Download: The A-Z of performance management
If people are the greatest creators of value in organisations, then using performance management best practice is critical for an organisation’s success.
That’s why you need this guide. We cover (just about) everything you’ll need to build a work environment that inspires happy, high performing teams. We've even put together a Spotify playlist to keep you company while you read.
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Performance management best practice is critical for an organisation’s success
The statistics around performance management tell us a worrying story:
- 77% of HR professionals believe their company’s performance management tools and processes aren’t an accurate representation of employee performance.
- Fewer than 50% of employees feel as though they understand their current work expectations.
- 8 in 10 employees feel current performance reviews are at best ‘average’ at improving their performance and future development.
Sound a little too familiar? Then read on.
Forbes found that 91% of companies with exceptional performance said that employee goals were explicitly linked to wider organisational objectives. Clearly then, goal alignment is essential if you want your people to perform at the superstar levels they’re capable of reaching.
Using some form of goal-setting for each person in your team and ensuring these goals are clearly linked with bigger company objectives is a must for every manager. But why?
Well, top-down alignment between what your people are asked to do and how it impacts outcomes gives staff two things: autonomy and purpose. Psychology tells us that these are two of the three key elements in human motivation. The third being mastery.
So, by helping your people understand the bigger picture, and how what they work on day-to-day impacts the organisation, you’re increasing their motivation to get sh*t done. And managers are the perfect drivers of this initiative.
Managers should continuously coach employees to set and meet aligned goals. By doing so, performance will be easy to measure and address.
Humans are imperfect, yes even you! As much as we may try to avoid it, our own attitudes, thoughts and experiences impact everything we do. Social, behavioural and neurological studies show that at both a conscious and subconscious level we bring biases into all we do. This includes how we choose, implement and run performance management process at work.
Unmitigated biases will dilute objectivity and fairness in an organisation and can negatively impact employee productivity, engagement and wellbeing. Biases that impact performance management include:
Recency bias: We are far better at remembering recent events than we are older ones. If you were to try to remember the past 12 month’s performance levels of a random member of your team now, the likelihood is you’d naturally focus on the most recent achievements.
Confirmation bias: We look for information, data and experiences that support our current view. We're more likely to ignore or downplay anything that goes against our current thinking.
Avoid bias by doing these 3 things:
- Awareness: acknowledge that you’re likely under the influence of biases.
- Challenge: ask your peers to review the processes you’re suggesting. A fresh pair of eyes gives a new perspective.
- Technology: look for tools that offer objectivity. If a potential vendor skirts around any questions about biases, then you’re better looking elsewhere.
Continuous Performance Management
Effective performance management is a continuous, always-on exercise. Managers need to offer their teams a channel to discuss performance when they need to discuss it, not when the diary deems it time.
Traditional performance management typically revolved around setting a few high-level targets at the start of the year and, at best, running review sessions at 6 and 12 months.
Sadly, traditional performance management processes are a waste of time.
The key hinderance to performance management? The time between any relevant interaction. In between goal-setting and a performance review, objectives may well shift. Think back to the start of the pandemic for some monumental scope shift. With months to wait for a review, issues have time to fester.
The best companies use a mix of tools at different cadences to ensure performance is talked about frequently.
Here’s what a best practice continuous performance management looks like
Weekly employee check-ins: Light-touch, high-frequency check-ins allow managers and their staff to raise issues, celebrate wins and give recognition in a timely way.
Monthly 1:1s: Nothing beats a proper conversation. Plenty of performance management takes place at serendipitous moments at the water cooler or over the top of a computer screen. But making sure all your people have a monthly slot to sit down and discus things with you is essential. The feedback received from the weekly check-ins can help shape these conversations and questions should look to build upon that.
Quarterly conversations: Performance reviews work when they’re part of a continuous approach to performance management. They don’t work in isolation. Using the outcomes and data from the weekly check-ins and monthly 1:1s means performance reviews are evidence-based, focussed on real events and can help shape development.
The easy answer to the question ‘what is performance management for?’ is perhaps, to drive better performance. But that’s not as accurate or appropriate as it might first seem.
Personal development, in our opinion, is the true goal of great performance management. In fact, Matt Mullenweg, CEO and Founder at Automatic believes the secret to great success in any business is a constant and consistent focus on developing your people.
Employee development naturally improves performance. It also drives commitment, passion and resilience.
All too often performance processes focus on chastising bad performance and setting future targets without really focussing on how an employee can really improve and grow. Effective performance focuses on helping people discover their potential and what they need to do to achieve it.
Because a business’s success and reputation relies on its people, having a healthy and satisfied workforce is key to ensure maximum productivity. Employee engagement and performance management have traditionally been two separate parts of HR’s role. But both need to be better aligned for organisations to get the most from their people.
Harvard Business Review in 2020 found that 79% of business leaders strongly agreed that their engaged employees were also their most productive. 69% also stated that it’s impossible to improve performance without also improving engagement. What we need here is alignment.
Processes that focus only on engagement and that aren’t linked to performance management may not serve the organisation’s best interests. It’s only by bringing the two concepts together that HR can create programmes that lead to happiness and success at work.
The trouble is these two activities have come from very different parts of HR, with performance typically focussed on assessment and engagement typically more focussed on listening and feedback. Bringing performance management and employee engagement together requires a best practice approach. Having integrated systems and processes is the ideal, but the reality is that most organisations still operate with engagement and performance management in silos.
This is where mangers come in. The manager’s role in integrating engagement and performance is critical. The same HBR study showed that the greatest impact on employee engagement is an employee’s relationship with their direct line manager.
If feedback isn’t already at the centre of your performance management processes, it needs to be. Harvard Business School found 81% of managers of high-performing teams believed two-way, transparent workplace feedback was the most effective tool to drive success.
Add to that the fact that requesting, listening to and acting on feedback from employees is a sure-fire way to drive greater engagement across your team. Feedback becomes an essential tool for all effective managers.
But to land effectively, feedback must be transparent. It’s tempting for managers to hold back snippets of negative feedback in a well-meaning attempt to avoid hurt feelings. But managers aren’t helping their people to break bad habits and develop their own performance.
As a manager you can use the FASTT framework to deliver effective feedback to your people:
Frequent: Research shows that feedback is less effective at changing behaviours if it’s more than 2 weeks after an event. Feedback should happen weekly for most impact.
Appropriate: Feedback needs to be framed positively (focus on improvements), be tactful and simple to follow.
Specific: Feedback must be related to observed behaviours, performance or against a clear and measurable goal. Be sure to include clear expectations, what wasn’t quite right and plans for improving.
Transparent: Honest and open feedback is the only way to impact future performance. It also helps build trust within your team when everyone knows they’re able to speak freely.
Two-way: Typically, feedback is seen as one-way. But feedback needs to flow down and up the chain of command. Great managers request feedback from their people and listen to it. If your people see you asking for and listening to their feedback, trust is further strengthened.
Helping employees set and reach goals is a vital part of every manager’s job. But ever wondered why? It feels just like something we’ve always done, but there are clear reasons why.
Firstly, your employees want to see how their work contributes to larger organisational objectives and setting the right targets makes this connection explicit for them. That's performance management best practice 101.
Goals act as motivational targets for people to work towards. Autonomy and purpose are two key elements of human motivation. By setting goals we give people clear purpose and allow them to be autonomous in their day-to-day work.
Goals by their own nature make us more productive (regardless of what the goal itself is) and improves performance. One study found that people who had goals set were faster at completing tasks than those offered financial rewards for better performance but no clear goals.
And finally, and perhaps most obviously, goals are a measure. They are a yardstick against which we can see how productive we are being, what successes we have had and where improvements can be made.
Performance management may well feel like something between an employee and their manager. After all, no one else is likely well placed enough to have a focussed, specific conversation on an individual’s performance.
But performance management best practice is a collaborative and collective effort.
HR need to ensure that all employees, managers and leaders are aware of the importance of performance management to the long-term success of an organisation. HR need to lay the groundwork for what their company’s performance process will be and give everyone the training, knowledge and confidence to make that framework work for them.
Engage with your HR team whenever you feel something isn’t working, or you see something you’d like to try out.
Simply running performance reviews where you reiterate an employee’s performance over a given period won’t benefit anyone.
Best practice performance management is all about developing your people so they can be better. Where issues arise, it’s essential managers work with their people on effective interventions to correct future performance.
By moving to a more continuous approach to performance management managers increase the likelihood that they catch issues early making intervention not only easier but more effective. Head to U for tips on what to do when one of your team’s underperforming.
One of the biggest issues with traditional approaches to performance management is the huge amount of time that goes between formal discussions between a manager and employee. In this time, small challenges grow into reasons why people stop caring, become disgruntled and leave jobs.
The best music to listen to when planning your best practice performance management processes.
Seriously, research shows jazz can help people think more creatively. Check out our Exclusive Spotify playlist.
KISS: Keep it simple, stupid
Yes, you know the acronym. Simplicity is key to effective performance management. We often overcomplicate processes to look more impressive than they need to be. But this reduces the effectiveness of the outcome.
If you’re new to management or looking to re-model your own approach start with these three basic steps:
- Put employee feedback at the centre of your performance management. Collect and request it weekly. This can be done through tools you already have such as Microsoft Teams, or specialist tools like Weekly10.
- Set and manage goals that align to organisational objectives for all your team. All your people should have 3 or 4 objectives they're working towards at all times.
- Run frequent 1:1 meetings to review these goals and catch up. Ideally these should be monthly and supported by weekly check-ins through continuous performance management.
Leaders and top managers play an essential role in the performance process by setting standards and expectations for the whole organisation. And are role models for employees.
Leadership needs to work with HR and managers to sell the benefits of any new performance-based processes. They need to help answer questions around challenges and maximise employee satisfaction as well as productivity.
Leaders need to focus on a few key responsibilities, specifically:
- Communicating an organisation’s mission and values to all employees.
- Clearly defining the expectations on staff and communicating to everyone from the top of the business down.
- Keeping employees informed on the role they play in the wider performance of the business. This includes recognising the great work of their people.
- Championing any process change, especially when it's performance management best practice, and listening to any employee concerns whilst empowering and supporting managers and HR to resolve them.
We know you’ve read this sentence plenty of times before but the world of work has changed.
The impact of COVID-19 on the world of work cannot be ignored or understated. Everything from where we work to why, how and when has been impacted over recent years. The likelihood is many of these changes will become our next normal.
One of the biggest changes is the move to remote work and its impact on the ways we communicate.
We’ve become more asynchronous in our communication habits. Even as many businesses look to move back to the office, we’re still having conversations in a more flexible way as individual colleagues might work different hours or at different locations from day to day.
Almost overnight Microsoft Teams has become essential: we talk over it, we book meetings through it and thanks to the huge array of apps, we can project manage, design, plan and even book holiday through it.
So why not manage performance through it? After all, why give your people a brand-new tool that needs yet another password, feels alien and perhaps presents IT with security concerns when it can be done through Microsoft Teams?
Look for tools like Weekly10 that offer you and your people the ability to run performance management without adding to your tech stack by integrating with Microsoft Teams.
No talking over your employees
60% of employees feel their manager doesn’t listen to them often enough. In fact, 82% were unhappy with how little listening their manger did in formal performance discussions such as reviews and 1:1s.
Performance conversations should be two-way, so make sure you’re facilitating a dialogue and actually listening. Listening to your employees helps you learn and understand rather than simply giving someone equal talking time.
When managers listen they’re able to ask follow-up questions to help dig deeper and really start to understand what is impacting their people’s working lives. And perhaps most importantly, how to help with an intervention.
Participating in the conversation isn’t about sharing your point of view. After an employee shares their feedback, repeat back what you heard. This gives you the opportunity to check that you accurately understood what the other person said. If you’re preparing your response while the other person’s talking, then you’re not actively listening and likely will miss important information.
Objectives and Key Results (OKRs)
OKR (Objectives and Key Results) are the leading goal-setting process for modern, fast-paced organisations. They're a simple goal-setting system to create alignment between company and personal goals, and engagement around measurable outcomes. They’re typically transparent and set, tracked and reviewed regularly, usually quarterly.
There’s some unique and core concepts that make an OKR effective
Agile goals: Instead of annual static planning, OKRs takes an agile approach allowing organisations to better respond to change.
Simplicity: OKRs are straightforward and need to be understood by everyone in the business. OKRs reduce the amount of time spent setting goals and therefore pushes focus to achieving goals over setting them.
Transparency: The primary purpose of OKRs is to create alignment in an organisation. To achieve this OKRs are public to everybody within it – everyone has access to everyone else’s OKRs.
Nested cadences: OKRs take account of the fact that strategy and tactics have different natural tempos.
Ambitious goals: Targets set should be ‘stretch’ based, with the intention being that 100% completion is unlikely – if you are always completing your goals, they are likely too easy. A typical completion rate of 70% is deemed a success.
Gallup says 80% feel traditional reviews offer no lasting benefit to them. And one study shows that 64% of managers feel the most important KPI of a review is completion, not impact on future performance. But there is a better way!
Effective reviews aren’t about chastising employees for past performance but instead need to focus on the bad habits that need breaking or the good ones that need encouraging and reinforcement.
You’ll see immediate impact by implementing performance management best practice
Review effectiveness: Moving away from the traditional cadence of an annual or bi-annual review and nothing in between to a more continuous approach powers up their effectiveness.
Focused on the future: Re-framing the discussion away from a day-to-day focus to being more future-focussed and aimed at developing staff helps your employees improve their performance.
Removes bias: Evidence-based discussions, and not ‘how I remember it’ removes recency bias, something that’s plagued reviews for decades. Capture employee feedback and performance data frequently to support here.
Time to listen: Ensure you give your employee the space and time to speak. This isn’t about you detailing their ‘good, bad and ugly’. Effective reviews are a discussion and need to be two-way. Use your active listening skills to truly understand what’s impacting their performance.
One of the most common things we get asked is “what questions should we ask in a check-in?” And the answer is, frustratingly, it depends. Sorry.
One of the most effective tools for running feedback more frequently is an employee check-in. Check-ins are designed to be run often (ideally weekly). They should be lightweight and simple for both employees to complete and managers to review and feedback on.
Check-ins should collect employee feedback and goal progress data that impacts a wide range of performance processes including performance reviews, goal-setting, and recognition schemes. Focus on asking for specific updates to individual goals as well as the key pillars of engagement: successes, challenges and peer recognition.
Here’s a few questions to get you started:
- What successes have you had this week?
- What challenges have you had this week?
- Has anyone gone the extra mile that you’d like to shout-out?
- Is there any support you need from me?
- On a scale of 1-5, how confident are you in completing your current goals?
Employee recognition has a lasting impact on:
- Increasing productivity
- Decreasing employee turnover
- High levels of employee satisfaction
- Improved team bonding and culture
- Higher levels of self-reported loyalty
- Decreasing stress and absenteeism
One of the things we love is some well-earned appreciation from the people around us. This is twice as true in the context of work. Gallup found that the leading reason for people leaving their jobs was a lack of recognition from their managers.
It could be a high-five for a job well done, a special shout-out during an all-hands meeting, vouchers for a takeaway or even a bonus for meeting a monthly goal. However you choose to do it, employee recognition is a key tool in every manager’s arsenal when it comes to performance management best practice.
When an employee feels appreciated and recognised for their individual contribution they become more engaged in their work. The frequency and consistency at which a manager recognises the efforts of their team members is a key determiner for how engaged that team will be.
Often, rewards come hand in hand with recognition programmes. But know that monetary rewards in particular usually only offer a short-term benefit to engagement, performance and retention.
For longer term impacts, focus on recognition processes that give public kudos, involve senior leadership and improve future job prospects.
A SMART goal uses its five components to build a goal that defines exactly what needs to be accomplished and by when. It also covers how you will know when you have been successful.
The aim of a great SMART goal is to remove any guesswork around expectations and what success looks like. They are:
To be effective, a goal needs to be specific. Include details on the nitty-gritty so that your people can’t misunderstand the task at hand.
To track progress in an accurate and simple manner, any goal needs to be measurable. Use benchmarks and KPIs within your goal to add the ability to quantify and measure progress.
Goals need to be realistic. That’s one key difference from OKRs and not some highly-elevated ideal of what success could look like. It’s important to consider any limitations that might impede success.
There should be a real benefit attached to reaching any chosen objective. No one wants to waste their time on dead-end tasks that serve no purpose. At this stage, evaluate why you are asking your people to perform the task at hand – if you can’t justify it, then it’s likely not a good goal.
Good goals don’t go on forever. The best goals have a relatively short shelf life as this mitigates the likelihood of scope creep or organisational change. This also gives you another yardstick against which to measure success – i.e. did we complete on time?
Transparency is a top priority in successful organisations rolling out performance management best practice.
This isn’t just because it’s the right thing to do, but because seeing things more clearly has been shown to boost employee engagement and performance. Studies have found that management transparency is the most significant predictor of employee happiness. And leaders who practice transparency and positivity are seen as more trustworthy and more effective. Using OKRs or prioritising open workplace feedback all help make performance a more transparent process.
Anonymity is the silent killer of accountability. So as a manager, ask yourself what your employees don’t currently have oversight on, if that’s a necessity and what can be done to be more open if possible.
Anonymity is the silent killer of accountability.
One outcome of performance management best practice is highlighting when and where your people are underperforming. Elements like feedback, goal-setting and transparency will help you measure how much underperformance is impacting your team and the wider business.
But what do you do next?
Dealing with underperforming employees need not be difficult if you have a solid intervention plan. Thankfully, if you have a good rapport with your team and a culture of open and honest feedback, the difficulty is lessened considerably.
Don’t just ignore it
If underperformance is allowed to fester, it’ll worsen. It’s extremely unlikely an underperforming employee will self-correct their own performance. They’ll need your guidance to get them back on track.
It might feel like you should sugar-coat things to be nice, but being absolutely honest about the issue and what could be improved as early as possible is critical.
Make sure to show empathy through all your conversations. After all, the underlying problem might be out of your employee’s control. And they may not even realise they’ve missed the mark.
Ask for another perspective
A fresh pair of eyes or a new perspective can help problem-solve underperformance. 360° feedback’s perfect for this. Don’t be afraid to ask for help or another point of view if underperformance is lingering.
Make a plan and action it
Create a concrete plan for what both you and the employee are going to do differently, agreeing on measurable actions so you can mark progress. You should also ask what resources the employee needs to accomplish those goals. Then, give them the time, resources and support to make the agreed changes.
By shining a light on the great work your people are doing and promoting them through the organisation, you increase the likelihood of two things. Staying with your business, and being considered for additional responsibilities and promotions.
But how do you give your team visibility? Well first off, make celebrating success regularly a priority in your team. We tend to focus on the negative both as managers and employees. Empower and encourage your people to shout about their wins, to congratulate their colleagues on a job well done and make sure you pass on a personal congratulations.
By doing these things you start to build a culture that makes sharing great work more likely and easier. Once this starts happening, the job of promoting this outwardly is far easier.
Weekly10 connects to a Microsoft Teams channel, offering even more ways to help you shout about the great work being done by your team. But it can be as simple as sending an email to your manager that outlines the great work your people are achieving.
If your people aren’t feeling their best, they’re unlikely to perform at their best.
Wellbeing is a critical part of the performance process, with managers and businesses offering channels for employees to seek advice and support when their wellbeing is being impacted. There are five wellbeing pillars which are inter-connected and impact one another.
- Physical: staying fit and healthy
- Mental: supporting mental health
- Social: keeping people connected
- Financial: minimising financial strain
- Digital: using technology appropriately
Why does this matter? A 2021 Indeed study shows employee burnout is up, with 52% of people having felt the effects of burnout at varying degrees over the past 12 months. With burnout leading to increased levels of stress, lack of sleep, increased absenteeism and ultimately higher levels of staff turnover. This is not good news for performance and productivity.
Gen-X and generational nuances
You might have employees on your team from four different cultural generations: Baby boomers, Gen-X, Millennials/Gen-Y and Gen-Z.
It’s important to recognise that each (typically) has its own world views, wants, needs, and attitudes towards everything including the world of work. Gallup found that different generations want different workplace feedback frequencies, with the trend being younger workers want more of it.
Though generational nuances do need to be taken with a pinch of salt, as it’s certainly not an exact science, there are some general trends managers need to be aware of:
- Keen on annual performance reviews
- One-way feedback (manager to employee) is preferred
- Happiest with a pen and paper review
- Strong preference for score-based reviews
- Keen on annual performance reviews
- Like self and manager feedback
- Don’t believe reviews need to be development focussed
- Preference for continuous feedback approach
- Keen on receiving 360° feedback from peers
- Like tech-enabled performance management
- Want reviews to be development focussed
- Multiple and frequent reviews or 1:1s with manager
- Keen to embrace AI in developing their performance
- Continuous feedback is a must
- Values employee experience more than others
You - the manager
Research tells us that great long-term employee performance relies on the relationship a manager has with their employees. Gallup says that managers account for a whopping 70% of variance in employee engagement.
HBR reports that a person’s relationship with their manager was the leading factor in how engaged they felt with their work. The Predictive Index found 77% of employees with poor relationships with their managers were looking to leave. But only 18% who had a good relationship with their manager were considering leaving.
The way that managers communicate with their people, the goals they set, and the trust and rapport they build are all vital ingredients to an effective manager-employee relationship. And therefore, performance management best practice.
What should you do as a manager to build the right sort of culture on your team?
- Focus on frequent and open two-way feedback to make it a habit.
- Listen to and act upon any given feedback to build trust.
- Treat all your team with empathy and sincerity.
- Set goals that are actionable and measurable.
- Provide your people with the support, equipment and training they need to develop.
It seems obvious doesn’t it, but managers play a massive role in the success (or failure) of any performance-based activity. Yet, the importance of managers has been downplayed a lot over recent years. Talk of people analytics, AI and new ways of measuring performance could have you believing that managers need to do little more than click a button to manage performance.
That couldn’t be farther from the truth.
The best managers we’ve met, read about and had, were those who care deeply about their people and seeing them grow. Bringing that passion and commitment to every discussion you have around performance will help you to have better discussions around performance.
That’s why it’s essential you share your thinking (and this A-Z guide) with the people you’ll need to help your teams achieve performance perfection:
- Human Resource – your first port of call
- Your team – always consult the people you’ll be impacting
- IT – find out how can technology make it happen (Hint, Weekly10 and Microsoft Teams)
- Senior leaders – build a case by trying it, prove it works then show them the results!
Your key takeaways from our A-Z of performance management
This is only the start and certainly isn’t exhaustive.
Great performance management is impacted and effected and directed by all manner of workplace elements. There’s no one-size fits all approach and managers and leaders need to find what works for them. Solutions like Weekly10 can help, but even we don’t profess to be the perfect fit for every business.
Work with your team, colleagues in HR, leadership and IT to identify where improvements to your current processes are needed and what solutions, tools and processes are out there that can help.
This article is taken from our latest best practice guide: The A-Z of Performance Management. Get your free download by completing the form below.