Every business relies on great human resources, that is, employees to achieve its objectives. While you must prioritize your people, ensuring all your employees work towards the same goal at optimum levels is just as important. This is where performance management strategies come in.
What is strategic performance management?
Strategic performance management systems allow you to create a process to understand and drive performance measurement and monitor and work on it, continuously improving your strategy to meet organizational goals.
A great example of performance management is a strategy implemented by Valve Technologies:
The organization gave its employees a platform to allow them to recognize each other and share their thoughts about each other’s achievements. They could also share feedback and suggestions on how to improve the projects. This is a great example of using a feedback mechanism as part of your performance management strategy.
At its simplest, performance management strategies align individual performance to the company’s overall strategy.
Why does strategic performance management matter?
Reasons to have a strong performance management strategy are:
Track progress and evaluate teams’ position
Running without knowing where you are going is a battle you will lose. Strategic performance management plans allow you to see where you stand, measure your progress versus your goals, and gain insights into what each team member is doing to achieve your business goals.
Example: Review OKRs at regular intervals to ensure you are on track to meet your goals.
Identify areas of opportunity
Knowing where you and each employee stand allows you to see how you can improve. A good performance management plan helps leadership spot holes in the strategy and provides data to identify areas of opportunity and resolve them.
Example: If you observe that one person in a team is consistently outperforming the others in the team, you must investigate the case. It could be that one person is too skilled for that position or the others need some support.
Align teams to organizational goals
Every organization has a set of goals that it needs to achieve. Therefore, it must create good performance management strategies to align individuals with these overarching business goals. Each individual contributor understands what they have to do, what role they play, and how their contributions add to the organization’s success.
Example: Understand each individual contributor’s personal goals and mesh those goals into your performance management strategy. Once you’ve done that, create step-by-step goals to achieve your overall business goal.
If your performance management strategy is in order, it should help employees become motivated, keep them engaged, and help boost productivity. When employees know where they stand and what they need to achieve, they are more likely to work toward their goals.
Additionally, when employees see their contributions adding up to the overall success of an organization, they are motivated to do more.
Employees that are motivated, engaged, and valued tend to stick around. If you acknowledge, praise, and reward their contributions, it will motivate them to stick around to see your company flourish. They become a part of the organization in the truest sense.
Example: Employees that don’t feel valued, trusted, and rewarded are twice as likely to look for a job elsewhere.
Improve bottom lines
- Lower attrition equals lower expenses in terms of hiring and training new staff.
- Clear goals equal improved utilization of resources and time.
- More productivity means better financial gain.
- A happier workforce ensures better work quality, ultimately boosting your company’s financial standing.
A better culture
Great performance management systems ensure that the right people are recognized and rewarded for their contributions. When you continue a positive pattern of recognition and reward, more people attempt to replicate the same behavior. This eventually creates a strong work culture.
Example: At Google, rewards, holidays, paid days off, and high levels of recognition motivates employees to perform better.
A big part of your performance strategy is collecting and analyzing data, right from feedback to numbers. Performance management systems allow for clear insights into every aspect of your team’s performance and a continuous and consistent feedback loop. This allows for better transparency throughout the organization.
Tips for strategic performance management
Evaluate and re-evaluate performance management strategies
This has to be driven home in every leader’s mind. Break down your current performance management strategy and evaluate it critically. Even if you are running a performance management system that seems effective, do not hesitate to re-evaluate it periodically.
One of the biggest mistakes an organization or a leader can make is to believe that their strategy is perfect. It must always continue to evolve.
Your people are your core. You must involve everyone when creating a performance management strategy. While specific people may be tasked with finalizing the strategy, you must get input from everyone. Just as important as getting your team to buy in, an effective performance strategy needs your leadership to live and breathe every aspect of your strategy.
When your team is involved in the process, they become accountable for ensuring that their inputs generate value. The rest of the team follows when they see your leadership pushing the strategy.
Set SMART goals
To create an effective performance management strategy, you must set Specific, Measurable, Achievable, Relevant, and Time-Bound goals.
- Specific: Clearly defined goals
- Measurable: Clear qualifiers and criteria to measure success and goal accomplishment.
- Achievable: Goals that may be tough to achieve but are realistic.
- Relevant: Goals must be reasonable and results based.
- Time-bound: There must be a definite time within which the team or company must achieve each goal.
Define performance improvement plans for every team member
Create performance improvement plans for every single team member. Even great performers can be aided with a strategy to continue improving.
Prioritize learning and development
This cannot be emphasized enough. The more learning and skills your team gets, the more they develop, and thus, the more they can contribute. Make learning and development integral to your performance improvement plans and overall performance strategy.
Continuously monitor, review, and improve people and processes
This is an echo of point one. Consistently and periodically monitor, review, and improve processes with the data you garner from your performance strategy. Yes, you must stay true to the overall objective, but do not be afraid to tweak your strategy, especially if you don’t see the desired results.
Feedback must become a culture
Performance reviews, casual conversations, and continuous loops of feedback must become the norm. This means ensuring that your door is always open to listen to what employees have to say. This will allow you to freely communicate with your team and drive performance goals.
Good rewards, recognition, and compensation programs
We’ve said this before—people drive a company’s success. When you succeed, make sure they know it. Make sure you reward them for their success. Be sincere in thanking those that have put their whole hearts into making your business a success.
Implement a good reward and recognition program and ensure your rewards and compensation plan improves your workforce’s quality of life. You will see that every penny you spend comes back multiplied.
These tips give you pretty much everything you need to make sure your performance management strategy succeeds. However, you also need to have good tools and systems in place. Your team, managers and employees included, need the right tools to execute your performance management strategy.
Mesh has a proven track record in performance management and offers a single platform to set, manage, monitor, and improve your performance management strategies. It is easy to use, intuitive, and of course, makes the most sense for your business. With Mesh’s wide range of products and resources, create high-performing and motivated teams.