Improving performance management is great for companies and their staff. Employees need to be motivated, have the resources they need and be held accountable to enjoy their role.

Gallup research found focusing on developing people’s strengths and performance management are the key behaviours managers have to impact engagement – and managers account for up to 70 per cent of variance in engagement.

This guide outlines some of the key factors that impact performance management, common mistakes and quick wins to make your processes more effective.

Performance management plays a central role in ensuring employees are productive. Here are the key areas to consider.

Goal setting

Goal setting has been shown to have a positive impact on outcomes in a wide range of disciplines, from listed companies to elite sports teams.

Goals help team members understand what success looks like and how to achieve it. This drives persistence and energises team members.

However, the process should be approached with caution. You risk disenfranchising employees if goals are too ambitious or they don’t have the resources to achieve them.

“Managers should use goal setting like a prescription strength medication that requires careful dosage and consideration of any harmful side effects,” warns the Chartered Institute of Personnel and Development (CIPD).

Regular check-ins

Employers are likely to use a combination of different types of regular check-ins to support employees and keep track of their performance. These include:

• Informal conversations
• Weekly update meetings
• Monthly one-to-ones
• Annual performance reviews or appraisals

The combination of these meeting types will depend on the employer. The important thing is to develop a structure that sets employee expectations.

Records are needed to track progress, so build quantitative and qualitative note taking into these processes.

Appraisals

Appraisals give managers the chance to review salaries and provide valuable feedback on staff performance. They are normally carried out on an annual basis.

Appraisals tend to be effective in improving performance, but carry a risk of demotivating staff and some experts argue feedback needs to be given more regularly. That’s led well-known brands like Adobe to drop them altogether.

Learning and development

Learning and development have an important role to play in performance management – managers should equip staff with the abilities they need to achieve their goals.

Gallup’s research shows that focusing on developing people’s strengths, rather than highlighting weaknesses, has a big impact on engagement too. So, making learning and development a key part of performance management can help boost performance.

Goals are oversimplified

It can be hard to set goals for complex tasks that have dependent steps or where the outcome is unclear.

One approach is to look for milestones in learning or formulating a response to the challenge, rather than a fixed (as yet unknown) outcome.

There are too many targets or targets are hard to measure

Targets need to be easy to understand and communicate – it’s hard to motivate people with arcane metrics.

Set too many goals and it will be difficult for employees to focus.

If you’re struggling to limit the number of goals, look for outcomes or activities that really move the needle. You might measure lots of activities in a sales cycle, but what simple leading indicator measures progress? Meetings with potential clients might work.

The purpose of appraisals is not clear

Appraisals highlight opportunities for development. They can also be used to assess whether team members are suitable for promotions or pay increases.

However, if their purpose isn’t made clear, it can leave employees feeling like they’ve been misled. Perhaps they would have made a stronger business case had they known the results impacted their progression.

The CIPD suggests that reviews for administrative decisions (eg. pay increases) and learning should be separated.

Employees don’t have sufficient resources

There’s little that will sap employee motivation faster than a management team that sets targets but doesn’t give employees the tools, support or time they need to achieve them.

Do salespeople have the support from the marketing team and leads they need to hit targets? Can customer service agents get the information they need to answer questions?

Performance reviews and one-to-ones should cover both what an organisation wants from an employee and how it’s empowering them to achieve it.

Targets are developed without employee input

Employees responsible for achieving targets often have deep insights into what’s possible and how to go about achieving a desired outcome – include them in your goal setting process.

Company goals may be set at management level but involving people in the individual target setting improves buy-in.

Goals aren’t SMART

It’s easy to set aspirational targets that aren’t grounded in reality. Goals need to nail down what a team member needs to accomplish, how it’s going to be measured and the timeline.

The criteria for grounded, achievable goals is summed up in the acronym SMART, which stands for Specific, Measurable, Achievable, Relevant and Time-bound.

It provides a helpful framework to avoid some of the common mistakes covered in this section.

Ask staff (and managers) if they know what their goals are

If goals are going to galvanise behaviour, your team needs to know what they are and why they’re important.

The quickest way to figure out if goals have been properly implemented is to ask people what their objectives are. If they know the majority of their objectives without having to look them up it’s a good sign the process is working.

Asking what team members are trying to achieve in a given quarter or month and how they’re doing is also motivating and further reinforces the importance of goals.

Get feedback on your processes

Getting feedback on performance management is essential to figuring out what’s working and what needs improvement; your performance management process needs its own performance management.

An anonymous survey will help you get an overview of what staff think and individual conversations can provide ideas for improvements.

An easy first step is asking people how they find the process at the end of an appraisal or one-to-one.

Check if goals are making an impact

Company-wide objectives and targets cascade down to teams, managers and individual employees. That connection needs to be stressed to motivate employees – people want to know how they are making a difference.

It’s important to check whether the objectives teams and individuals complete make an impact. This is a simple process for goals like revenue targets, but more nuanced for areas like staff training.

Think about how you can build stronger links between your forecasting and reporting processes, and team goals. For example, you could add more detail to reports or dashboards, have team leaders give updates at meetings or add an item to a board agenda.

The key is to make sure company-wide objectives are cascading down to individual targets and individual objectives are impacting the whole team’s progress.

Celebrate success

Hearing success stories is great for individuals, teams and company morale. Create opportunities for people to share examples of where achieving a goal has made a real difference.

This could be done through monthly employee nominations with a prize for the winner or a responsibility for each department head to share an example in company-wide meetings. The key is to ground the achievements in the objective setting process.

Ready to make some changes to your performance management processes? Use our action plans to improve how you conduct appraisals, manage a challenging member of staff or increase overall staff engagement.