Why Do You Need Effective Performance Management? How to Build One?

Shefali Vasave | January 10, 2022 | 133 views

What is Performance Management?

HR performance management is a type of organizational process that is used to evaluate the performance of an employee, group, or business unit. It can be a formalized process or an informal system. Performance management often includes feedback from the employees, managers and colleagues.

Performance management is a great way to identify developmental needs and set goals for employees to improve their performance in current and future positions. In a world where business is evolving rapidly in the face of a global health crisis, it is time to think of performance as a driver rather than as part of an organization. All of that is possible with an effective performance management process. An employee performance assessment includes:
  • Providing feedback to employees to help them understand how well or poorly they are performing: Giving feedback on both strengths and developmental areas
  • Setting goals for improvement
  • Evaluating progress towards goals and
  • Providing ongoing support for career growth


The Benefits of Implementing Effective Performance Management

There are many benefits to performance management. It is an essential part of any organization’s culture. It allows for employees to be clear on the organization’s goals, expectations, and how they are being evaluated. Performance management also allows employees to reflect on their performance and look for areas in which they can improve. The performance management process in HRM is also a way for employees to be aware of their strengths and weaknesses so they can focus on what they do best.

It has the power to affect the company's morale, productivity, and many other factors. The three main benefits of performance management are:
  • Promoting greater employee engagement
  • Ensuring that employees are performing at their best
  • Managing individuals to achieve organizational goals


“It’s critical that we have managers who see the potential, and the best in people, and who also have the skills to draw that out of them."

- Adrian Moorhouse, Managing Director at Lane4 Management Group.

Performance management is used to measure how well an individual or organization performs. Traditionally, this was done through an annual review process, but today, organizations are looking for more robust ways to measure performance. This has led to the emergence of performance management systems that incorporate continuous feedback loops and other tactics to get better insights on where employees need to improve.

The Drivers of Successful Performance Management

A successful performance management system is one of the most vital things in a workplace. It helps with motivation and productivity, lays out clear expectations, and makes the company a better place to work.

To make a company’s performance management system successful, it should be a part of its culture. It should also be flexible enough to address all employees’ needs and encourage them to achieve their goals.
  • An accurate appraisal of the employee's achievements and shortcomings
  • Development of a plan for improving weak areas
  • Monitoring progress towards achieving the goals set out in the development plan
  • Regular reviews to ensure that both parties are aware of the progress made

Performance management has found success when it focuses on continuous feedback from managers, employees, and peers about every aspect of their work lives. However, it also has to be fair by considering each person's strengths and limitations.

Companies can implement a successful performance management system by setting clear expectations. The company should communicate what is expected of the employee and what the company will provide.

For instance, the Fossil Group deployed a digital performance management process. The organization encouraged regular goal-setting to align with the company’s goals as closely as possible. The organization also had dedicated performance days when all work-related meetings and tasks were set aside for the day. The goal was to jump-start discussions among employees, managers, and teams about performance.


How to Build an Effective Performance Management System?

A successful performance management process is an ongoing process of evaluating the performance of employees. It entails the following steps:
  • Identify what the company’s goals for this year are
  • Make plans to help you achieve your goals
  • Measure your progress against those plans
  • Provide employees with feedback on their performance and help them improve
  • Follow up on feedback with coaching or more training based on individual performance as needed.


Conclusion

Performance management in HR is not just about taking stock of an employee’s work, but is also about providing a channel for discussing the areas that need improvement. It allows managers to give feedback and create a dialogue with their employees to improve themselves professionally. Performance management is a critical aspect of HR as it helps organizations identify and develop their high-potential performers.

It advises employees on what they should focus on in order to achieve their goals and objectives, both for themselves and for the organization. It also helps an organization identify priorities, whether those priorities are strategic or operational, and allocate its resources accordingly.


Frequently Asked Questions


What is the purpose of performance management?

A performance management system motivates and rewards employees for their contributions.


How is a performance review conducted?

The employee's manager conducts a performance review. The manager will meet with the employee to evaluate their performance in their position. The review process will include analyzing how well the employee has met the company's goals.


What types of feedback can be included in a performance review?

The best feedback provides constructive criticism and helps the employee become better at their job. This is why it must be specific, timely, and appropriate.
Some types of feedback that can be included in a performance review are: developmental coaching, formal mentoring, 360-degree feedback from peers, and customer satisfaction surveys.

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