Performance management is a fundamental component of business success, influencing performance and productivity. However, it’s often approached with trepidation. What’s involved?

Clarifying Performance Management

Almost half of employees (48%) have objectives set for their job – the basic level of performance management. (CIPD, 2023) Only 28% experienced comprehensive performance management involving:

• setting of objectives
• monitoring of objectives
• feedback on the extent to which objectives have been met; and
• accountability for meeting objectives (measured by employees having to explain themselves if objectives were not met).

Why Performance Management Matters

Getting performance management right optimises the efforts of your current teams, benefiting employees and the business. Why risk losing employees and implementing expensive, time-consuming recruitment drives if you already have the talent you need?

Performance management ensures you focus on your current employees, using existing skills and experience to deliver better results. Incentivising and motivating existing employees may mean you don’t need to recruit. Happy days!

The Bigger Picture

A critical success factor in performance management is aligning business and personal goals. This ensures employees understand how their individual work contributes to team and company goals. The process also ensures personal contributions are valued and performance issues recognised. Goal alignment can include:

• Purpose

A robust performance management system spots team and performance issues via individuals’ performance analysis as well as feedback from team members. Importantly, action to resolve the situation should result.

• Employee Benefits

Delving beyond salary to create a range of valued employee benefits truly resonates with employees. 40% of UK workers would choose a job with a lower salary if generous employee benefits were offered. (MetLife UK, 2024) Performance management meetings can offer valuable feedback to determine which benefits are most valued by your organisation’s workers. For example, work-life balance is very important to 51% of employees (Forbes Advisor, 2024). How does your organisation support this? Healthcare? Flexible working? Mental health support?

• Performance-Related Pay

Performance-related pay boosts performance and productivity while improving staff motivation and retention. For many people, it’s the ultimate incentive; we would all like to be rewarded for our hard work. However, it must be implemented fairly to prevent unhealthy competition and overwork.

Getting Started

One action underpins all aspects of performance management … communication.

Ultimately, employees appreciate being acknowledged; it’s part of our DNA. Performance management enables workers to feel seen and heard. Regular meetings with individual employees (ideally monthly) and annual appraisals are a great starting point. Consistency is key. Every employee should have regular one-to-one meetings.

Regular meetings ensure relevant discussions with proactive outcomes. Conversations are about what’s happening now, not months ago. Too many performance management systems need to be more dynamic, enabling the people involved to deal with current issues. Then, there is a real “in the moment” opportunity to achieve positive change and boost motivation, informed by employees’ feedback and needs.

Looking at the overall performance management process in one go can be overwhelming. The good news … you don’t need to change everything at once. Ask yourself three key questions:

1. Do all employees have a job description?
2. Are training needs analyses taking place?
3. Are development plans created to help employees upskill on the job?

Even if you’ve answered “yes” to all these questions, too many performance management systems are in dire need of a revamp. Take a step back and ask yourself “Is our performance management system still fit for purpose?”

Now, you have your starting point.

To find out more, talk to Emma at Heneom HR. Explore how performance management can be truly productive (and painless) for your organisation.