Performance Management Best Practices

Written by Coursera • Updated on

Learn performance management best practices, the benefits of improving your performance management process, and what an effective performance management cycle looks like.

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Performance management is a process where supervisors and employees review the employee's performance, discuss feedback, and set goals. While many immediately think of an annual performance review, that meeting is only one part of a greater performance management process.

Improving your performance management practices can help you engage and motivate your staff, increasing productivity. In this article, you’ll learn some performance management best practices to help your team perform at their highest level.

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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 give them tools 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 offering excellent performance management. 

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

  • Clear communication: You build effective performance management based on clear and transparent conversation so employees know what to expect and when. 

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

Performance management best practices

By implementing performance management best practices, you can ensure that you offer your team the best leadership. Consider these best practices when considering performance management plans.

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 happens on a day-to-day basis. 

When you think of performance management, you may picture an annual or quarterly performance review. Although performance reviews vary from company to company, they tend to be semi-formal or formal meetings where employees and their supervisors give feedback, discuss performance, and set goals. 

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

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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 what priorities are most critical to 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 highest.

Career development planning

Development planning is an integral part of team leadership. You can identify areas where your employee could improve their performance or become a better-skilled team member. 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 should happen more often than just in formal performance reviews. When training issues occur or employees deliver stellar results, you should immediately tell them what you think instead of waiting for the next scheduled meeting. While giving regular feedback is important, you should also engage your employees in offering 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 of time, to review goals and set new goals for performance and professional development, and to open a conversation with the employee about their work experience.


When you use performance management best practices, you can encourage your staff to stay engaged in the process and act as a participant. By regularly communicating with your staff, 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, employees who receive “meaningful feedback” at least once a week are nearly four times more likely to be engaged with their work [1].

Conduct frequent and predictable check-ins.

We’ve discussed the importance of daily feedback and regularly scheduled performance reviews. 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 come up 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.

Build relationships

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

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

Learn more with Coursera.

To learn more about performance management best practices, consider the Leading People and Teams Specialization offered by the University of Michigan on Coursera. You can complete this five-course series in as little as one month at 10 hours a week, and it can help you learn skills like vision alignment, talent management, employee motivation, leadership, and more. 

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Article sources

  1. Gallup. “How Fast Feedback Fuels Performance.” Accessed September 19, 2023.

Written by Coursera • Updated on

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