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Lead Your Team Strategy

What is Performance Management?

Credit: garagestock/Shutterstock

Just about every business has some means of tracking its own performance — sales numbers, social media engagement, marketing leads, etc. It's the best way to see how you're actually doing compared to where you should or want to be.

The same goes for your employees. A formal performance management program helps managers and their employees see eye-to-eye on expectations, goals and career progress, and how those things align with the company's vision.

Rusty Lindquist, vice president of human capital management (HCM) strategy and insights at BambooHR, said organizations today take measuring and improving their people's performance and productivity more seriously than ever.

"[Formal performance management] ... represents an industry-wide initiative to understand and quantify how our employees are doing, how much they are doing, and how well they are doing it," Lindquist said.

Performance management begins with an aligned set of objectives against which each employee can be measured. It also emphasizes learning and development for a higher level of workplace performance. Each employee should be motivated to improve his or her skills, competencies, development and delivery of results. [See Related Story: Tips for Writing an Effective Performance Review]

Consistent performance management shifts the focus away from annual reviews to a more ongoing form of accountability. Implementing periodic meetings ensures a continual push for progress, rather than a sudden rush to meet objectives at review time.

Performance management, when implemented correctly, can create positive performance outcomes at a drastic rate. Below are just a few basic benefits for employees, managers and organizations:

  • Improved communication. Employees and managers communicate more regularly to discuss company objectives and overall progress.
  • Established rules. Employees and managers more easily understand the process and stipulations for how performance appraisals are performed.
  • Reduced stress. Employees aren't stressing about impressing a manager through some random task and managers aren't worrying about offending employees for not performing.

Editor's Note: Considering employee performance management software for your business? Use the questionnaire below and our vendor partners will contact you to provide you with the information you need.

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Without an emphasis on strategic goals and progress, employers can't really determine whether improvements were made in congruence with the organization's objectives. Aligning those daily tasks and projects with company goals requires a well-defined process that establishes groundwork for excellence.

Employees should have a clear understanding of what is expected of them and how their goals will contribute to the company's overall achievements. Performance expectations should go beyond the job description and entail a range of expected outcomes:

  • What goods and services should the job produce?
  • What effect should the work have on the company?
  • How should employees act with clients, colleagues and supervisors?
  • What organizational values should the employee demonstrate?
  • What processes or methods should the employee use?

Here are a few ways you can make sure you and your employees get the most out of the company's performance management program.

Create measurable performance-based objectives and expectations. Employees should understand and give input on how each objective's success is to be measured. Expectations can generally fall into two categories:

  • Results: The goods and services produced by an employee often measured by objectives or standards.
  • Actions and behaviors: The methods used to make a product or perform a service, and the behaviors and values demonstrated during the process. Actions and behaviors can be measured through performance dimensions.

Define professional development plans. Supervisors and employees should work together to create development plans. The plan can focus on skills aimed at mastering the job or on professional development skills that go beyond the scope of the employee's job description. Employees should have a say in what new things they learn and how they can use it to the company's benefit.

Meet regularly to discuss overall progress and identify potential roadblocks. Rather than waiting until an annual review, managers and employees should be actively engaged throughout the year to determine overall goal progress.

Looking for a software tool to help you manage employee performance? Visit Business News Daily's buying guide to learn more about what performance management software is and how to choose one.

Additional reporting by Ryan Goodrich and Jennifer Post.

Nicole Fallon

Nicole received her Bachelor's degree in Media, Culture and Communication from New York University. She began freelancing for Business News Daily in 2010 and joined the team as a staff writer three years later. She currently serves as the managing editor. Reach her by email, or follow her on Twitter.