11 Techniques For Effective Performance Management
Performance management is notoriously difficult to get right, with a study by Gartner finding that 82% of HR leaders think performance management wasn’t effective at achieving its primary objective, and only 38% saying it kept pace with business needs.
Let’s face it, most of us have come out of a performance review and doubted its usefulness, or sat in roles starved of proper feedback and guidance.
We can do better!
In this article, I’ll pull from my experience implementing different performance management systems across various orgz with a focus on development and motivation, to share nine techniques to drive effective performance management in your organization.
11 Techniques for Effective Performance Management
1. Quarterly goal setting
Managing performance within your organization requires a keen focus on creating systems that motivate employees to achieve both the individual and collective goals of the organization.
In order to evaluate performance, it’s great to know what someone was trying to achieve!
Performance, at its root, is the demonstration of goal-directed effort. Simply put, if you don’t set goals or expectations for delivery, it will be challenging to evaluate performance.
Personally, I happen to be a total nerd about goals. In fact, I have an organization-wide goals methodology that I live by (cascading goals).
When evaluating an employee’s performance in achieving goals, consider some of these three items that might come into play:
Too long a time frame
If goals are set on too long of a time horizon, they may become irrelevant. Instead, set goals quarterly and, at the midway point of the quarter, check in on the goals to ensure they’re correct and relevant to the current organizational strategy.
Try not to set individual goals that span longer than one quarter. If you are tempted to do this, break a bigger goal into smaller parts and set the smaller parts as the quarterly goals.
It's worth noting that you can do both, looking at longer time frames as part of your performance appraisal approach vs performance management styles that focus on shorter periods.
“Goals” that aren’t really goals
If goals are not really “goal-sized,” as in if they aren’t really goals just tasks, then it’s the manager’s responsibility to work with each individual and team to determine goals.
If a team is transactional, such as call center workers or support personnel, consider setting goals around quality, such as customer feedback, NPS or other key performance indicators (KPIs) or metrics.
Example of a bad goal: “Complete onboarding training”
Example of a much better goal: “Complete company onboarding and become comfortable with work systems.
Complete all required onboarding training, document the main systems that are used in executing this role effectively, and publish the results to the team documentation space.
Once fully onboarded, provide at least three suggestions for making onboarding better in the future for this specific role.
Goal to be measured by the completion of training in the LMS, documentation of main systems in the team knowledge base, and submission of three suggestions for onboarding improvement to the team lead.”
Dependencies
People can share goals, and some individual goals will be reliant on others for completion.
If you are in the position of evaluating goal completion and your employee did everything they needed to, and everything they could to try to accomplish the goal, but they were not able to because of the lack of performance of someone else, this should have been identified way before the goal period is up.
Managers should be having conversations with their employees about their goals throughout the goal delivery period, so if a goal is not going to be met because of a dependency, this should never be a surprise at the end of the goal delivery period (hopefully quarterly!).
2. Bi-annual or quarterly performance reviews
I’m a firm believer that performance reviews are still an effective performance management technique, but the annual review doesn’t quite cut it.
Quarterly or bi-annual performance reviews are better because they fit into a system of more frequent, timely feedback, enabling employees to adjust goals and behaviors while they still matter.
The trick here is balancing the time it takes to complete performance reviews and the frequency which formal feedback needs to be provided.
My personal preference is a 6 month review period, meaning that a more comprehensive review happens in late-January with a lighter review in mid-July.
3. Double-blind performance evaluations
Most performance reviews include a self-analysis part (at least IMHO they should anyway).
In many cases, the team member completes a self-reflection which is then sent to their manager for review, and then the manager writes their evaluation of the team member.
Personally, I don’t like this method because it enables managers not to have to really think about an employee’s performance because the employee submits their self-reflection for review as an input to the manager’s evaluation.
Instead, I much prefer double-blind performance evaluations where both the manager and employee create their performance review by themselves, and the results are displayed to each other at a set time/date, typically just before the live conversation about performance.
What’s neat here is that this method clearly identifies when managers and employees are in or out of sync on perceptions of performance, and each party is challenged to really think critically about the individual employee’s performance in the review period without the influence of the self-reflection feedback.
In other words, this method can mitigate bias and help employees feel like their manager actually cares about and notices their performance rather than just taking what they wrote in the self-reflection and adding comments or re-wording it.
4. 360-degree feedback
360-degree feedback is a performance management technique that allows employees to better understand how they are viewed and valued by others in their organization and sometimes clients as well.
This is done by using confidential, anonymous feedback from managers, peers, direct reports and customers.
In this process, individuals are typically asked to identify 4-10 people they feel they work closely with and would be able to give an effective review of their performance.
These people, in addition to the employee’s manager and any direct reports, are then asked to complete a 360-degree feedback questionnaire.
The feedback gathered can provide a better all-around insight into assessing employee performance and any areas for improvement, especially when reviewing managers.
It does require more effort, however, although this is something 360-degree feedback software can help alleviate.
5. Continuous performance management
I say this in my article on conducting performance reviews but it bears repeating: nothing in a performance review should be a surprise.
Effective performance management is a continuous process, and continuous feedback helps bring about faster pivots and better outcomes.
One of my favorite sayings related to feedback is: “I can’t fix what I don't know about… and I’d like to know about it now so I can fix it now instead of later when the opportunity is gone.”
A system of continuous performance management is optimal for managers and leaders. What this means is not sitting on feedback, good or bad, but finding ways to weave feedback into conversations with employees continuously.
When I teach graduate students how to be good managers and leaders, we spend an entire week talking about how their #1 job as a manager of people is to give feedback continuously and consistently, both good and bad.
We get into this to the point where we set feedback targets for each employee, to be executed by their manager.
Each week, every employee needs at least one piece of feedback, good or bad. This feedback, both positive and constructive feedback, needs to be more than “good job” or “that email could have been better.”
It needs to be specific, focused on the task, related to the expectations of the role, and supported by what you can do to help them. This is particularly effective for performance management in retail settings.
One of my absolute favorite books on managing people is Radical Candor by Kim Scott. Learn with Kim about how to give actually helpful feedback in this article: 6 Tips for Giving Helpful Feedback.
In small organizations, continuous feedback practiced consistently might be able to replace formal performance evaluations, but this doesn’t scale and won’t support the organization as it develops and needs to represent the performance of employees consistently for succession planning, merit bonus allocation, etc.
6. Employee recognition programs
Employee recognition programs are a vital but overlooked performance management technique.
These intentional, company-wide initiatives are designed to appreciate and reward employees for their achievements, efforts, and contributions.
The goal is to engender the consistent practice of acknowledging individuals or teams for their performance at work.
A study from Gallup and Workhuman found that employees who feel appreciated are more likely to be engaged and perform better, with praise from senior leadership being particularly effective.
Recognition programs also reinforce desired behaviors by aligning rewards with organizational goals, encouraging employees to consistently contribute in ways that drive company success.
This alignment, combined with regular acknowledgment, strengthens morale and supports a high-performance culture.
Some employee recognition ideas off the top of my head:
- Public acknowledgment e.g. shout-out in a meeting, Slack channel, or newsletter
- Giving development opportunities, raises, bonuses, benefits, and ownership
- Personalized gifts
- Time-related rewards.
Tip: Many organizations use employee recognition software to help you launch and manage these programs.
7. Flexible rating scales
There are tons of performance rating scales to choose from and you need to be flexible depending on your needs.
The scale I choose depends on what I’m trying to assess and how many questions there are, etc.
For example, if there’s a ton of questions, I like to standardize the scale to minimize survey fatigue. It takes a lot less reading to standardize the scale vs., for example, having to read a customized BARS for each question.
8. Personalized development plans
While performance management is an organizational initiative, with the aim being to improve overall organizational performance, it’s generally more effective when workers can see how it benefits them too.
Personal/professional development plans (PDPs) are structured action plans that help employees map out their learning and development and career growth aligned with their current role and future aspirations.
They’re an integral part of the performance management process because they empower employees to take ownership of their development and push harder, resulting in higher levels of engagement and retention.
These plans can result in workers taking part in additional training, cross-functional projects, or even secondments, helping to bolster internal collaboration.
9. Mentorship programs
Mentorship is a highly effective technique within performance management that helps facilitate networking, skill-building, and career support, which can significantly boost employee performance, satisfaction, and retention.
For example, 67% of businesses reported an increase in productivity due to mentoring.
Types of mentorship programs include:
- Traditional one-on-one mentorship where an experienced employee (mentor) is paired with a less experienced colleague (mentee) to provide individual guidance and support in their professional development.
- Group mentorship where a single mentor or a group of mentors works with multiple mentees. This approach can be beneficial for workshops or training sessions where a collective learning experience is desired.
- Peer-to-peer mentorship in which employees of similar job levels or roles mentor each other. It's particularly effective for sharing specific job-related skills or knowledge.
- Reverse mentorship when a younger or less experienced employee mentors senior staff, often to share knowledge in areas like technology, digital trends, or emerging market behaviors.
10. Use the appropriate tools
There are many different approaches and employee evaluation tools that can be used to measure employee performance.
At the most basic level, performance management can take place on paper, through an online form, or in a simple database.
These methods are potentially effective, but they don’t scale well. If you’re a team of three, it probably makes sense not to over-engineer a performance management system.
But, if you’re a group of ten or more, it’s time to consider what tools might help to enable your performance management process to be more consistent, fair, and effective.
If you’re just getting started, consider what can help managers in your organization provide feedback early and often, with documentation and clarity for employees. Employee morale is heavily influenced by the type of feedback they receive, so help your organization adopt a culture of frequent feedback and professional development.
Templates are a great way to start adding value to managers trying to practice good performance management.
Next, you might consider ensuring performance standards are known and documented across the organization such that they can be referenced in the organization-wide review process.
You might also want to engage in performance calibration from time to time to ensure managers are assessing objectively using the same measures across the org.
Beyond setting expectations and giving managers tools to facilitate employee performance management, there are a number of software tools that can help out.
Need to learn more about performance management and not sure where to start? Check out our list of performance management courses that will help you stay aligned with the most recent techniques.
11. Performance-based compensation (used wisely)
Compensation is a loaded topic in most organizations, and performance-based compensation is even trickier to navigate.
Performance-based compensation is a methodology that aims to reward performant employees for their hard work, such as going above and beyond the requirements of their role.
There are many different types of performance-based compensation models, some of which are more impactful than others. For example, individual incentive plans such as sales commissions are very common.
Bonuses based on company and individual performance are also common, where individual performance is typically measured by goal attainment. Merit pay increases, while seemingly routine, are also typically influenced by performance.
The idea behind performance-based compensation is, of course, to motivate employees to achieve results and demonstrate certain behaviors.
However, it requires clear, documented performance feedback and a solid performance management strategy that is implemented across the organization consistently.
While high-performers may enjoy the incentives brought about by performance-based compensation, this methodology is often flawed as performance evaluations that are not data-backed are inherently subjective and potentially littered with bias.
Consider again those stealth influencers that Invitae identified in their journey to reducing bias in peer feedback.
Under a performance-based compensation model, it’s possible that people who self-promote better than others will receive more pay because of an inflated perception of their performance which may or may not be the reality.
At the same time, those who consistently deliver results, but don’t boast about it as much as others, may not be noticed as uniquely and may not receive adequate compensation for their real contributions to the organization.
Under this model, competition brews and becomes core to the culture of the organization. Some organizations might benefit from this, but, over time, this competitive culture will change the average employee profile within the organization.
In an environment where self-promotion is essential to receiving more money, self-promotion ramps up, bad news is minimized (even worse, sometimes ignored or hidden) and the organization’s lived values shift from doing the right things to grow the business to doing the things that will make the individuals within the business look good.
One note about creativity and innovation in performance-based compensation environments: it’s especially hard to be creative, innovate, and take risks in an environment that celebrates and incentivizes competition and avoids failure.
Innovation and creativity require failure, meaning you have the potential to minimize innovation and creativity if the compensation methodology does not support people taking risks and learning from their mistakes.
My view, of course, is just one of many. In some cases or departments such as sales, a performance-based compensation structure is expected, and employee engagement and retention depend on it.
For this reason, this might not be a one-method-fits-all approach. Before considering implementing a performance-based compensation system, consider how you want your organization to act and interact, both with each other and with your customers.
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