The links between well-designed performance management and organisational success are well established, but there’s still an ongoing debate about the best approach. We know from research conducted by SAP SuccessFactors that the best performance management systems are those which are tailored to an organisation’s unique workforce characteristics including their culture, industry requirements and available resources. At the same time, there are some consistent approaches which we see throughout the best performance management systems:
Communication is the grease that keeps the wheels of your business turning and in performance management, this is particularly the case. Ongoing conversations between employees and managers that consist of both positive and constructive feedback are vital for ensuring team members are on the right track. It’s also important to provide leaders with the tools and capabilities to keep a continuous dialogue with employees and to offer coaching at appropriate intervals.
Employees should also be encouraged to participate by setting their own goals, booking meetings with their managers and preparing for regular reviews. These routine discussions about development goals, career aspirations and ongoing performance set up a process whereby the dreaded annual performance review becomes just another marker on a continuous journey. By having the performance conversation with an employee continuously, they’re able to receive the coaching, mentoring and recognition they need at the right time.
Although approaches vary, most organisations still have systems in place for differentiating the performance of employees. This is a necessary component of performance management systems as it allows an organisation to make fair decisions about employment and promotion opportunities. In some cases, employees are differentiated using a rating system during annual reviews, while others have a continuous rating system.
The important part here is ensuring your employees understand how the rating system actually works and how they’re being evaluated. There’s no more sure-fire way to lower employee morale than shifting the goalposts on performance ratings. These ratings systems operate at their peak when employees believe the process is accurately recorded and consistently fair. To achieve this, you need to have clear criteria aligned to organisational goals as this allows you to make the best decisions in regards to pay, promotions and development in the context of driving positive business outcomes.
Ultimately, performance management works at its best when systems are tailored to the specific characteristics and needs of an organisation. It involves facilitating continuous employee-manager dialogue, coaching and feedback, and transparent methods for measuring performance that are also consistent. That’s why the current generation of performance management technology is so exciting because it provides enhanced support for the innovative strategies that will power your organisation’s performance in the future.
This article was written by Presence of IT's Kent Lawrence on LinkedIn.