The success of meeting organizational goals is reliant on employee performance management. Performance management is an ongoing collaborative process where managers and employees work together to improve performance.
There are seven main techniques to guide the performance management process:
- Plan and set clear performance goals and management expectations
- Perform regular checks on employee progress
- Utilize employee peer reviews
- Provide frequent employee performance feedback from management
- Offer incentives to strive for higher performance
- Clearly define roles and responsibilities
- Encourage continued professional development
There are many performance management tools an organization can utilize to supplement those techniques and increase team performance and employee engagement. An effective performance management system will incorporate both performance management techniques and strategies as well as performance management software and tools.
Importance of effective performance management techniques
Employee productivity and employee retention drive the success of any organization. What drives productivity and retention? An effective performance management system that uses the above techniques.
Using effective performance management techniques provides these benefits:
- Identify vulnerabilities within the workforce
- Guide employee training and recruitment
- Raise employee morale and support employee motivation
Let’s look at how performance management techniques do that.
Related Read: 10 Best Workforce Management Software Of 2023
HR managers have a challenging job in balancing employee satisfaction and ensuring organizational effectiveness and performance goals are met. Their success lies in using performance management techniques as an ongoing and collaborative process between employees and management.
Simply providing a yearly employee performance review is not enough. Technique number two, performing regular checks on employee progress, is important because it can unearth issues such as employee engagement or damaged workplace relationships. Ongoing monitoring and feedback (techniques three and four) also help HR managers catch things like wasted resources and increased legal risks, additional vulnerabilities to an organization’s success.
Related Read: 10 Best Integrated Risk Management Software 
Recruit and train new employees
Performance management techniques are also invaluable in employee recruitment. An essential part of an effective performance management system involves developing clear job descriptions (technique six) and management expectations for new employees (technique one).
Clear and detailed job descriptions enable HR to select the best candidates. This also provides potential employees with clear expectations so everyone in the hiring process is on the same page before an offer is accepted.
Improve employee motivation and morale
Each employee is most likely motivated by an array of different factors:
- Sense of purpose or meaning in their work
- Positive company culture
- Recognition for hard work
- Opportunities for career development
- A clear path of career progression
An effective performance management system identifies and supports each individual employee’s motivation (see techniques five and seven in particular). When employees experience motivation in the ways important to them, employee morale is generally high.
Techniques for organizational performance management
An organization must take a big picture view and evaluate not only employee performance but the performance of the entire organization as well.
A key performance indicator (KPI) is an effective performance management tool that measures how well the organization is meeting organizational goals and objectives. Organizational performance is measured against company objectives and peers in the industry. As with employee techniques, continuous performance management is essential to organizational performance management.
How effective performance management works
Organizational performance management techniques are most effective when integrated into the following phases: planning, appraisal, and improvement. Implementing just one of two (such as setting goals and having a yearly review but not applying a progress strategy) is unproductive.
Performance planning involves clarifying the goals and strategies of the organization as well as guiding the organizational behaviors necessary to achieve those goals (see techniques one and four). Performance appraisals encompass regular feedback and evaluations. Improvement includes organizational changes needed to enhance performance.
Related Read: How To Develop an HR Strategy: A Comprehensive Guide
360-degree feedback is a performance management technique that allows employees to better understand how they are viewed as employees, coworkers, and as managers. This is done by using confidential, anonymous feedback from managers, peers, and direct reports. An essential element of this is peer feedback (technique three).
Peer feedback can provide a better all-around insight into employee performance. However, as with other performance management techniques, it must be implemented in an overall performance management system to be effective. It also tends to focus on employee weaknesses and not strengths, which can be unsuccessful for properly motivating employees.
Related Read: 360 Degree Feedback Software For Employee Reviews
Techniques and scales used in performance appraisals
There are a variety of different techniques and scales used in performance appraisals:
- Management by objectives (MBO)
- 360-degree feedback
- Behaviorally anchored rating scale (BARS)
- Human-resource (cost) accounting method
- Graphic rating scales (also called a Likert scale)
Two popular scales are graphic rating scales and BARS. Graphic rating scales list desired traits and behaviors for the employee’s role (like job knowledge and accountability) and then provide a rating for each. BARS measures an employee’s performance against specific behavioral traits.
MBO and 360-degree feedback are common techniques used in performance appraisals. MBO is a technique that defines both organizational and employee objectives and evaluates performance based on adherence to those objectives (see techniques one and two).
Related read: Best Performance Appraisal Software for Skill Growth
Continuous performance management
Continuous performance management is a huge element of what makes a performance management system effective. Continuous performance management allows your organization to develop a trusted environment where every employee is empowered in their performance and development (techniques two, six, and seven).
A traditional employee performance process utilizes an annual performance review, which can create anxiety for employees and provide an inaccurate representation of performance. A continuous performance management system increases employee engagement by providing real-time feedback that is supportive and constructive. Studies show that organizations using ongoing feedback have a 14.9 percent lower turnover risk and employees are up to three times more engaged.
Related Read: Performance Management Software for Continuous Feedback
Principles and examples of continuous performance management
The main principles of continuous performance management focus on the following:
- Constructive feedback
- Interpersonal relationship
The performance management strategy should be based on creating an environment of recognition and mutual trust. Examples of continuous performance management techniques are 360-degree reviews, regular one-on-one conversations between employees and managers. Regular shows of appreciation in the form of recognition and rewards are also beneficial.
Benefits of continuous performance management
The biggest benefits of a continuous performance management system are increased employee motivation, employee satisfaction, and worker retention. Additionally, continuous feedback provides timely and meaningful interactions. This helps the organization run efficiently and effectively.
Employees who are recognized for their work usually work harder and remain with the company longer. Having regular conversations enables employees to know where they stand without feeling the anxiety and shock that can sometimes accompany an annual review.
Related Read: 30 Creative Employee Recognition And Appreciation Ideas
Personal development plans
A personal development plan (PDP) is a tool used to aid employee development and personal growth. It is a plan that guides the individual on a continuous process of self-improvement. A personal development plan provides the employee with a clearer idea of their life and career goals. It also provides greater confidence in each skill and attribute of individual employees.
An individual development plan like a PDP empowers employees to drive their own development needs. Employees who create and meet their personal development goals are generally happier and more highly motivated employees.
When employees should have personal development plans
When should employees have a personal development plan? The answer is always! Career development is a large aspect of employee satisfaction and motivation and a great action plan for anyone. Each employee should have a set of development goals that encompass short- and long-term goals.
A PDP should be implemented together with continuous performance management techniques and performance appraisals. As a stand-alone tool, personal development plans are only marginally effective. When joined with the other performance management techniques, they comprise a highly effective performance management system.
Benefits of personal development plans
There are a host of benefits to personal development plans, including the following:
- Improved performance
- Increased motivation
- Enhanced mental well-being and lowered stress
- Increased confidence and self-esteem
An effective personal development plan will assist employees in meeting their goals of self-improvement in their personal lives and career goals. It also helps them feel better about themselves while doing it.
Key features of personal development plans
There are some features that effective personal development plans need to be successful. The plan should include SMART goals: both short- and long-term perspectives and goals that are realistic and slightly out of reach. The key is to push the employee hard enough to encourage real growth but not so much that they face constant failure.
An effective personal development plan should have each development goal clearly defined with assigned levels of priority. The assigned level of priority for each goal will vary based on the individual. The personal development plan should also be written down and regularly revisited.
There are a vast number of performance management techniques available to employees and their managers. Utilizing as many of the techniques as possible will increase the likelihood the performance management system is effective. Performance appraisals using 360-degree feedback and graphic rating scales combined with continuous performance management and a personal development plan set employees up for their highest level of success.
Want to learn more about performance management techniques? Subscribe to our newsletter to get the all latest expert insights.