Performance management is a tool that most managers of people will employ on a daily basis, but often without formalising the process or knowing that they are even doing it. However, when effectively managed it has the potential to support business growth, aid in staff retention, create efficiencies and aid in improving performance.

Performance Management a definition:

The Chartered Management Institute defines performance management as “an integrated approach to helping an organisation to achieve its aims and objectives by monitoring and improving the performance of individuals, departments and organisations as a whole”.

Alternatively the CIPD suggests that they see there being no standard definition to what performance management is, instead it describes activities that:

  • Establish objectives
  • Improve performance
  • Hold people to account

Whilst this may seem a contrasting opinion from two leading institutes, scratching the surface a little exposes that both agree it amounts to the same thing.

Performance management is not something that is carried out in isolation, instead it is an all encompassing approach that facilitates open communication between employee and management linking the activities and performance of the individual employee or overall department with the goals and vision of the business.

When should you implement performance management?

Historically performance management has been confused with annual or quarterly reviews or something that is brought into play to manage and resolve underperformance. Performance management is often perceived as something that is utilised when an individual or teams performance is not at its optimum level and cracks are starting to appear. This could not be farther from the truth, effective performance management should begin before an employee even joins an organisation.

It requires the effective communication of the business’s goals and how the role of the individual or team fits into those goals. It is about setting expectations and being honest and realistic with regards both the benefits and consequences associated to the meeting of those expectations. With that in mind performance management should begin at the start of the employment process and be a constant throughout the employees tenure at the business.

Why is it important to formalise performance management?

As discussed, performance management should take a holistic approach throughout the duration of an employees time at a business. At the beginning we stated that often managers can implement performance management without even knowing, for great leaders it is almost intrinsic to share a goal or vision and provide a roadmap for success. But all too often the message can be lost, misconstrued or be perceived less important against the backdrop of everyday life. Where a great leader will apply performance management intrinsically, an effective leader will implement processes that consistently revue and remind  teams and employees that achieving  business goals is mutually beneficial and will be able to identify, support when things go a little off track and where necessary challenge and prevent the spread of counterproductive behaviours and activities.

Does performance management support employee engagement?

When approached and implemented correctly performance management is integral to achieving employee engagement. Employee engagement is ultimately where an employees personal goals are aligned with those of the business. Performance management seeks from the outset to define the business goals, vision and values whilst at the same time identify the key motivators and values of the team or individual and work to set out a journey that will fulfil as best as possible the needs and desires of both the business and its employees.

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