Why is performance management important?
Since my entry into HR in the early 2000s I have worked for a number of companies, all of which preached performance management. Interestingly enough, the term performance management meant something completely different to each employer, and certainly holds different connotations and meanings to employees. Although performance management means different things to different people, I have found that most employers agree that performance management is a method in which companies can measure an employee’s output. However, performance management is really so much more than just a measurement of employee output, especially to employees.
Over the years I have had numerous opportunities to speak with employees about performance management and to get a better understanding of why it is important to them. Many employees have expressed that companies who do performance management well enable them to showcase their abilities, highlight their strengths, develop their skills and competencies and establish both personal and professional developmental plans. In addition to the overall development of the employee, performance management also allows companies to compensate and reward employees for achieving or exceeding their goals. When speaking with employees, I have found the terminology of rewards to be challenging as they often go far beyond traditional compensation. Many employees have listed recognition, promotion or addition of responsibility as being a reward, especially those who are typically top performers.
Employees, especially Gen X and Millennials, are looking for validation and confirmation that they are valued by their employer. They want to feel like they are a critical piece to what makes the company great. I would go as far as saying they want to believe a company’s success hinges on them. This mindset actually lends very well to performance driven employment cultures. Cultures that are highly performance driven and that effectively utilize performance objectives and performance management allow employees to take the reins of their destiny and drive their development and careers. It also provides employees with much needed and continuous performance management feedback, and the direction and confirmation they are often seeking. Top performers can differentiate themselves from the pack, while low performers may be able to come to a self-realization that they are in over their heads, the role is not right for them, or may even be working for a company that does not meet or match their personal core values. Finally, regular and effective performance management helps to mitigate surprise for underperforming employees.
Constructing the Ideal Performance Plan
So what have employees told me a “good” performance plan looks like?
- First, they want a plan that is straightforward and easy to understand. Performance plans should clearly define goals, metrics, grading and/or scoring. Plans that are ambiguous, open ended and confusing are not only ineffective, but also create bitterness and lack of interest in the plan.
- Second, employees want to feel that the goals tie into the larger picture. They want an understanding of how their individual goals and accomplishments help the company to achieve its overall goals or strategy.
- Third, employees want to be challenged. They want to show the skills they have acquired, be given the ability to participate in new activities, and be allowed to continue personal and professional growth.
- Fourth, individuality is very important. Employees want to know that the plan has been designed with their interests, abilities, skills and development in mind.
- Fifth, the plans need to be transparent. Employees must be able to understand the outcomes they can expect if they meet or exceed their expectations, as well as any consequences if they don’t meet them.
- Sixth, employees want specific details on their strengths, areas for improvement, and what their development plans look like inside and outside of the organization.
- Last, employees want managers to put real thought and effort into the plan creation and evaluation. Employees want to feel as though their manager really cares about their achievements and is vested in their continued development and future.
Sounds like a lot of work right? I’m not going to sugar-coat it: A well prepared and executed plan is definitely a lot of work, and not just for the manager, but also for the employees. This being said, the rewards both the employer and employee can receive from developing and executing well-thought-out performance plans make the time and energy a worthwhile investment. Positive returns on performance, behaviors, production, output, engagement, and overall job satisfaction are just some of the outcomes both the employer and employee can realize when performance management plans are made a priority. Not to mention it can assist in lowering attrition, and help to make the company be an employer of choice. In today’s environment where the mindset of most employees entering the workforce is “what can my employer do for me,” companies should evaluate their current strategy and acknowledge that by utilizing effective performance management and making it about the employee, the company and the employee can mutually reap the rewards.