What is performance management?

As previously stated, performance management is not restricted to the annual performance reviews; it’s a system that expands throughout the entire duration of an employee’s tenure with the company. As such, performance management includes every interaction that management has with an employee, at every step of the employee journey. Ideally, it should turn each of these interactions into a positive learning opportunity.

Performance management systems may take many forms, and yours will likely be unique to your company values, culture and goals. Nevertheless, most follow a similar structure. Common components/actions of a performance management system include the following:

• Crating clear job descriptions
  
• Recruiting qualified candidates
• Interviewing candidates
• Further meeting with and testing candidates to determine strengths
• Selecting the most qualified candidates based on ability and cultural fit
• Extending job offers to qualified candidates and negotiating terms of employment
• Welcoming new employees to the company
• Orienting and integrating new employees into the company and culture
• Negotiating performance- and accomplishment-based standards
• Providing further training and education
• Delivering direct feedback
• Conducting regular performance-development discussions
• Creating employee recognition and reward systems
• Offering career development and promotional opportunities
• Assisting with exit interviews to determine cause of departure

Performance management is not a single event or tool. It’s not an employee review, survey or self-evaluation, and it’s not the technologies that exist to promote improved performance. Performance management is bigger; it encompasses and includes various actions and their associated resources, but performance management itself is a process—one that continues to take effect through the entirety of the employee journey.

With the understanding that performance management is an ongoing process, it would be inaccurate to visualise it as a sequence of steps. Instead, think of performance management as a cycle—one that is constantly repeating itself, while also adapting to incorporate new discussions. Here, we take a closer look at the four phases of the performance management cycle:

The first phase of the performance cycle is focused on planning. Here, organisations and employees work together to establish expectations. Performance expectations may cover a wide range—everything from hours spent in the office to compliance with company policies, but they usually fall into one of two categories: results and actions. Results are what the employee produces or accomplishes, and actions are the methods and behaviours demonstrated during the process.

With expectations firmly in mind, work together to establish SMART (Specific, Measurable, Achievable, Relevant, Time-Bound) goals. These SMART goals should each contribute to various company objectives, but they should also relate to personal development for the employee.

Identify the actions that should be taken within the next few months. Then, review the performance expectations within the employee’s job requirements, and make updates where necessary. Remember that this should be a collaborative effort between management and the employee, working together to construct a personal development plan that can help guide future action and show the commitment that both sides have to improving performance. 

During phase 2, employees review their goals and take necessary steps to achieve them. This phase is a continuous one, occurring throughout the year as employees work with management to implement and follow their personal development plans.

The tracking phase tasks management with monitoring employee progress, while also providing support wherever necessary. Committing to regular feedback allows management and employees to identify problems and make course corrections quickly, rather than waiting for these issues to become unmanageable.

In this phase, it is the responsibility of management to identify and mitigate any potential blockers that might be standing in the way, and to offer professional development resources, training and coaching to help ensure employee success.

The final stage of the performance management cycle brings the employee and management back together in a review setting. Here, they can discuss goal progress, assess training and development opportunities, review achievements, discuss possible advancement opportunities, reaffirm or re-evaluate career goals and evaluate the employee’s overall performance. This review is also an ideal time to work together to establish what steps should come next.

Again, relegating this phase to a yearly performance review may be an ineffectual approach. Instead, more regularly implementing this phase in concordance with the other three phases can ensure ongoing improvement.