What Is Performance Management?

It’s no surprise that the annual employee performance review process ended up with a bad rap. 

Typically, performance reviews force managers to distill a year’s worth of feedback into a single conversation. So, they don’t always paint a complete picture of employee performance over time.

Since managers are likely to give more importance to an employee’s most recent wins and losses, recency bias sneaks into the equation—which further distorts the view of an employee’s performance. 

What’s more, a performance process that requires employees to wait six months to a year to receive feedback on how they’re doing doesn’t support employee development or encourage engagement.

From “one-and-done,” formulaic yearly reviews, to proactive performance management

The good news is that the annual performance appraisal process is considered by many to be outdated and restrictive. Today, it’s being replaced instead by its modern incarnation: proactive, flexible performance management. 

What is performance management? 

Employee performance management refers to the holistic, ongoing process of improving employee performance by setting goals, tracking progress, capturing feedback, and engaging in regular check-ins and reviews. 

Performance management helps employees meet and exceed expectations in two ways: 

1. It requires employers to clearly define what success looks like (and doesn’t look like) for a given role
2. It involves establishing an iterative process of setting and reviewing goals, discussing progress, and receiving/offering feedback to help employees reach these goals  

Related content: How People Operations Leaders Are Overcoming the Challenges of the Hybrid Office

What goes into a successful performance management system?

Performance management can look different from company to company, but most include some version of the elements below: 

• Goals or OKRs: Goals and OKRs should both enable an employee to help the organization meet its top-level goals, and push an employee to improve personally and professionally through skill development and competencies. 
• Regular check-ins:: Employees need consistent, regular feedback and communication from managers to understand where they’re doing well and how they can improve. Good communication is also necessary to help employees feel connected to the organization and engaged at work. 
• Recognition: Kudos for a job well done do more than just lift one’s mood. Research shows recognition leads to better employee engagement, builds stronger teams, and increases satisfaction at work, all of which result in improved performance.
• 360 reviews: Goal achievement is just one aspect of achievement, and orgs need a more holistic approach to collecting and delivering performance feedback to employees. 360 reviews do just that. 360 reviews can look different from company to company, but tend to follow a similar format. They usually include feedback from 4-5 peers of the employee, and aim to create a more balanced view of their performance by providing insight on communication, leadership ability, strengths, and areas for improvement. 

Pro tip: When evaluating or creating your current performance management system, be sure to go beyond the annual and semi-annual review. Rather, create a dynamic review process designed to accommodate changes in company direction, current employee responsibilities, feedback gathered during past reviews and check-ins, and more. 

Related content: How Gathering Feedback Will Improve Your Office Culture and Employee Experience

Don’t forget: Performance management is about people

Thankfully, the days of stacked rankings and bell curves are behind us. These problematic approaches to “performance management” were a form of forced distribution that created toxic workplace cultures and hampered collaboration and innovation. 

Today, performance management is about empowering your workforce by providing the tools and information they need to improve, develop, and advance—not forcibly identifying the lowest performers and slating them for lay-offs. 

As such, performance management should be people-centric, and not exclusively focused on metrics. 

When you evaluate employees for more than just hitting (or missing) their goals, you communicate that performance amounts to more than just outcomes, but also development, growth, and attitude. 

Pro tip: To evaluate contributions to company culture, start by comparing employee performance against company values and desired competencies on performance reviews. Train managers to give specific examples of how the employee did or did not embody company values or competencies. 

Related content: How to Boost Employee Happiness: 4 Strategies for HR and People Teams

Why you need a performance management tool to establish processes and measure results 

Flexible performance management tools serve a number of purposes. They make it easier to integrate with the tools and tech you use every day, provide a platform to capture feedback, and give HR teams access to powerful data and analytics. 

How using a tool can help you build an streamlined and effective performance management process:

• Integration capability: There’s nothing worse than siloed information when you’re working to build a better performance management system for your organization. You want a flexible tool that integrates with the tech stack you work and live in every day, like Slack, Teams, and your email platform, and your HRIS.
• One place to give, receive, and store feedback: With a single place to capture feedback, managers can easily refer to this information in advance of one-on-ones, to write performance reviews, and when making pay raise or promotion decisions. 
• Access to data and analytics: Performance management systems give HR a single place to collect and store information on performance trends, employee engagement, and survey feedback. That way, they can easily pull this information to inform talent strategy as the company scales. 

But perhaps most importantly, a performance management tool is non-negotiable because it can help prevent bias. 

Consider:

• If you’re going to measure performance, you first have to set clear and discrete criteria as well as define what success looks like. 
• Without criteria for success, organizations end up relying on informal feedback, which can result in a biased performance management system. 
• Research supports this and shows that when companies lack formal systems, they are more likely to revert to biases when making decisions.

Pro tip: Use a tool to streamline performance management to create more equitable systems and provide HR with data and analytics they need to scale talent strategy and support employee development. 

Today’s performance management looks nothing like that of a decade ago—and that’s a great thing! As you focus efforts on improving performance management systems at your org, opt for a tool that gives you the flexibility to tailor processes to your business needs, all the while supporting employee growth and development. 

We built Eden’s Performance Management tool to be people-centric, and integrate with the tools you use every day (like Slack and email), as well as our growing suite of HR and workplace software. If you’d like to learn more about Performance Management, click the button below to book a demo.