We all know that digitisation has revolutionised how businesses function. Using effective software, organisations are making their processes easier and any company which has a growth strategy in place will relate to the importance of Performance Management as well.

Let’s begin by first understanding what is Performance Management.

Performance Management is the end to end process of defining and planning goals, executing these goals or objectives, and finally assessing or evaluating the achievement against them.

The goal of Performance Management is to ensure that the employees perform efficiently throughout the year and help in achieving the strategic goals of the organisation. Performance Management also means having continuous communication and feedback between employees and managers.

Performance Management is more than just the annual reviews. It is a process that enables employees to improve their performance by aligning individual and team goals with the organisational growth strategy. It is a continuous process which includes planning, reviewing, skill development and motivating individuals.

Even though managing the human workforce is considered one of the toughest jobs because of the dynamic viewpoints, Performance Management has become easy with the intervention of technology. Using a Performance Management system for HRM, organisations are now able to track employee performance while also coaching them when needed continuously.

Why does your company need a Performance Management system? Every modern organisation needs to be fast-paced, has complex structures and faces different challenges. While profits and production are the key metrics of success, all these depend on employee performance. This is the key reason why you need a Performance Management system in place instead of conducting only performance reviews.

Even if you feel that managing employees is a piece of cake with spreadsheets, it is not. Keeping track of data of each employee, and tracking their performance becomes daunting. Statistics show that employees hate reviews. According to a survey, 22% of employees have called in sick rather than face performance reviews. About 15% have cried in reviews and about 35% complain to their peers about it.

Realising the below-mentioned benefits of the Performance Management systems, about 81% of HR leaders are bringing in changes in the traditional Performance Management systems. The benefits that a Performance Management system brings in are:

  • Align company goals with employee goals
  • Accurately measuring performance
  • Provide effective counselling and coaching to bridge the skill gap among employees
  • To give required importance to the personal and professional goals of the employees
  • Boost employee morale and show appreciation for their work
  • To create a strong foundation of trust between managers and employees
  • Drive results that are vital to the company

A powerful Performance Management system software helps in achieving the goals of the company and generates a high-performance culture in the company. It creates an environment of developmental discussions and real-time feedback. A manager can set agile goals, can track performance, and offer insights into the employee’s mental state through transparent collaboration and communication.

Process of a Performance Management system The process of Performance Management is very simple. It consists of a 5 step process that covers all the aspects of the Performance Management cycle.

Planning: This step includes planning activities like defining the job, long-term and short-term goals, identifying key objectives, and developing clear metrics of goals and objectives. Robust planning safeguards organisational goals while aligning them with employee goals.

Monitoring: This is where you track performance through the metrics set in the plan. This step involves monitoring progress and if the team and employee goals have been achieved.

Regular Check-ins: While monitoring only cannot benefit the company or the employees and thus, guidance, mentoring and training employees from time to time will help in bridging the gaps.

Assessment: This is the most important feature of your Performance Management system– correctly and efficiently appraising performance of employees and giving the final results. An efficient system will facilitate managers to get insights, provide appropriate feedback, understand the perspective of the employees, and create future plans.

Recognition: Everything aside, this is the stage which actually makes a big difference when it comes to employee motivation. You have to give employees a reason to stay motivated and this happens through recognition.

What affects your current Performance Management process? In the real world, it is very difficult to get things right at once, every time and consistently. Well, aren’t mistakes ought to happen when you have so much on your plate? Your current Performance Management process, if you have one, is similar. If you are not highly vigilant, your process might not produce the desired results. The common pitfalls that will affect your Performance Management system are:

Unrealistic goals and unfair practices This is a common problem which hampers Performance Management. If the annual reviews are favoured, if the metrics set are poor, not realistic then it is difficult to maintain high employee morale. How could you set the right goals, make the metrics, and be absolutely fair during the review if you are looking at the entire year’s data in one sitting. It will seem unfair. It is necessary to contemplate events of the year, give appropriate feedback, recognition and support, etc. at regular intervals.

Setting the right targets is an art that is backed by science. Out-of-reach targets leave employees to not even try achieving them while easy targets don’t leave the scope of improvement. The best targets are the ones which are easily understood, measured, attainable and yet a little challenging.

Talent Planning Making talent decisions like progression, recognition, retention, succession, internal job changes and developmental initiatives etc. are to be done periodically. Performance management systems should empower leaders with tools that help analyse employee specific performance, potential, loyalty, development needs and fitment.

Lacking transparency This often happens when there are vertical and horizontal layers in an organisation. Which is literally there in every organisation because that’s how they function– through functions and the hierarchy. Since targets and metrics descend downwards, a lack of transparency may hamper the performance of the entire company. For example, few managers might add buffers to targets which may or may not be communicated to the other teams. A Performance Management system operates to provide a single version of the truth to all the employees. Each employee receives the information and feels part of the larger journey.

Lack of consequences Now, this might seem a little harsh but performance without consequences is often taken for granted. This, however, does not mean that you always must win or leave. While penalising is sometimes necessary in extreme cases, performance dependent rewards are more important.

Engagement of management In many companies, senior managers rarely interact with the entire team or the frontline employees. But a Performance Management system which sends a positive message to the employees. It indicates that they are respected. Making announcements and action plans through the system is easy. Assignment of the plans is also critical. Some Performance Management systems have built in employee engagement platforms to regularly assess engagement and wellbeing quotients at various quarters. However, the best of the systems give insights as to why the blidspots exist, facilitate action planning and assignment of plans from there itself.