Why Performance Management Is Important

By Jamie Birt

Updated February 8, 2022 | Published October 7, 2019

Updated February 8, 2022

Published October 7, 2019

Jamie Birt is a career coach with 5+ years of experience helping job seekers navigate the job search through one-to-one coaching, webinars and events. She’s motivated by the mission to help people find fulfillment and belonging in their careers.

Managing performance is essential to workplace success, but many teams need a strategy that goes beyond basic evaluations. Performance management incorporates a complete system of goals, reflections and rewards that encourages team members to do their best work.

In this article, we discuss what performance management is and how to build a strong performance management strategy.

Related: Using Performance Management in the Workplace

What is performance management?

Performance management is the process of observing and directing an employee’s accomplishments at work. As an alternative to the standard employee appraisal system, performance management takes a more comprehensive view of your team’s work. A successful performance management strategy is continuous, allowing managers numerous opportunities to correct and reward team members.

It also allows team members to have many chances to improve their work. Effective performance management impacts both daily work and overall processes, empowering teams to succeed in the short term and over a long period of time.

Setting effective goals

A good performance management strategy begins with setting practical goals. Consider preparing an updated job description for your team members and discussing how you would like each one to progress. Then work with your team to establish SMART goals that align with their current roles and career objectives. These goals should meet the following criteria:

  • Specific: Your team’s objectives should be as exact as possible. For example, a team member might aim to secure a senior assistant role within your company.

  • Measurable: Each goal needs boundaries that your team members can quantify. For example, completing a training session and mastering a skill by a specific date are easy goals to measure.

  • Achievable: Your team’s goals should be realistic. For example, accomplishing a promotion during the next year may be more attainable than transferring from an entry-level role to a CEO position in a few months.

  • Relevant: Every goal should be something that your team members truly want to accomplish and should relate to a larger plan. For example, each skill that your team members aim to master should be essential to the ultimate goal they are striving to achieve.

  • Time-based: Completion dates will help your team members reach their objectives on time. For example, an employee may decide to earn an administrative certification within the next six months.

Next, work with your team to transform their goals into an actionable plan. Try to give them the resources and time they need to accomplish their objectives. You can then decide together on future points to check in and report on progress.

Read more: SMART Goals: Definition and Examples

Building an engaged team

A successful performance management system builds engaged teams by welcoming open dialogue. You can do this by establishing weekly team meetings or monthly check-ins.

As you connect with your team, develop a process for measuring how engaged and motivated your team members are. Consider asking them to complete surveys on a regular basis providing post-project reviews. Schedule these check-ins once a month or once a quarter to ensure that you keep team members motivated as often as possible.

Read more: Ways to Conduct Employee Performance Appraisals

Improving productivity

The benefits of effective performance management extend far beyond team members themselves. Better performance often leads to improved productivity, which can make a substantial impact throughout your organization.

When advising team members about SMART goals, discuss how employees will track their output and measure their progress. In addition to regular progress meetings, collect data to monitor and analyze team productivity. By opting for this objective measurement, you can offer impartial feedback and guidance to help your team members reach their goals.

Establishing transparency

To create a performance management system that embraces transparency, outline the process as far in advance as possible. Demonstrate how they should prepare and how to achieve a positive outcome to provide structure and help them succeed.

Be clear about the motivations behind the performance management process to encourage employees to become invested. Explain how team goals and individual accomplishments contribute to corporate excellence and strive to be as transparent as possible about potential rewards or advancements that may result.

Planning for improvement

With continuous performance management, employees can easily understand how they are performing at all times. As a result, they have a better sense of how to manage themselves on the job, and they can more effectively set goals and plan for the future.

Managers who successfully adopt a performance management program can also make more informed plans for improvement. As a supervisor, performance management gives you a much clearer idea of how your team is progressing so you can allocate resources and optimize productivity.

Read more: Management Skills: Definition and Examples

Recognizing high performers

A good performance management system incorporates recognition at every step. As a manager, you can recognize team members during weekly check-ins, at the close of projects or the moment they have accomplished major goals. Since this system offers clear insight into team members’ action plans and SMART goals, you can plan rewards and offer incentives when they will make maximum impact.

Rewards and recognition can go beyond financial incentives, too. Offering public accolades and extra perks can help team members feel appreciated, reinforce good performance and boost employee retention.

Developing strong leaders

The best performance management programs make leadership development part of an ongoing process. Team members can establish themselves as potential leaders as they chart their SMART goals. Managers can identify leadership qualities during frequent dialogues with team members.

As a manager, you can empower team members to develop leadership skills by taking charge of projects or enrolling in training programs. By offering support and feedback throughout the process, you can enable team members to perform their best, driving personal gratification and cost-effective benefits for the company.

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