Performance Management Best Practices

Key takeaways

Employees and supervisors participate in performance management by sharing feedback, setting goals, and seeking professional development. 

• Performance management best practices can motivate and engage employees, attract and retain talent, and identify skills gaps.

• A performance management cycle involves planning, reviewing, and evaluating employee performance and growth.

• You can implement performance management best practices to help employees stay engaged.

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What is performance management?

Performance management is an ongoing professional development practice between employees and their supervisors, including feedback, goal setting, and plans for future professional development. Performance management is a daily practice that can help you understand your team better and build strong relationships.

Benefits of effective performance management

Performance management helps you connect with your staff and build relationships in a structured way, offering a wide range of benefits:

• Motivation and engagement: Employees want to feel valued at work, and regular constructive feedback will equip them to perform at their best. 

• Talent attraction and retention: Happier, more satisfied employees are less likely to leave their jobs. You may attract potential new hires if you gain a reputation for excellent performance management. 

• Skill gap discovery: Regular performance management helps you identify opportunities for ongoing professional development by clarifying where skills gaps exist and how you can remedy them. 

• Clear communication: You build effective performance management through clear, transparent conversations so employees know what to expect and when. 

• Improved productivity: Performance management can help your team improve productivity through professional development and other support.

Performance management best practices

By implementing performance management best practices, you can ensure you provide your team with the leadership they need to succeed. Consider these best practices when developing performance management plans.

1. Polish your performance management cycle.

The performance management cycle, the ongoing process for planning, reviewing, and evaluating your staff's performance and growth, helps you consider how performance management operates day-to-day. 

When you think of performance management, you may picture an annual or quarterly performance review. Although performance reviews vary by company, they are typically semi-formal or formal meetings in which employees and their supervisors provide feedback, discuss performance, and set goals. 

But performance management refers to more than just these regularly scheduled meetings. Performance management happens year-round, day to day, as you connect with and lead your team. The components of the performance management process include goal setting, development planning, feedback, annual reviews, and engagement.

Read more: 15 Employee Engagement Ideas

Goal setting

Setting goals with your team is an important step in the performance management process. It’s essential to communicate the direction your team is heading and the priorities most critical for the coming year or quarter. When you start by setting goals, you help your employees succeed by giving them the direction they need to perform at their best.

Career development planning

Development planning is integral to team leadership. You can identify areas where your employees could improve their performance or become better-skilled team members. By offering career development opportunities and helping your employees plan their careers, you will demonstrate that you are willing to invest in their careers, gaining the benefit of a more skilled employee.

Feedback

Feedback should happen more often than just in formal performance reviews. When training issues occur or employees deliver stellar results, immediately tell them what you think instead of waiting for the next scheduled meeting. While giving regular feedback is important, encourage your employees to offer feedback about the work process. Through these conversations, you can identify areas where you can provide more support to help your employees succeed.

Annual reviews

Even though you strive for regular feedback outside of structured meetings, these annual or quarterly reviews still have a purpose in effective performance management. Yearly or quarterly reviews are a time to sit down and discuss the progress your employee has made over a period, review goals and set new goals for performance and professional development, and open a conversation with the employee about their work experience.

Engagement

When you use performance management best practices, you can encourage your employees to stay engaged in the process and act as participants. By regularly communicating with your team, you build a working relationship where employees trust they can speak openly with you, easing the stress of what feels like a high-stakes performance review. According to Gallup, a fully engaged global workforce could potentially add $9.6 trillion in productivity to the global economy [1].

2. Conduct frequent and predictable check-ins.

The importance of daily feedback and regularly scheduled performance reviews is clear. Let your team know when these meetings or daily check-ins will happen so they can prepare to offer feedback and bring up any issues that have arisen since the last time you met. For example, you might have a daily stand-up meeting in the morning where department heads can check in with one another, work out complications, collaborate on ideas, and more.

3. Build relationships.

Performance management helps you build trust between you and your employee, and within your entire team. Regular feedback helps you better understand your team and provide measured input, considering their full range of skills and performance. 

For example, suppose you observe an employee make a mistake and haven’t built a relationship with that team member. You might not understand whether they need additional training or simply made a mistake. When you take the time to build relationships and understand your employees as a whole, you are empowered to know which response is correct.

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