not maximize their skills and contributions or potential and innovations.”
Strategies for Managing Employee Performance
Effectively managing employee performance is crucial for building successful, high-performing teams. But first, you need to put a plan into action. Here are seven essential tips for building an effective employee performance management strategy.
1. Get clear on your starting point.
You can’t measure how an employee’s performance is improving if you don’t know where that employee is starting from. “In other words, if you don’t know where you are at the beginning of the development process, how can you know if you’ve improved and whether development occurred?” Jaffee said.
So, the first step of managing employee performance is establishing a baseline of where your employee is today. That way, you can continually measure their progress, compare it to their starting point, and see how they’re advancing throughout the employee performance management process.
How you assess your employees is up to you. “The assessment can be informal, such as observations, or more formal, such as a full 360-degree survey,” said Jaffee. The key is establishing that baseline of performance so you have something to compare future performance to as your employee progresses.
2. Deliver ongoing feedback.
“Performance management cannot be viewed as an [isolated] event; rather, it should be an ongoing process that happens consistently throughout the year,” Jaffee noted.
Delivering ongoing feedback keeps your employees in the loop about what they need to work on in real time, which can help avoid any potential misunderstandings or surprises come review time. No employee wants to sit down for a review and hear that they’ve been underperforming for an entire year and no one has bothered to let them know.
“When a manager saves up their feedback for a period of time, then it leads to ‘surprises’ on the part of the employee,” cautioned Jaffee. “There should never be any surprises during an appraisal if the manager has done a good job giving feedback as it is needed.”
If you want your employee performance management strategy to be successful, you need to be delivering feedback — and delivering it often.
3. Follow-up on (and measure) action items.
Delivering feedback is an important part of managing employee performance. But the feedback is only one part of the equation. For your employee performance management process to actually improve your employee’s performance, you need to take things a step further by developing an action plan to address that feedback, and a set of metrics for measuring their progress as they move forward.
“We know [that] what gets measured gets paid attention to,” Jaffee said. “So, if a manager simply tells an employee to improve — but that is never followed-up on — then it won’t occur. If you tell an employee you will be measuring that improvement — and hold them accountable for addressing any skill gaps — then [they are] much more likely to engage in the resulting development actions put in place.”
4. Avoid “performance micromanagement.”
Following-up with your employees and making sure they’re on track with their goals is a must for effective performance management. But there is a difference between performance management and performance micromanagement.
Employees “don’t want you to ‘manage’ their performance; they want to be inspired, supported, and developed to make a bigger impact,” Goldberg stressed. “This is not an invitation to micromanage.”
While it’s important to give your team the support and oversight they need to hit their performance goals, it’s also necessary to give them the space and autonomy to hit those goals in their own way. Make sure you’re not being overly involved — to the point of micromanaging — as they do that.
5. Help your team see the bigger picture.
You can give your team feedback on areas you think they can improve and help them develop a plan to make those improvements — think of that as the how. But if you want your employees to follow through, you need to give them a reason to improve — a strong why that’s going to inspire them to make the changes necessary to perform at a higher level.
In other words, you need to help them see the bigger picture.
For example, let’s say an employee is struggling to work collaboratively with their coworkers. Instead of just letting them know they need to work better with others, giving them a bigger reason why collaboration and teamwork are so important (for instance, being able to better work with others will enable them to move up in the company and make for a more positive work environment, both for them and others) can be a bigger motivator for change.
“Help people understand the purpose and meaning in their work,” advised Thackeray. “Linking day-to-day tasks to a vision or goal that is bigger than themselves helps to create aspirational thinking and a sense of belonging [and drive improvement].”
6. Build on wins.
One of the key aims of employee performance management is to help your employees set — and hit — their goals. When they do hit their goals, you can use that success to make their other performance efforts more successful as well.
“When [employees] achieve goals, milestones, or results, work with them to highlight their achievement — and on how to spread that success across all areas of their role,” Thackeray said.
For example, say one of your employee’s goals is to hit an ambitious sales quota — a goal they achieve the following quarter. In addition to celebrating that win, you should also discuss ways they can use that win to improve in other ways. This could be things like setting more ambitious goals in other areas of their job, such as upping their daily call volume or training new sales reps.
Effective employee performance management can lead to big wins for your team, and you can use those wins as a springboard for future successes and improvements.
7. Use the right tools.
All of these strategies will help you better manage employee performance. But to really drive results and make your entire employee performance management process more effective, you need the right tools.
“[The right] software makes the entire process more efficient and less time-consuming, and therefore increases the likelihood that the [performance management] activities will take place,” Jaffee pointed out.
Not only does the right software make managing employee performance easier and more effective, it can also provide you with the data you need to continually optimize your efforts — and make sure you’re providing your team with the right support.
“Software also provides a good central repository to manage all the data points — which, in turn, allows for much better evaluation of what’s working and what’s not,” Jaffee said. “It helps determine if certain actions are taking place, provides an easy way to share best practices, and helps quantitatively examine the effectiveness of what is going on related to performance management activities.”
At Lattice, our performance management tool allows you to work with employees to set goals, deliver and receive feedback, and increase the effectiveness of your one-on-one meetings — all from a single, easy-to-use platform. Lattice also offers a full analytics suite that allows you to better collect and understand data and track your employees’ performance over time — and then use those insights to improve your employee performance management processes and help your team reach their full potential.
Ready to learn more about how Lattice can help you better manage employee performance within your organization? Request a product demo today!