Technology is advancing at an unprecedented rate and forcing companies to adapt and become more flexible and innovative in order to remain competitive. Continuously improving your organization and its operational processes has become a vital part of modern‑day business.

Performance management is the ideal way to achieve critical objectives effectively and efficiently. But what are performance management’s biggest benefits? And how can you successfully implement this way of working? These are the questions we’ll be answering in this article.

What is performance management?

Performance management is a process that aims to correlate an organization’s objectives to those of its individual employees.

ManagementSite adopts the following definition:

‘Performance management entails systematically mapping strategy to operational processes (using KPIs), monitoring and evaluating these processes in order to gain feedback, and then determining if and how the original strategy needs to be altered. When combined with the intelligent use of information systems, this cycle ensures that organizations can respond more rapidly and effectively to internal and external changes.’

Performance management entails running your business based on organizational objectives and results. Key performance indicators (KPIs) generally play a major role in this process.

It’s a system of monitoring and managing your organization, with the aim of implementing its strategy and achieving its objectives, by mapping these to operational processes.

Why start with performance management?

There are many reasons why it’s worth your while implementing performance management. If you do it properly, it can take your organization to the next level. Here are a few of the foremost reasons:

1. Greater clarity

Performance management provides greater insight into the goals and results at management and staff levels alike. It involves making and documenting clear and concise agreements. By monitoring progress carefully and adjusting course accordingly, you can then help your organization achieve its objectives more effectively and efficiently.

2. Higher engagement

Proper performance management increases employee engagement within your organization and with its objectives. When your staff know your plans and goals and are involved in implementing and achieving them, they feel more appreciated, take more initiative, and experience a greater sense of self-fulfillment.

3. Broader insight

Performance management maps objectives and plans to operational processes throughout your company, and this allows bottlenecks, problems, or inconsistencies to be spotted more readily. And because you can see at a glance how your organization, departments, and individual employees are performing, it allows you to respond more agilely.

4. More options

Continuous feedback plays a key role in performance management. The advantage is that employees have greater control over their own tasks. They gain keener insight into their performance and respond more acutely whenever a process isn’t running according to plan. It also allows staff to make their personal goals and ambitions known to management.

5. More pleasant working environment

Motivated employees generally experience greater job satisfaction and are more loyal than disgruntled employees. Regular, thorough, and honest evaluation and feedback, combined with greater insight into organizational objectives, have a positive effect on morale, self-confidence, and job security – reducing fears among employees that they may be laid off unexpectedly. And what does this achieve? A more pleasant and relaxed working environment that results in higher employee productivity.

Process

But what does performance management look like in practice? A key factor is a systematic approach. It takes more than simply stating a one-off objective and result. Continuous monitoring and feedback also play a vital role in its success.

It’s also important to realize that performance management isn’t a traditional top-down process. On the contrary, it will only succeed if all employees are actively involved in deciding and determining the objectives. The same also applies to monitoring progress towards achieving them.

Although there’s no one hard and fast way to implement performance management, there are a number of crucial steps involved:

Step 1: Goal setting

Firstly, determine your organization’s main goals and strategies. Where are we now? Where do we want to go? What do we need to get there? And what factors in our vision/mission are essential to our organization’s viability?

Next, map these goals to each level of your organization:

• to your organization as a whole
• to each department
• to management and staff

The balanced scorecard (BSC) method works well for this purpose. Once you’ve verified these goals, start implementing the strategies to achieve them.

Step 2: Performance planning

Map your goals to actual operational processes or improvement programs. What methods will you be using to improve operational processes? What tools will you be providing your staff to achieve these goals? And how will you be monitoring individual and departmental performance?

Step 3: Implementaion

Put your models into practice. Implement improvement programs and monitor them continuously. Making adjustments and improvements will gradually become both an individual and team mindset throughout your organization. Create a fixed schedule and performance/assessment cycle, because this is the best way to make performance management more tangible.

Step 4: Monitoring & analysis

Keep your finger on the pulse at all times. Monitoring is an essential part of performance management. Are we consistently achieving our main goals? Are the changes we’re making working? And are our employees comfortable in their roles?

Make sure that constructive dialog exists between management and staff, and among co-workers in general. Everyone should feel free to express their ideas and insights.

Step 5: Fine-tuning

Now you know what works and what doesn’t, continue fine-tuning the process still further.

What can we improve? And what tools and methods can we use to make further improvements? For example, training courses for staff having trouble reaching their targets?

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