The core of any organization is its employees and the work they do. When the performance of the employees is managed well and aligned with the goals of the organization, there will be a great work culture. Employees will feel valued, work better and stay longer at the organization. Here we will discuss the significance of a performance management model and how it can be implemented for optimized results.
What is the performance management cycle?
The performance management cycle in a company is a perennial and progressive process where the employees in an enterprise are assessed throughout the year. This typically begins with a goal-setting exercise that starts in the first quarter of the year and ends with an assessment that considers year-round monitoring of performance.
The performance management cycle aims to develop and execute performance plans that align organizational goals with employee growth. This process aims to enhance employee performance by helping them set appropriate and achievable goals yet helping push the envelope further in terms of results. The performance management process can be applied at individual and team levels to guide overall strategy and evaluate employees accordingly.
The four stages of a performance management process
The performance management system is not a one-way process where the employees are told to do something, and they do it! It is more of a two-way conversation between the management and the employee to achieve synergy between the employee and the organization.
A popularly accepted model for a performance management process includes the four stages as given below:
Plan
Performance review starts when the manager evaluates the employee’s job roles, responsibilities, and competencies, constructs goals, and discusses all the details of such an analysis with the employee. This is a highly collaborative process that sets the baseline for performance expectations and develops a mutual understanding of the behaviors required for the same.
Example: An Uber employee is an excellent example of performance management, where goal setting, employee recognition, and more are facilitated by peers.
Coach
The longest part of the performance management cycle includes coaching. Employees are mentored and given feedback throughout the year to help them achieve the goals agreed upon and set mutually. The goals set during the planning stage are used as a blueprint to reference and revise when required to achieve the goals and even exceed them. The better the rapport between the supervisor and the employee, the better the results of the performance management system will be.
Evaluate
In this stage, supervisors or managers will compare notes about performance, refer to self-evaluations by the employees themselves, and consider any customer feedback and awards to evaluate employee performance.
While the timeframe for this stage is shorter than the coach stage, it will be undertaken in various phases. The supervisor will first evaluate on his own, then share the inputs with the employee, discuss areas of improvement and only then close the evaluation process.
Reward phase
Depending on the performance appraisal, the manager will identify employee achievements that include meeting and exceeding the goals set during the planning stage and bestow rewards to the deserving employees.
The reward can be monetary, paid time-off, gifts, a higher position in the form of a promotion, and so on.
Types of performance management models
While HR in an organization is geared towards recruitment, it also serves the critical function of managing employee performance, adding to how the company works.
It is important to note that cookie-cutter performance management models do not work for every business, and each organization needs a management model that will work to enhance employee performance.
Here are the different models that companies can adopt according to their requirements:
The self-renewing performance management cycle
In this model, employee performance needs to be a progressive and self-renewing cycle that aligns individual and team goals with organizational goals. The process includes these steps:
- Performance planning to meet the specified goals
- Review and evaluation of progress
- Mentoring employees and offering support to develop skills required to achieve the goals set
While this management model is straightforward and logical, the success depends solely on the total commitment of everyone involved in the process, from managers to team members.
Example: GE is known for its performance management overhaul, where managers meet with employees at the end of each year, review their performance requirements, and offer support to help them develop skills and perform better. This method has helped them stay consistently on the Fortune 500 list. (According to the Fast Company website)
Employee-driven performance management model
In this management model, ownership is created among employees, which drives greater involvement in the whole process.
Employee-driven performance appraisal works by inquiring about how the performance review should be organized from the employees and team members. This can range from the sub-processes involved to the decision made during the evaluation.
Here feedback and employee communication drive personalized learning and development initiatives that make way for the best possible results for enhanced performance.
Software-based performance management system
While the software is not the only factor in a software-based performance review, it does play a significant role in shaping how the performance management process works.
In the digital age, there is a wide range of software-based performance management systems, but you will need to find the one that best suits your company’s needs by consulting with the HR staff.
The software for performance appraisal helps staff gain insights from employee performance metrics, team performance metrics, and more in real-time.
Peer-reviewed performance management cycle
Like employee-driven performance appraisal, peer-reviewed systems rely on feedback from colleagues or peers about individual and team performance.
This management model can foster a spirit of collaboration among employees and bring in higher engagement among staff that adds directly to the development of work practices and enhancement of business processes.
The added ownership in this review can bring about higher standards that the employees set by focusing on how and what peers are doing in their work processes.
Agile performance appraisal
Agile performance management systems are different from conventional models in that they are not concentrated in certain months of the year. Here the performance reviews are distributed throughout the year and have a more flexible structure with consistent communication involving performance support.
The apparent advantage of this method is that the individual employees and teams are constantly and consistently engaged throughout the year in the company. This will bring about a culture of support and progressive learning and development that can boost team performance.
Example: The globally renowned US food corporation implemented the “Everyday Performance Management” system in 2012 with groundbreaking results. The approach here included daily feedback mixed with supportive statements while carrying out work conversations. Here the focus is to look forward instead of performance in the past.
Team-based performance review
Here the focus is on team-centric goals that identify and incentivizes teamwork highlighting the benefits of a collaborative work culture that generates results for the company in the long run.
Why is performance management important?
Performance management is not a nice-to-have but a must-have in today’s competitive marketplace where employee performance needs to be progressively monitored and developed.
When you take the employee or team through the four phases of a performance management model, a business can optimize employee output while keeping the employee goals aligned with the larger organizational goals.
Another critical aspect of performance management is that organizations can use a progressive approach to revise organizational goals according to changes in the market. Such an adaptive approach to performance management with the market in mind will ensure the organization stays competitive and will be able to weather any changes in the market conditions.
From the perspective of an individual employee and a team, they will feel heard and valued when support is offered from the management side to develop skills and achieve the goals set. A collaborative spirit is also fostered when there is communication among peers, and rewards for performance will ensure employees and teams feel valued in the organization.
When this process is customized according to the organization or business and implemented appropriately, it will inevitably lead to higher job satisfaction and, in turn, will also boost employee retention in the long term.
If you want to boost employee performance and retention, you can try mesh.ai for performance management software products and transform your work culture!
