What do we mean by Performance Management?

What do we mean by Performance Management?

January 3, 2019

When we think about performance management, we tend to think of the annual appraisal process to ensure that targets have been met throughout the year, and set goals for the following  twelve months in line with organisational strategies and goals.

However, this is becoming a somewhat more stagnant approach.

Although the idea of an annual appraisal is that it’s a working document, this often does not reflect in reality.

Business strategy can change to reflect external influence, for example political, technical and legal changes. Therefore the targets set in an annual appraisal become no longer relevant as external forces make us change strategy.

Why Do I Need to Manage Performance?

If people are the greatest creators of value in organisations, then good performance management is critical for organisational success. Employees must understand what’s expected of them, and to achieve those goals they need to be managed so that they’re motivated, have the necessary skills, resources and support, and are accountable.

The days of ‘I pay this person to do a job, so they should just do it’ are long gone. Jobs for life are no more, and the labour market moves with more fluidity.

This gives the employee more flexibility in terms of searching for and potentially obtaining alternative employment.

The old approach of ‘do as I say’ will not motivate or engage your staff, nor retain them.

This can prove costly for the organisation with the average cost of replacing an employee £30,000. £25,000 is due to loss of productivity, whilst the remainder is due to the logistics of finding a replacement.

However research highlights that those employees who understand business objectives, and understand the business strategy, are more inclined to perform well.

Therefore, team and individual objectives should be reflective of this.

Employees need to understand where they fit into the bigger picture, the importance and value of their duties and their role, and understand what direction the organisation is heading in.

When this is achieved they feel more valued and start to care more about the company for which they work.

Performance Management is there to:

  • Establish Objectives – whereby the employee can see their part in the organisations mission and strategy
  • Improve performance – among employees, teams and therefore organisations;
  • Holds people to account for their performance – by linking it to reward, career progression and Company goals.

What’s The Best Way To Manage Performance?

Performance management should be:

  • Strategically aligned – with broad issues and long term goals
  • Integrated with various aspects of the business and how people are managed.

Performance management is continuous, not an isolated event that happens annually.

It is also multifaceted, and there is no ‘one rule fits all’.

However, performance management should be holistic, revolve around continuous effective feedback, and should align itself to the job in question and organisational strategy. Whilst we traditionally think of the annual appraisal as a reflection on previous performance of months gone by, modern performance management reflects on current performance, and looks forward to new performance objectives continuously.

Senior leaders need to be pivotal and ensure their people managers are instrumental in performance management. People managers need to reinforce the links between organisational and individual objectives so make sure they have the tools to do this.

Performance management needs to be regular, both informal and formal.

It needs to define and review objectives, link the objectives to the business objectives, and ensure its success can be measured.

Formal performance reviews can be set up periodically, but with the addition of creating a culture in which employees can approach their managers about the resources they need to perform their job well, in addition to the manager providing perhaps a morning briefing to the team or individual with objectives of the day.

This can be a very quick conversation in the morning.

These objectives can be uploaded easily to Human Resource Information Systems, such as Breathe HR whereby teams and individuals can also see visually what their objectives are for the day.

However, do not micro manage! Lack of autonomy can cause stress and disengagement.

If you want to talk to us about your options for effectively performance managing your team, please do not hesitate to give us a call on 01527 909436


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