Getting performance management right

Nina Mehta explores how to get to grips with performance management today.

Learning and development need not just come in the form of traditional classroom training sessions or even e-learning. Photo credit: Fotolia 

In a fast-changing, knowledge- and skills-based economy, talented employees are key to an organisation’s success. Yet job satisfaction is now at its lowest level in more than two years and almost a quarter of employees are looking for new jobs.

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To retain their best employees, many businesses are focusing on fostering engagement through growth and development. The latest best practice in performance management supports this approach.

Traditional performance management in the form of the annual appraisal is too infrequent to meet the needs of today’s business environment. Workforces are now not only more global, they are made up of multiple generations with diverse cultural backgrounds, and the increasing reliance on temporary and contract workers adds to the complexity of how organisations can best support their people in delivering outcomes that matter. The traditional approach to talent management no longer works.

Performance management has shifted as a result, no longer top-down but rather, reflecting emerging flexible structures within organisations. According to Bersin Deloitte: “Companies today are turning into ‘networks of teams’ so many of the traditional management practices we developed over the last 20 years are open to debate.”

Careers are more dynamic, young people are asking to be promoted into leadership much faster, and the worlds of recruitment, performance management, and training are now driven by the employee.” Yet many employees do not feel able to fulfil their career aspirations in their current organisation – more than a third (36 per cent) saying it is unlikely or very unlikely that they will be able to do so, while only a third (33 per cent) believe it is very likely or likely.

Flexible, not fixed
The performance management process must shift from the once-a-year, rear-view perspective approach of the annual appraisal towards being a more flexible process that mirrors the rhythms of the business. Performance management must also reflect the rate of development of individuals. It is no good providing an annual appraisal when an individual has changed job roles three or four times within that period. 

Furthermore, there is a strong link between the contribution an employee makes to the business and how satisfied he or she is. If an employee feels they are making a worthwhile contribution, they are likely to be more engaged.

However, employee contribution and employee satisfaction are not entirely interdependent. It is possible that an employee is happy and satisfied at work, while not contributing effectively. An effective performance management process must address both employee satisfaction and contribution in order to drive engagement.

Performance management processes also have a reputation of being a heavy drain on time and productivity, yielding underwhelming results. Employees need and want ongoing feedback, coaching and development, and the annual review is too late to make an impact.

However, when performance management is embedded into the rhythm of the business, it is much simpler for managers and employees to communicate about what is working well and what isn’t and to redirect focus as needed. 

Manager/employee relationship 
The manager/employee relationship is now at the heart of the performance management process. Some sources say that up to 70 per cent of employee engagement is impacted by their relationship with their manager. Managers play a key part in ongoing performance management, understanding what motivates their employees and providing them with the right level of challenge to motivate and engage them. 

As a result, managers must take on more of a coaching role with their employees, fostering a two-way exchange that builds communication and trust. To make these discussions meaningful to the employee, these conversations should focus on employee contributions, and should clarify expectations and accountability around goals and development.

They should also be used to provide timely feedback, recognition and coaching. When these conversations take place regularly, employees are better able to understand what behaviours they should continue and which ones are not supporting their productivity and professional development. 

This latter point is important because learning and development is a key aspect of ongoing performance management. Talented employees, especially millennials, have an expectation that their organisation will provide them with the skills they need to grow. If these opportunities are not forthcoming, they are very likely to leave the organisation. 

Learning and development need not just come in the form of traditional classroom training sessions or even e-learning, but rather, should incorporate on-the-job development opportunities.

For example, stretch assignments that play to the employee’s strengths and interests and support the development of new competencies provide an opportunity for employees to use and grow their skills and abilities at work. Managers should also foster supportive team collaboration that leads naturally to peer mentoring.

Employees must take ownership of their own development by openly discussing career goals, collaborating on development plans and defining specific development activities with their managers that will help them grow.

Making the shift to this more ongoing and agile approach to performance management truly requires a manager/employee relationship built on mutual trust. Great managers ensure healthy communication, which is a behaviour that fosters engagement.

However, managers must be supported to take on more of a coaching role. L&D plays a critical role here in guiding managers and providing them with the right tools to enable them to listen, measure and act on employee needs. 

Focus on strengths
The traditional performance management process tends to focus on skills gap analysis. Today’s performance management approach gives more weight to strengths-based development. In other words, as well as identifying areas for improvement, the process identifies areas where the employee is particularly talented that could be developed still further. It also looks ahead, focusing on meeting future requirements rather than addressing past shortcomings.

When employees can see that they are having a tangible and measurable effect on the organisation’s success they are inevitably more motivated and engaged to deliver outcomes and to grow.

Line managers may support this by setting motivating goals for employees linked to business outcomes, continuously reviewing and revising these goals as business strategy changes and providing feedback to each employee as to how they are doing in achieving these outcomes. 

Supporting other talent programmes
Performance management should be fundamental to supporting other talent programmes. First, it should have strong and clear links to the organisation’s competency framework. How work gets done is just as important as what work gets done.

Competencies should be at the root of all performance management processes from goal-setting to the delivery of feedback, recognition and development opportunities. 

In addition, the best performance management programme retains the connection with salary and benefits; however it should empower managers to take a holistic approach to remuneration. Great managers let employees know that their salary is based on a wide range of factors and behaviours and not limited to a specific performance score.

This kind of compensation can take many forms and, like feedback, employees should not have to wait until the end of the year to be recognised. Spot bonuses, gift cards and other rewards and recognition can be awarded just-in-time to complete an employee’s total rewards compensation. 

A great sales manager who meets his or her targets may not have leadership capabilities, for example. Of course, it is necessary to define the competencies required for effective succession planning, before they may be identified in individuals.

These competencies may not be the same as those displayed by current leaders, and different succession paths may need to be designed to build bench-strength in both leadership areas and other critical roles of the business.

Recruiting and on-boarding also need to be considered. If the organisation can communicate a clear idea about the competencies it requires in new recruits and how it intends to measure those and deliver development, it will be in a stronger position to attract and retain the best candidates. 

Ongoing performance management
Instrumental to the success of every organisation is the people. When performance management evolves from being an isolated HR-driven process to an intrinsic part of the everyday business rhythm, organisations are better able to drive engagement, productivity and results.

This approach supports every stage of the career management lifecycle, from attracting new staff, on-boarding them into the organisation, monitoring and managing their performance and engaging and developing them. 

However, successfully transitioning to this more agile approach to performance management requires organisations to develop managers who are in tune with what motivates their employees, and who have the skills, tools and resources to drive greater engagement, productivity and results from their people. 

About the author 

Nina Mehta is a Talent Management Consultant for Halogen Software. For further information, visit



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