Unlocking the secrets to successful performance management: a step-by-step guide

According to research, 83% of employees appreciate receiving feedback, regardless of whether it’s positive or negative. 65% of employees say they want more feedback, and 43% of highly engaged employees receive feedback at least once a week compared with 18% of employees with low engagement. Offering feedback through performance management involves more than just holding an annual review or establishing a set of targets. It’s a continuous process that should involve setting expectations, providing constructive feedback, and developing employees. It can improve productivity, boost morale and contribute to the overall success of the business. In this guide, we’ll delve into the secrets of successful performance management, addressing common people management issues along the way.

Why do you need performance management?

Ignoring people issues can lead to huge challenges that will ultimately hamper your businesses’ success. Performance management serves as the compass that aligns individual and team efforts with the overarching goals of the business. Without it, managers and employees can find a lack of clarity in roles and responsibilities. What’s more, the business could face reduced employee engagement and see a decline in overall productivity. Ignoring people management issues can also leave a business vulnerable to conflicts that can escalate over time.

Creating a culture where feedback is the norm

To create a culture in the business where feedback is regularly and freely given, buy-in is needed from everyone (from senior managers down to employees).  Research indicates that turnover rates of employees receiving feedback are lower than those who don’t receive any feedback. The same goes for productivity levels.

In a small business, giving constructive feedback is essential for managers as this plays such a critical role in the employee experience. According to Breathe’s Feedback Guide, not enough managers provide feedback or solicit this. This could be purely because it doesn’t take priority over other business tasks, yet it should. It could open up new ideas for the business, or teach senior managers something new.

Foundations for successful performance management

Setting clear expectations is the first step in effective performance management. This involves establishing roles, responsibilities and performance standards and making sure that each employee understands these. They should also understand their individual goals and how they contribute to the broader objectives of the business.

Step one: Set up mechanisms for feedback

Whilst some businesses prefer to host annual performance reviews, many have embraced a more dynamic approach involving giving regular feedback to employees. This means staff receive ongoing feedback and guidance, and issues are identified and potentially dealt with more rapidly. Constructive feedback is essential for employee development and cultivating a positive workplace and culture. Read our guide to staff appraisals.

Step two: Align goals with company objectives

Aligning goals with the wider business objectives for employees helps to create a sense of purpose and direction. It also allows them to contribute to the company’s overall success. As priorities change, so can individual goals.

Step three: embrace technology

Good performance management software can track these goals, give mechanisms for feedback and analyse performance. It can save considerable time but also provide managers with insights that help with decision-making.

Step four: encourage ongoing development

Good performance management doesn’t end with an appraisal. It should encourage ongoing learning and development. During the process, employees should have opportunities to enhance their skills whether that’s through training, exposure to different responsibilities, and/or mentoring. A workforce that is continually growing and developing is an asset to any business.

Step five: don’t ignore people management issues

It can be easy to avoid difficult conversations in the hope that issues will go away. However, people management issues can hinder performance and often escalate. Effective managers can proactively spot and resolve conflicts, providing support and helping to promote a healthy work/life balance. Positive workplace cultures contribute to employee satisfaction.

Step six: let employees set their goals

If employees are involved in their own goal setting it will increase the sense of ownership. It also means that these goals are more realistic and likely to be more achievable. Take time to understand where their aspirations lie and together develop goals that reflect this and will ultimately let them achieve this.

Step seven: consider staff rewards

How will you reward and recognise good performance? Will it be through monetary incentives or promotions? Recognition and reward can play a pivotal role in motivating employees and contribute to successful performance management and avoiding people issues.

Successful performance management is a multi-faceted process. By incorporating it into your business strategy, you can cultivate a highly engaged and motivated workforce.