What Effective Performance Management Looks Like

The Mesh Team
Published on 
Apr 27, 2023
Learn about the different aspects of effective performance management and find out how you can improve your company's ability to track, manage, and improve employee performance.

Businesses need to outperform competitors as well as themselves regularly to keep growing and generating more revenue. One way of knowing how your business is doing is to check the revenue that is being generated from all the actions being undertaken in any particular year. 

But the challenge with using revenue as a measurement of how your business is doing is that you are only able to measure it towards the end of the year. If you are not satisfied with the result, you have to wait one whole year to see the actual results and see if things have improved.

The second way to keep a check on how your business is doing is by introducing a performance management process. Using this process, you can set goals for your team members, teams, and the business as a whole. Once you set these goals, you can set up a process to get regular feedback from each team member on how they are performing in their roles on a day-to-day basis. 

This enables you, as a business owner or senior management member, to regularly review the performance of the business and take corrective measures to ensure that your business is moving in the right direction. This way, you can measure your performance continuously, without having to wait for the end of the year results.

Let's explore performance management a little.

What is performance management?

Performance management is a process that lets the team members continuously track the progress they are making towards the goals defined by their managers.

This process is usually aided by the use of tools that allow the business or managers to define goals after discussions with the team members. After they are defined and placed into the system, it becomes the responsibility of the individuals as well as the managers to regularly track the progress that the individual has made towards achieving the goals that have been defined. 

The speed and efficiency of the progress enable the individual, manager, and the company to understand their performance and plan changes in the goals as well as plan annual reviews of the employees accordingly.

All this is possible only if the business can put a robust performance management system in place. Let's look at some of the key features that we think should be there for a good performance management system.

Features of effective performance management systems

1. Easy to use

Any process within a company gets completely left out if it is not easy to use. This is why it is essential to make the process as easy as possible for all the parties involved. This applies to not just the goal setting and discussions process, but also to the ability of the team members to track their progress as well as the managers to review their performance.

Select the right performance management software that can make it very easy for everyone involved in this process, including the human resources team. 

When multiple teams play a key role in a process (like the managers, team leads, HR teams, and finally, the employee), it becomes important to ensure that all of them can not just access the system easily, but are also able to contribute to the performance management process collaboratively.

2. Support transparency

Employees today do not just want to focus on improving performance; they want to understand how their performance is contributing to the overall success of the organisation. This is the reason why the performance management systems need to facilitate easy visibility of not just the individual's goals, but also the goals of the team as well as the company.

By making the company goals visible along with the performance management plan, it is easy to see how the company can achieve its goals because of the impact of the goals that are being achieved by the individual employee. 

This also facilitates better employee engagement as the individual can feel proud about the impact that they are having on the achievements of the company.

3. Facilitate better performance reviews

One of the purposes of having a performance management process in place is to review the work performed by the team members. Although the system lets the managers and the team members continuously track the progress of their performance, the end result is usually a performance appraisal process.

When a manager has to focus on effectively managing multiple team members working in his/her team, he/she can feel it overwhelming to remember all the details required to make a better decision during the annual performance review of a single employee.

One of the biggest challenges when it comes to performance management is the issue of recency bias, where the manager is likely to remember the most recent positive or negative performance results of an employee and not be able to recollect the performance over the complete time of the review being conducted for.

Hence, the ability of the performance management system to show the progress of the individual's performance over time enables the manager to not just see the recent events, but measure the employee performance over the period that the review is being conducted for.

4. Support regular feedback from peers

Employee performance expectations are set up by the managers to help the team and the company grow continuously. The employee works towards fulfilling these expectations to achieve the goals set out for him/her.

But we all know that there are hundreds of tasks that a knowledge worker does these days which might not contribute to the end goal being tracked as part of the performance management systems. These other tasks are essential but do not directly contribute to the progress of their performance goals.

So, in this scenario, how does the manager understand all the effort being put in by the team member?

This is where feedback from peers within the team becomes valuable. Performance management systems today enable not just the managers to provide their feedback on the employee's performance, but also enable peers within the team or other complementary teams to provide regular feedback on how the individual is contributing to the overall achievement of the company goals. 

This feedback ensures that the manager gets better visibility into the value that the employee is bringing to the table apart from the core goals that have been defined for him/her. 

Hence, good performance management systems need to enable this feature for their users.

Having the right processes and technology in place to help support continuous performance management is essential. Check out Mesh's intuitive performance management solution that can help your company create a more engaged and productive workforce.

5. Data-Driven decision making:

The best performance management systems are those that make decisions based on data. This could include data on employee productivity, customer satisfaction, or any other metric that is relevant to your company. By making decisions based on data, you can be sure that you are making the best possible decisions for your business.

6. Focus on coaching skills for effective People Management:

The focus of an effective performance management system should be on coaching employees to help them improve their performance. This could include providing feedback, offering resources and training, and setting goals. By coaching employees, you can help them reach their potential and improve your company’s overall performance.

Psychological Principles of an Effective performance management system:

1. Autonomy:

The best performance management systems give employees a sense of autonomy. This means that employees feel like they have the freedom to do their jobs without too much interference. They should also feel like they are able to voice their opinions and be heard.

2. Mastery:

Employees should feel like they are constantly learning and growing in their roles. The best performance management systems provide opportunities for employees to learn new skills and improve their knowledge.

3. Purpose:

Employees need to feel like their work has a purpose. The best performance management systems help employees see how their work fits into the company’s larger goals. By doing this, you can motivate employees to do their best work.

Steps to building an effective Performance Management System

1. Define what success looks like:

The first step to creating an effective performance management system is to define what success looks like for your company. This will help you set the right goals and objectives for your system.

2. Collect data:

Once you know what success looks like, you need to collect data on employee performance. This data will help you identify areas where employees need improvement.

3. Set goals:

After you have collected data, you should set goals for your performance management system. These goals should be specific, measurable, achievable, relevant, and time-bound.

4. Provide feedback:

Feedback is essential for an effective performance management system. Employees need to know how they are doing and what they can do to improve. Feedback should be given on a regular basis.

5. Offer resources and training:

The best performance management systems offer employees resources and training to help them improve their performance. This could include books, articles, online courses, or in-person training.

6. Evaluate progress:

It is important to evaluate the progress of your performance management system on a regular basis. This will help you identify areas that are working well and areas that need improvement.

Reasons for the ineffectiveness of Per­for­mance Man­age­ment Sys­tems 

1. Lack of clear goals and objec­tives:

One of the main reasons why performance management systems are ineffective is because they lack clear goals and objectives. Without clear goals, it is difficult to measure success or identify areas that need improvement.

2. Lack of data:

Another reason for the ineffectiveness of performance management systems is the lack of data. Without data, it is difficult to make decisions or set goals.

3. Lack of feedback:

Feedback is essential for an effective performance management system. However, many systems lack regular feedback. This makes it difficult for employees to improve their performance.

4. Lack of resources and training:

The best performance management systems offer employees resources and training to help them improve their performance. However, many systems do not offer these resources. This makes it difficult for employees to improve their skills and knowledge.

5. Lack of evaluation:

Many performance management systems are not evaluated on a regular basis. Without evaluation, it is difficult to identify areas that are working well and areas that need improvement.

About the Author

The Mesh Team is a diverse group of passionate professionals at Mesh, dedicated to transforming the world of performance management. Together, we aim to provide you with valuable insights, strategies, and knowledge to empower your journey toward achieving exceptional performance in your organization.
The Mesh Team
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