What is Performance Management?
Performance management is the process of creating a work environment that enables employees to perform to the best of their abilities. It outlines performance goals that align with the company’s and employees’ goals for professional growth.
A performance management system typically begins at the recruitment stage and continues throughout the lifecycle of the employee until separation. An effective performance management system may include the following components:
- Developing clear job descriptions.
- Recruit potential employees and select the most qualified to participate in interviews.
- Select your most qualified candidate.
- Provide effective new employee orientation, assign a mentor, and integrate your new employee into the organization and its culture.
- Negotiate requirements and accomplishment-based performance standards, outcomes, and measures between the employee and their direct supervisor.
- Provide ongoing coaching, feedback, education, and training as needed.
- Design effective compensation and recognition systems that reward employees for their ongoing contributions.
- Provide promotional/career development opportunities.
- Conduct exit interviews to understand why valued employees leave the organization.
Why is it Important to your Business?
Effective performance management is essential to businesses. It helps align employees, resources, and systems to meet strategic objectives. It works as a dashboard too, providing an early warning of potential problems and allowing supervisors to know when they must adjust to keep a business on track.
With the traditional performance management approach of semi-annual and annual reviews becoming outdated, many employees want continuous, transparent, and constructive feedback. However, many employees believe that management does not have a good grasp of performance assessments and effective guidance.
According to a 2019 study from Gallup, only about 10 per cent of U.S. workers felt engaged after receiving negative feedback on the job. They reported that one-half of the workforce received supervisor feedback a few times a year or less. Moreover, 55 per cent of workers believe annual reviews do not improve their performance, according to a 2019 Workhuman Analytics & Research study.
Benefits of Performance Management
Performance Management reviews help to align goal setting between employees and their managers. Providing honest feedback to employees on a regular basis helps employees gain clarity on management’s goals and expectations.
Recent polls have shown that 50% of employees are not clear on their exact role within the workplace, or what long term or short-term goals they are trying to achieve.
Continuous performance management creates an ongoing dialogue and an atmosphere of trust, support, and encouragement. It also helps develop a relationship between employees and the company.
For the Company (ROI)
From a business perspective, performance management generally results in increased performance. Misunderstanding is reduced and confusion is lessened.
- Performance Management identifies “good” and “bad” performers.
- Increases employee retention:
- Recent studies have shown that employers who implement regular feedback have turnover rates that are nearly 15 per cent lower than employees who receive no feedback.
- High turnover can have an impact on staff morale and company profitability.
- Performance Management assists management with personnel planning:
- Deciding to retain or terminate.
- Identify opportunities for promotions or salary actions.
- Identify disciplinary issues which may arise.
- Performance Reviews clarify training needs:
- Understand the skill set of employees.
- Identify specific training needs before they have an impact on productivity.
- Allow employees to stay current on new trends for their role or future roles.
For Managers / Supervisors:
In a continuous performance management process, 360-degree feedback data is collected regularly, which allows managers to review a more comprehensive picture of an employee’s actual performance.
Nearly 90% of HR managers believe that the traditional review process does not paint an accurate picture of an employee’s performance.
Performance management does not end once a performance review is completed. Managers should take an integrated approach to employee learning. Using a Performance Management tool allows managers and supervisors to create development plans that support the company’s business objectives, employees’ goals, and career interests.
When employees understand that performance management is meant to help their professional development and give them more control over their career advancement, they feel empowered and engaged. Employees are generally able to enjoy a greater sense of autonomy, allowed by a clear understanding of their performance in real-time.
By conducting regularly scheduled Performance Management meetings, the employee is aware that their manager and the business cares about what they are doing and is dedicated to helping them do better to progress their career. In such an environment, employees are more likely to remain engaged with the company.
Effective performance management is often cited as the most vital component of organizational success, either ensuring it takes place is very important to any company. Whether ensuring targets are reached, deadlines are met, or quality is maintained, ensuring your employees maximize their performance is crucial for the output of the organization.
It is important to recognize and emphasize the link between an individual’s performance and the effect it has on the organization. This helps to align everyone’s goals and objectives with the organization’s and is an effective motivation and engagement tool.
To ensure that a Performance Management program is properly effective within a business, implementation of the following 5 components is key to its success:
- Shared vision– all members of the program should share the same vision, and this should align with the organization’s objectives.
- Expectations– it is important to outline exactly what is expected of employees, as this gives them direction and purpose.
- Define high performance– often employees aim to improve performance but are not aware of what high performance is and how they can achieve this.
- Motivation and engagement– clear performance management objectives should act as a motivation tool for employees and improve their levels of engagement. Employees are more willing to work hard when they understand exactly what is asked of them and why it needs to be done.
- Ownership and responsibility – once individuals have been given specific targets, they feel more responsible for their work and can produce higher quality output.
30, 60, and/or 90-day review
The first 90 days of employment are incredibly important for both the new hire and the employer, as this time can be stressful if the proper support is not provided. New employees are tasked with learning entirely new products and systems front to back, as well as any secondary tools that they may be required to use.
To effectively ensure a successful onboarding experience, an employer should:
- Complete a 30 and/or 60-day informal face to face review by obtaining and providing feedback of the employee’s tenure.
- How are things going in general?
- What is the employee doing well / what can be improved?
- Set expectations.
- Understand how the employee feel about the work they are currently doing (i.e. happy, motivated, stressed, lack of interest, needs motivation, etc.).
- Complete a 90-day review to determine performance within the probationary period. This review should be completed with formal documentation from the supervisor or manager.
- Categories for review: Quality of Work, Initiative, Productivity, and Customer Focus (if applicable).
- Set expectations for the next 3 to 6 months by establishing skills to be developed.
- Establish what training and support the employees should receive.
See attached the 30/60/90 DAY EMPLOYEE PERFORMANCE REVIEW.
Providing real-time feedback is a more collaborative process that helps to drive high performance and engagement while delivering measurable metrics based on data which the manager developed over time through regular check-ins.
- Adopting regular check-ins assists data gather based on these discussions to complete a targeted performance snapshot.
- A few highly targeted questions identify appropriate performance metrics and promote employee readiness or succession planning.
- These meetings help assess the direction performance is headed, allowing a manager to adjust or change goals as needed. Essentially, this would save employers and employees from wasting time and effort on projects or tactics that just aren’t working.
- Providing regular feedback throughout the year allows reviews to be less susceptible to recency bias.
See attached REAL-TIME FEEDBACK template.
Annual Professional Development Review
Effective performance reviews provide a steppingstone for employees and management to identify and discuss areas where performance can be improved. Much like the 30-, 60- and 90-day review; the annual review helps to provide and receive feedback from both the employer and the employee. However, with annual reviews, there is an opportunity for a manager to delve further into an employee’s performance beyond the first 90 days.
- How does an employee work towards the improvement of the overall organization?
- Establish future targets and objectives for the next 12 months.
- Establish development opportunities for the employee, while reflecting on the direction the business is heading.
- Assess an employee’s abilities to perform in their current environment, or work to develop an environment where employees are constantly moving in a direction that provides the maximum possible benefit to the company.
- Conducting annual reviews help to better the morale and teamwork within the organization.
See attached ANNUAL PROFESSIONAL DEVELOPMENT REVIEW.
The Importance of Professional Development
Professional development refers to continuing education and career training after a person has entered the workforce to help them develop new skills, stay up to date on current trends, and advance their career.
The purpose of professional development is to give employees the opportunity to learn and apply new knowledge and skills that can help them in their job and further their career. With employees building their skill set and knowledge base, your business will continue to flourish.
The Investment for the Employee and the Company
Professional development helps employees continue to not only be competent in their profession but also excel in it. It should be an ongoing process that continues throughout an individual’s career.
Some benefits of professional development to employees include:
- Expands the employee’s knowledge base exposing them to new ideas, solidifying their knowledge, and increasing their expertise.
- Boost confidence and credibility in their work.
- Keeps employees current on industry trends, allowing them to grow in an evolving industry.
Professional development also helps strengthen the backbone of your business, proving to be a powerful investment in your company’s success.
Some company benefits of offering professional development to employees include:
- Allows businesses to retain the best talent which may contribute to innovative strategies to the continued success of your business.
- Boosts employee morale which allows you to gain the trust of your employees, and ultimately, reducing employee turnover.
- Boosts employee productivity which drives results and added value to your company.
Training and Professional Development Policies
A training and development policy is a set of guidelines and requirements reflecting the organization’s values and culture and is based on a set of principles to which the organization adheres in its overall management and development of the workforce.
This policy needs to translate the organization’s needs and priorities into actionable, value-added, affordable, and effective learning solutions. When developing a policy, the following considerations may include:
- Eligibility requirements for policy participation
- Approved courses such as:
- Professional exams and exam preparation courses
- Certificate programs and credentials
- Courses offered by accredited institutions.
- Workshops, seminars, and conferences
- Number of professional development program(s) approved per year.
- Maximum cost of program(s) approved.
- Procedure for approval
From Performance Improvement Plan (PIP) to Termination
Purpose of a PIP
Managing an employee’s performance is never easy; but managing an employee through a performance improvement plan (PIP) to disciplinary action can be very complex.
A performance improvement plan (PIP) is a tool to give an employee with performance deficiencies the opportunity to succeed. It may be used to address failures to meet specific job goals or to improve behavior-related concerns. With an opportunity to improve their performance, while also holding them accountable if they fail to do so, this process can re-engage an employee while avoiding costs and delays associated with employee turnover.
When an employee is placed on a PIP, it should not be a foregone conclusion that the employee will be terminated. Instead, the PIP is a tool that enables an employer and an employee to come together and document expectations that are tied to time-limited objectives.
Foundations of a PIP
The PIP should:
- Identify the issues requiring improvement. Clearly state the deficiency that needs to be corrected and whether the issue is related to overall performance or behaviors. Each problem should be stated separately and should focus on objective, measurable facts.
- Specifically explain what the employee is required to do to improve performance.
- Identify and provide information on how to obtain resources, materials, training or coaching that the employee can use to meet performance expectations.
- Clearly set a deadline for the employee to display evidence of improvement. Best practices are for a PIP to last between 30 to 90 days. However, it is in the employer’s best interest to limit the length of the PIP if the employee shows no signs of improvement and needs to be dismissed.
Communicating the PIP
How a manager communicates to an employee may determine the receptiveness of the employee to embrace this process. Upon being presented with a PIP, an employee may become hostile and uncooperative, perhaps even refusing to sign the PIP. Should this happen, be sure to:
- Focus on the facts.
- Present the information in a calm and professional manner.
- Explain that the PIP represents the employer’s good-faith effort to better enable the employee’s performance.
A supervisor should review the PIP with the employee. Then, the employee should be allowed to collaborate in planning and goal setting to improve performance deficiencies or behavioral issues.
Once the employee is placed on a PIP, the work does not end here. To avoid the document becoming a dead letter, it is important to monitor progress by:
- Providing positive or constructive feedback on a regular basis such as scheduling weekly follow up meetings to discuss progress in real time.
- Offering the employee coaching opportunities or other assistance during the period of the PIP.
- Allowing sufficient time for improvement to take place throughout the entire period agreed upon.
- Documenting the outcome of the PIP once the period has passed.
If the employee’s performance improved in accordance with the PIP, then the manager should praise the employee and continue to monitor performance. However, if performance did not improve sufficiently, progressive disciplinary measures may be necessary such as:
- Verbal Warning
- Written Warning
- Suspension (with or without pay)
- Other serious sanctions that are short of termination such as demotions
- Termination of Employment
Please consult the HR team at Foothold America prior to initiating any of the above measures.
All disciplinary actions must be thoroughly documented and retained in employee records. The employee must be given a documented copy of disciplinary actions set forth.
Employers should take note of poor performers in a challenging business climate. If an employer needs to explore ways to reduce workforce spend through workforce reductions, terminations for poor performance may be an option to further business interests without resorting to furloughs or layoffs of top performers.
As the employer of record, Foothold America is responsible for the overall personnel functions of the employees. As such, you must contact the Foothold America HR team (email@example.com) prior to implementing a PIP or any disciplinary actions.