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The process of performance management

Previously we have discussed how performance management is a continual process between managers and their employees with the ultimate goal being that all employees understand what is expected of them, how they can achieve their goals and what support they can receive from the business.

A robust performance management process is essential for the success of any business with employees. Without a clearly defined process, businesses run the risk of losing sight of their employees’ performance and ultimately having a less engaged team. The process of performance management is not just defined by a single activity, instead it is a combination of key steps, all of which hold equal importance, but together culminate into a robust and effective performance management process to maximise the productivity and engagement of your team.

4 key steps in a performance management process

Performance Management Step 1: Planning

Planning is a crucial phase in the performance management process and in an ideal world is something that should be considered and recorded before recruiting for the role even begins. However, do not be alarmed if you have not officially started this process, you may have done so without even realising.  It is also possible to put planning in place at any point in an employee’s tenure as long as you effectively communicate this with them.

As an employer it is recommended you define roles, set goals and objectives for each position within your organisation. When setting goals, as an employer it is important to ensure that any objectives set are SMART (specific, measurable attainable, relevant and time-based) this allows both you and the employee / candidate to assess and review the attainability of the goals and better manage performance.

Communicating goals and objectives in the job description from the outset of the recruitment process ensures you are providing clarity and guidance to your teams that is difficult to challenge. If you haven’t formalised goals and objectives from the outset of a role, go back and check the original job description as it may give you a guide as to how you can set and communicate fair and effective goals. Once a successful candidate accepts a role and begins employment, these goals and objectives should be communicated and reconfirmed in the new starter induction.

Key takeaways:
  • Set SMART objectives from the very beginning of creating a position within your business
  • Communicate and record these in job descriptions and new employee inductions


Performance Management Step 2: Monitor

Now that your goals have been set and communicated, it is important that continuous / consistent monitoring is put into practice. Scheduling regular check ins between managers and employees should form part of the culture and should be a positive experience, an opportunity for ‘radical candour’ with open and honest two-way communication. These are also a great opportunity to reaffirm goals and objectives, ensuring that they are front of mind for the employee.

Key takeaways:
  • Schedule regular check-ins between employees and managers
  • Actively encourage honest, open and constructive communication
  • Re-affirm goals and objectives


Performance Management Step 3: Review

Goals and objectives are not set in stone, in fact they should regularly change, otherwise the employee is not growing and is definitely not achieving. Reviews provide the opportunity for both the manager and employee to look back and see how well they have performed against their goals. Again, reviews should encourage open and honest two-way communications. As a guideline below are some sample questions that could be asked throughout an employee’s review

Questions to ask in an employee review  

– What challenges have you faced during the year?

– What additional training or support could help you improve your performance?

– How well do you feel you performed in the tasks you were given?

– Do the regular tasks you are given align with your role’s goals and objectives?

– Do you feel you met your overall goals and objectives?

– Do you feel your regular manager monitoring and reviews are effective and support you in achieving your goals and objectives?

Performance Management Step 4: Reward and Recognition

Rewarding and recognising employees on a regular basis forms an integral part of employee motivation and engagement supporting an individual’s overall performance. Communicating how employees can attain reward is important and allows employees to push boundaries and strive to achieve, but do not underestimate the power of an unexpected or impromptu recognition. Don’t underestimate the power of a thank you or an unexpected cake or pastry!

Types of employee reward

There are two types of rewards:

‘Extrinsic rewards’ these usually take the form of something tangible and include things such as pay and benefits to extra holiday and gifts & vouchers.

‘Intrinsic rewards’ these are more psychological and can take the form of a simple thank you helping the employee to feel valued or an employee’s feeling of doing something meaningful.

Whilst in the past extrinsic rewards were believed by many to be the key motivator when attracting and retaining talent, in more recent times there has been either an awakening within organisations or cultural shift amongst employees (or both), that suggests extrinsic and intrinsic reward hold equal importance, if not slightly weighed more in favour of intrinsic rewards, a study suggested that 85% of millennials want to be rewarded for exceeding personal performance levels, followed by receiving a promotion and exceeding team performance levels. As an employer or manager it is therefore increasingly important to ensure that a blended approach is taken when rewarding and recognising employees.

Key takeaways:
  • Place equal importance on both intrinsic and extrinsic reward
  • Don’t underestimate the power of a ‘Thank you’

Formalising Performance Management into a process requires effective communication, and where appropriate, activity records so that it can be referred back to in the monitoring and review steps. Bringing this all together will give you a highly effective performance management process that can drive productivity, aid in retention and increase engagement.

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