How does your company help employees reach their full potential? For many, the answer is through their performance management strategies. When they’re well-executed, these strategies lead to soaring productivity, engagement, and retention rates. When they’re not, they can do just the opposite.
But how do you know which approach will work best for your organization and your people? The research makes it crystal clear — a strategy that puts people first is the key to success. When companies help employees improve performance, business outcomes improve:
- 4.2 times more likely to outperform their competitors
- Revenue growth is 30% higher
- Attrition rates are 5% lower, on average
If those results look like something you’d like to replicate, you’re in the right place. This quick guide will walk you through the essentials of effective performance management for HR teams and help you discover what works for your people.
What Is Performance Management?
Performance management refers to the strategies companies use to set expectations, track progress, give feedback, and reward great work. It’s how your business meets its own goals and drives growth. These strategies also enable you to recruit and retain top talent more effectively — research shows that employees want to work for a company that recognizes their work and supports their career development.
Managing employee performance involves a combination of these activities:
- Establishing clear performance expectations: Typically done during onboarding and after a promotion or move into a new role
- Setting individual goals that align with organizational objectives: Typically done on an annual basis, though it could be a semiannual or quarterly task
- Providing support and giving feedback: Done most effectively, this takes place on an ongoing basis, at least weekly
- Assessing results: Typically done on an annual basis, but most effectively done semiannually or quarterly
Your performance management strategy has the potential to help create a workplace where employees feel valued, supported, and motivated — but only if it’s well-executed. Avoid using an outdated approach, especially if it’s reliant on paper. Get in tune with what your employees think, whether they feel they need clear expectations about their job duties, more face time with their manager, or are motivated by setting goals and tracking progress.
A modern performance management system built for HR makes it easy to follow best practices and pay attention to the needs of your workforce. With performance software, you have a digital toolkit at your fingertips and can more deeply understand your workforce — the perfect combination for a strategy that builds a strong foundation of trust and collaboration.
HR’s Role in Performance Management Success
Human resources and performance management are just like HR and most other people management strategies — it’s your team’s responsibility. You’re tasked with creating and executing the system used across the company to monitor and evaluate every employee’s contributions to company goals. It has to be fair, consistent, and transparent, with a manageable mix of performance reviews, continuous feedback, and recognition.
At some companies, a once-annual review combined with near-daily check-ins on performance goals meets their needs. At another, employees and their managers meet once a week and complete quarterly performance appraisals. Both companies use similar ratings systems for their reviews, regularly recognize top employees during department meetings, and reward great work with incentive pay.
Your HR team has to find the balance between what the business can accommodate and what will help your workforce be successful. Your expertise is critical in building a smart performance management framework for your company — one that learns from the past, evaluates how goals are progressing now, and plans for the future.
Here are a few examples so you can see why HR in performance management is so important.
Tailored Review Cycles Keep Feedback Flowing
You’re planning performance review cycles, and you know from conversations and employee surveys that your people would prefer quarterly reviews to annual reviews. Unfortunately, you also know your managers don’t have the bandwidth. Your team is able to come up with a solution: semiannual reviews combined with weekly one-on-one meetings. Leaders conduct a more manageable number of formal reviews, and employees get the feedback they’re craving.
Coaching Drives Aligned Goal Setting and Engagement
Surveys and review data show high employee engagement and productivity in one department while those metrics lag behind in another. Your HR team looks at performance review trends, one-on-one discussions, and department-wide feedback to find the root cause. A lack of performance feedback and goal alignment on the underperforming team is holding them back from achieving their goals. Your team is able to quickly roll out a coaching initiative to help managers deliver more actionable feedback and set SMART goals that feed into the company's goals.
Streamlined Onboarding Leads to Faster Productivity
Your company is growing fast and needs to onboard dozens of new hires quickly. Your team steps in to design a streamlined process that includes clear performance expectations, immediate access to internal learning courses, and scheduled check-ins at 30, 60, and 90 days. This structured approach gives new hires lots of support from day one, allowing them to focus on getting up to speed and fully ramped.
Development Plans Boost Leadership Impact
A gap in leadership skills has emerged among mid-level managers at your org, and it’s affecting team dynamics and project outcomes. You tackle the challenge by designing a learning and development (L&D) program that includes hands-on workshops and mentoring sessions with senior leaders. You also spearhead the implementation of a learning management system (LMS) to provide on-demand leadership training courses.
Not only do managers develop stronger leadership skills and increase their personal job satisfaction, but team performance and project success rates improve across the board. That shows the tangible benefits of investing in development.
Key Features to Look for in HR Performance Management Software
Finding the right tools to streamline your HR performance management cycle doesn’t have to be overwhelming. Today’s systems simplify the process, offering everything from user-friendly review templates to advanced options for using AI in performance management. Whether you’re looking to bring automation and efficiency to your HR processes or revolutionize performance management with cutting-edge AI tools, there’s a solution out there for you.
Here are some of the features to look for to find the best possible system for your company:
Basic Functions
- Set team and individual goals
- Deploy performance reviews smoothly
- Easily collect review information
- Export performance data
- Use performance data to inform managers of top performers
Unique Functions
- Align and manage goals
- Allow goal and task feedback from managers
- Real-time progress updates
- Visual representation of goal progress
- Public recognition functions for engagement
- Social collaboration elements
- Library of performance review templates, including self-assessments and 360-degree reviews
- Automated and customized review workflows
- Custom reports and dashboards with AI-enhanced analytics
- Compensation planning tools or integrations
- Employee engagement surveys
Transform Your Performance Management Approach
Managing performance is a necessary HR process, but it can be much more than that. Your team can turn it into continuous opportunities to unlock employee potential and drive business growth. With HR teams leading the way, supported by software designed to meet your organization’s unique needs, the possibilities for transformation are endless.
When you adopt a people-first approach to performance and back it up with the right technology, you can build a workplace culture where both employees and the business thrive.
Take the next step in optimizing performance management. Download our Performance Management System Buyer’s Checklist to find the solution that fits your company’s needs and take your performance strategy to the next level.
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