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Let me ask you one thing: What is performance management?

If you answered something along the lines of “it’s when you assess employees’ performance” then you need to keep on reading because I’m sorry to tell you, but you’re wrong.

Performance management is a system, not a task. It is a set of integrated management practices that are designed to help achieve two main objectives: maximize employees’ potential, and increase employee satisfaction.

Now that we got the definition out of the way, there a few best practices that you must always keep in mind when setting up your performance management system. How many of these are you missing? Let’s get to them and find out!


1.  Remember that performance review is NOT performance management

Performance reviews or employee evaluations are only a part of an effective performance management system. Don’t forget that!


2.  Identify the purpose of managing performance

Why is an effective performance management system important to you?

  • Are you doing it for compensation purposes?
  • Administrative reasons?
  • To uncover developmental opportunities?
  • Or is it simply to measure overall performance?

Maybe it’s a combination of any of those! Point is: knowing what you want is the first step to getting there.


Measuring Human Capital: Why and How to Measure it

Human capital has recently been the topic of many, many conversations. Everyone appears to be concerned with how to develop their human capital – and for good reason! Developing your human capital ensures that your workforce is being effective and efficient, and ultimately, improving your company’s overall performance.

3.  Clarify the work to be done

Seems easy enough, no? But you’d be surprised at how many organizations still don’t have clear, written-out job descriptions and requirements.

I’m not saying every single job in the world needs to have a formal job description, but it surely doesn’t hurt! And if you can’t manage that, then just make sure that the work is clearly defined.


4.  Set goals and establish a performance plan

Tell your employees what is expected of them, what they need to achieve, and what they can do to get there.
No matter how great an employee is, nobody will be able to reach their full potential if they don’t have the right tools.


5.  Conduct regular and frequent coaching

It’s important, we all know that by now. Need I say more?


6.  Conduct a formal review of performance

Formal performance reviews may not be the only part of a good performance management system, but they are still integral. And when I say “formal”, I don’t mean that you should sit your employees down and scare the bananas out of them in an interrogation room!

Formal reviews have to be about development, not evaluation. Sure, evaluation is part of the process, but improvement and development are still the main objective. Be sure you clearly convey that message.

Also, you’re going to need to sort out all the things associated with a performance review; like having a performance evaluation grid, determining when you’re going to do it, how often, and who is going to be involved in the process.

The answers to these questions all depend on your needs, the job in question, and the general workings of your company. So be sure it keep them all in mind.


How to Create an Employee Performance Evaluation Grid

Performance appraisals are a key component in any organization. Not only do they provide you with a quantifiable measure of performance, but they are also used for administration, compensation, and even development purposes. In fact, properly done performance appraisals are not only meant to benefit the employee, but their supervisors, as well as the organization as a whole.

7.  Train your reviewers

Arguably one of the most important best practices of performance management. So for the sake of emphasis: TRAIN YOUR REVIEWERS!

There are so many pitfalls that performance reviewers can succumb to, and it’s your responsibility to minimize the damage. Don’t believe me? Check out these common mistakes you can avoid during employee evaluations and consider yourself warned!


8.  Pinpoint the sources of ineffective performance

So, you’ve done your performance reviews, and a few of your employees aren’t quite pulling their weight. Now, who do we blame?

The employee, of course! Right?


There are many, many sources of ineffective performance. It could be personal problems, external factors, job concerns, or even issues with organizational policies and practices.

We can all agree that pointing fingers isn’t the best solution, so be sure to identify the sources of ineffective performance and find solutions to reduce or eliminate their negative effects.


9.  Recognize and reward performance

Do you know what’s worse than conducting performance management and then not do anything about the results? Conducting performance management and only focusing on the bad!

Recognizing and rewarding performance has so many benefits, and if that isn’t convincing enough, then you should know that NOT recognizing and rewarding performance is actually harmful.

Don’t skip this one!

And if you need a few pointers, check out these tips to creating the best employee recognition programs.


10.  Create action plans to develop performance

The essence of the performance management system, action and developmental plans are not only good for the employee, but for the company as a whole. Gather all the information that has accumulated throughout the performance management process and have a conversation with your employees. See what they like, don’t like, what they want to learn, what they feel they need to improve upon, etc.

After that, all that’s left is creating action plans to develop performance and benefit both the employee and the organization.


How to Conduct a Motivation Assessment

The age-old question: “How can I motivate my employees?” is one that has probably been asked by every single manager out there. Wouldn’t it be a wonderful world if there was a single direct answer to that question? Unfortunately, as many managers can tell you, there isn’t.

11.  Comply with the law

Mainly because it’s important. But the better reason? Because you have to.

Laws weren’t created with the sole purpose of making your life difficult; they were created to protect people. So be sure to review local labor laws relating to performance management before you set anything up.


Start implementing these Performance Management Best Practices now!

And there you have it: performance management best practices that everyone should take to heart. After all, if you’re bothering with a performance management system, then you might as well do it right. You’ll have nothing to lose and everything to gain!

Do you have any other items to add to this list? Let us know in the comments below!

Leen Sawalha

Leen Sawalha’s interest in the effects of motivation and behaviour on businesses has led her to obtain a Bachelor’s Degree in Psychology and a Bachelor of Commerce specializing in Human Resources Management. Currently in the process of acquiring her MBA, Leen’s expertise lies in the integration of both disciplines to enhance the effectiveness of an organization’s human capital.


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