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What Is Performance Management? Process and Cycle

June 3, 2024

3 Min Read

Did you know that only 12% of employees feel recognised at their work? Conversely, about 25% of employees leave their current job due to lack of recognition. With talent wars and labour shortages, it’s essential you avoid voluntary departures at all costs.

But how? What can you do to make your employees feel more appreciated, valued, and motivated? Implementing a comprehensive performance management process might be of some help.

Imagine a system that fosters growth and encourages employees to achieve goals efficiently and effectively. Seems like a dream right? Not anymore. With this blog, you will unlock the secret to achieving all your business goals while keeping your employees motivated.

This blog will help you understand what the performance management process is and why it is so important. Further, it will also provide you with useful tips to significantly improve your performance management plan.

If you are interested in knowing how a well-designed performance management strategy can unlock your employees’s full potential, then keep reading till the end.

What is the performance management process?

Performance management is a continuous process used to improve individual and organisational effectiveness. The performance management process includes a cycle of feedback between managers and their employees to ensure the organisation’s objectives are achieved.

In recent years, the definition of performance management has changed. What once used to be an annual affair has now become a continuous process that ensures your employees are performing efficiently throughout the year.

Overall, you can divide the performance management process into four key steps:

Planning: Setting up employee and organisational goals.
Monitoring: Consistent monitoring is done to ensure sufficient progress is being made to achieve the said goals.
Reviewing: Measuring the progress of the employees on a yearly or biannual timeframe
Rewarding: Rewarding employees for successfully reaching their goals.

Now that you are familiar with the performance management process in HRM, let’s examine it and try to understand why it is so important.

Why is the performance management process so important?

Here are five reasons why an employee performance management process is important:

Boost performance and engagement

When managers and team leaders constantly have an open and constructive feedback channel with their team, they can help to provide on-time suggestions. This leads to improved performance and keeps the employee morale high.

Employees feel valued and heard when they can reach out to their superiors when they face issues, as it helps them with a learning opportunity while also bettering their output.

Strengthen goals alignment

Performance management makes it easier for managers and leaders to develop realistic goals to measure for their employees. A good performance management plan will allow your employees to set practical goals for themselves. Therefore, consider preparing an updated job description for your team and discussing with them how you would like them to progress.

In addition, you can work with them to establish SMART goals that align with their career objectives and roles. By setting goals that cascade down from the company’s primary objective, you can ensure the individual efforts of your employees end up contributing to the bigger picture.

Boost employee motivation

A successful performance management process can easily increase your team’s engagement. In addition, it can also encourage open dialogue between managers and employees.

You can boost your team’s engagement by establishing weekly meetings, monthly check-ins, etc. Furthermore, you can even develop a process to measure the engagement and motivation level of your employees regularly.

Clearly mention your expectations, provide regular feedback, and nurture development opportunities to help your employees understand their roles.

This can also make your employees feel valued and motivate them to improve their skills. Overall, the performance management process is a great method to increase engagement and improve performance.

Improve productivity

Aside from improving engagement, performance management also helps you encourage and inspire your team to perform better, hence boosting productivity. This would, in turn, create a stress-free workplace environment, allowing your employees to retain their focus and achieve more in less time.

Establish transparency in the workspace

One of the biggest advantages of performance management process is that it allows you to increase workplace transparency. By sharing organisational goals and helping your team establish individual SMART goals, you can further contribute to maintaining a transparent environment.

To create a performance management system that promotes transparency, you must first outline the tasks employees can perform. Then, you should demonstrate how they can prepare to achieve positive outcomes.

Moreover, informing your employees about the motivation behind the performance management process will help them optimise its use. Lastly, you can also explain how their goals and accomplishments contribute to the bigger picture.

When your employees know the potential rewards of their work, they can easily work on improving their performance.

Support talent development and retention

A strong performance management process can help you identify high performers and their development needs. By investing in employee growth, you can easily retain top talents. Further, this will also motivate them to continue optimising their performance while also inspiring other employees.

You can easily recognise employees during weekly check-ins, or at the end of a project. According to their performance, you can plan rewards and offer incentives. By offering public accolades and additional benefits you can also encourage other employees to improve their performance.

A well-designed performance management process is a vital tool for any organisation seeking success. It goes beyond evaluating past performance; it is a continuous cycle that fosters employee and organizational growth. Therefore, the next section will provide you with some useful tips.

Tips to improve performance management process

Performance management fosters a culture of learning and improvement that benefits both your employees and the organisation. Here are some tips to improve your performance management system:

Align employee and HR performance management: Make sure to involve your HRs from the very beginning and try to get their input during the down phase of your performance management process. By aligning employee and HR performance management, you can ensure your system meets legal and company guidelines.

Invest in a good employee performance evaluation system: There is no one-size-fits-all in the performance management process. You need to select an evaluation method that best suits your specific roles and provides meaningful insights. Develop a clear employee performance evaluation system to ensure consistency across different managers and departments.

Use technology for cascading goals: Technology can come in handy to keep track of who is responsible for what. But that is not all; using advanced tools offers broad visibility and easy access for everyone. This way, completing or modifying goals will be a hundred times easier.

Actively involve your employees: Gone are the times when the performance management process used to be a top-down exercise. Nowadays, performance management is more of a shared responsibility between employees and supervisors. Increased employee participation will result in higher satisfaction, commitment, and motivation.

Create a culture of continuous learning and growth: Learning new skills directly improves the efficiency and performance of your employees. Therefore, you need to create a work environment that supports employees’ development.

How 6 Pence Helps

In the end, the performance management process can help you achieve organisational objectives efficiently while retaining employees. 6 Pence is a leading staffing agency in Oman, Bahrain, Iraq, and Dubai. We help businesses find the right talent and also assist with the hired employees’ payroll processing, paperwork verification, and work visa application (for foreign hires) and job role-related training.

Frequently Asked Questions

1. What is the performance management plan process?

The performance management plan process is a structured approach within the performance management system. This process focuses on building personalised roadmaps for each of your employees to achieve their goals and improve their overall performance.