Welcome to our new weekly series on performance management. Join us every Friday as we’ll be posting a new topic to help you get the most out of your employees through various performance management strategies and techniques.
Organizations that are searching for renewed motivation and employee morale with increased productivity will find the solution with effective performance management. Essentially, performance management is helping your employees work more efficiently and in line with the goals of the organization.
It is an ongoing process that involves motivating employees to meet expectations, providing training to address skill deficiencies, and adapting reward systems to encourage employees to meet expectations. Performance management gives employees a greater engagement with the organization and heightens their feeling of value since they know they are directly contributing to the organization’s overall success.
A History
Though it’s always been around in one capacity or another, the “official” concept of performance management dates back to about sixty years ago as a means of justifying an employee’s income, where employees were evaluated based on their performance and given an income that matched their performance levels.
There have been many new developments since performance management begun. In the 1980s the biggest redesign occurred by expanding the outlook on employee motivation to include learning and developing motivators, as it was noted that not all employees are driven primarily by income reward.
These days, performance management has become more specialized and more formalized, and is used over a variety of places, such as companies, organizations, sports teams, and religious or community groups. Basically, it can be applied anywhere people interact with a common production output goal.
The Performance Management Appraisal
Central to performance management is the employee performance appraisal: a formal and systematic review conducted at least annually. The goal is to “align individual performance with organizational performance.” The processes involved should direct the employees’ attention to the degree to which their actions are aligned with the goals of the organization.
Many people often ask “What is the difference between performance appraisals and performance management?” Performance appraisals differ from performance management in that they are once-a-year reviews that look back on past performance, whereas performance management is an ongoing focus on maintaining the present objectives and aligning future objectives.
Here are some of the more interesting take-aways of appraisals:
- Performance management is motivating employees to perform well.
- Performance management relies on having a valid performance appraisal system.
- Performance appraisal should provide information on employee promotion, contingent rewards, firing, and for informing human resources decisions as well.
- Discussions regarding development and Human Resources decisions based on the performance appraisal should be completely separate (i.e. separate meetings with the employee; separate emails, phone calls, communication).
- In order to avoid reducing employee personal interest in doing their job well, compensation should not be portrayed as a control mechanism. An appraisal should be a motivating factor that provides information to the employee about the approach they are taking (e.g., confirming competence).
- Managers play a key role in performance management. They should give ongoing support and feedback to employees throughout the year.
Benefits
Effective performance management includes set objectives that follow the organization’s overall strategic goals. If executed correctly the benefits incurred are numerous.
However, stress needs to be placed on aligning objectives with organizational goals. A CEO can say that production needs to increase by 10 percent, but this needs to be communicated through the proper channels to every department, every manager, and every employee. Then each individual that has a direct influence in increasing production will be motivated and measured on their ability to do so. Their performance appraisal will show how much they contributed to this goal, whether favorably or unfavorably.
As you can see, this approach to performance management can provide many positive effects:
- Clarifying the responsibilities and expectations of employees. Employees will benefit from ongoing support and clarification of their expectations and responsibilities. The employee can move forward at all times, confident that their work is relevant to the set objectives.
- Improving communication flows between employees and supervisors. Communication will become more frequent and both parties will have more opportunities to offer their input and contribute to the dialogue on achieving the objectives. Communication becomes more collaborative.
- Helping to align employee behavior with organizational goals and strategies. Performance management provides a formal structure that employees can work along with. The guidelines that are set provide a framework to what is being assessed and how it will be assessed. Employees will also be better equipped to manage their own performance.
- Performance appraisals will be relevant to everyone. Conducting regular reviews will help to better align employee performance. Managers and employees can review and adjust objectives to suit any changes in the organizational or business environment. This will help to ensure employees remain on the right track.
Hopefully you’ve begun to see the reasons for and benefits of implementing a formal performance management program for your organization. Join us next week as we outline and give a complete overview to performance appraisals.
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