Performance Management

After working for a company that you considered to be archaic in its operations, you are relieved by the refreshing, innovative organization where you’ve landed a new job. You’re fairly young and uncertain about your career, making you eager for continuous feedback. One of the biggest issues with your prior employer was only having annual check-ins with your manager and feeling disconnected from the priorities of the company at large.  Luckily, after being at your new gig for only one month, your manager is already taking a more proactive approach, with biweekly check-ins on your performance and where you are on the road to achieving both personal and organizational goals.

Your experience with your new company is best captured by performance management: a dynamic, strategic process that replaces outdated annual reviews with ongoing collaboration, aligning employee performance with organizational goals through continuous feedback, measurable objectives, and regular coaching to drive individual and business success. Many companies have a formal performance management program or system that helps higher-ups and their employees foster a mutual understanding—with an emphasis on how one’s own work may align with a company’s bigger vision. 

Typically, performance management programs rely on the funds collected from the organization’s performance budget, which measures the program’s outcomes and then uses those results to inform future budget allocations, such as supplemental training.² In an ideal world, employees and employers work together to achieve an absolute performance standard.³ While this level of perfection may be unattainable in practice, it remains a useful benchmark for striving toward optimal performance and the highest quality of work.

Conventional performance management tools often focus on familiar practices, such as goal-setting and measuring objectives, which help clarify how individual performance is assessed. Recently, however, there has been a notable shift away from performance appraisals such as annual assessments and toward more regular feedback mechanisms.¹ Modern tools facilitating this shift include 360-degree feedback platforms and continuous performance tracking systems like real-time feedback apps.⁴

Though nowadays there is performance management software that can do most of the work for managers, companies usually tailor performance management to their own unique needs. In general, here are some universal elements of performance management:¹

1. Align employee activities relative to company goals and business objectives. Employees need to recognize how their job plays a part in a company’s larger goals. A joint process between supervisors and employees helps to define responsibility and ensure accountability on the job. 
2. Develop performance outcomes unique to each position. Employees can come to answer some key questions via performance management, like, what service or product does my role lead to? What processes do I need to know for my job? Or, what kind of impact should I have on the company? 
3. Make performance-based expectations quantifiable. The way in which success is measured should be opportune for each employee, such as by KPIs or other metrics. In performance management, expectations commonly consider results, like the service someone creates at work; actions, like the processes an employee does to complete a service; as well as behaviors, the attitude and values that an employee displays. 
4. Bring definition to job-development plans. Nowadays, employees have (or, at least should have) a voice in what they want to learn at work and how such knowledge may translate into good for the company. Performance management helps ensure that employees play a proactive role in their professional growth with a more egalitarian perspective than in the past when a manager simply decided what was best.
5. Meet and communicate often. This may sound like an obvious one, but the truth is that there used to only be annual performance reviews (and for some places, this is still the case!). A proactive, frequent approach to meeting amongst managers and employees leads to more dynamic performance management. Once a month or per quarter may be often enough to incentivize, assess, and reward work performance. 

A similar model to performance management is management by objectives (MBO), which is a corporate leadership theory where employee goals are congruent with that of an organization. Performance and MBO crossover in that there is an expectation that the employee has a say and contributes to their own goal-setting.¹

If done right, performance management can benefit organizations and their employees in goal attainment, employee fulfillment, and overall higher commitment to the job. Performance management is versatile across a range of fields as it adapts to the unique goals and metrics of diverse industries, helping to align individual contributions with organizational objectives.