Have you ever purchased a smart watch and instantly become motivated to hit exercise targets? Right before bed you are walking around the house just to hit your 10,000 steps? Many of us have been there, and it is a lesson on the power of effective performance management and goal setting in the business world too. 

Per­for­mance man­age­ment isn’t an easy field to get right. Get it wrong and it can cause frustration and reduce engagement with employees and man­agers. Thankfully, more and more com­pa­nies are understanding the impor­tance of effec­tive per­for­mance man­age­ment. 

But what is effective performance management? In this article we will look to under­stand what elements are necessary for effec­tive per­for­mance man­age­ment and address the fol­low­ing questions:

What Is Per­for­mance Man­age­ment? 

Firstly, the term annual performance appraisal process is not interchangeable with per­for­mance man­age­ment. A per­for­mance appraisal is just one com­po­nent of what is con­sid­ered to be per­for­mance man­age­ment. One of the best def­i­n­i­tions of per­for­mance man­age­ment is composed by Michael Arm­strong in his Hand­book of Per­for­mance Man­age­ment:

​“The definition of per­for­mance man­age­ment is the con­tin­u­ous process of improv­ing per­for­mance by set­ting indi­vid­ual and team goals which are aligned to the strate­gic goals of the organ­i­sa­tion, plan­ning per­for­mance to achieve the goals, review­ing and assess­ing progress, and devel­op­ing the knowl­edge, skills and abil­i­ties of peo­ple.”

As a result the key takeaway from this definition is that effective performance management is a continuous process rather than a once off or annual event. Could you image if your smart watch target was 3,650,000 steps a year? Out of sight, out of mind!

What are the basic ele­ments for effec­tive per­for­mance management?

The basic ele­ments that form an effec­tive per­for­mance man­age­ment frame­work include:

Goal set­ting  

You need to set goals the right way. Firstly, they need to be mean­ing­ful and under­stood. Secondly, employ­ees should have con­text as to why these indi­vid­ual goals mat­ter and how they are fur­ther­ing organ­i­sa­tion­al objec­tives. Employ­ees will care much more about their roles and be much more engaged when they know — and tru­ly under­stand — how their job matters. 

Goal set­ting should be a col­lab­o­ra­tive process. Where once goals trick­led down­wards from the high­er-ups in an organ­i­sa­tion, mod­ern com­pa­nies are align­ing goals upwards. So goal set­ting should involve meet­ing with employ­ees and being trans­par­ent about com­pa­ny goals, direc­tion and obsta­cles. It is a simple formula – by involving employees in goal setting, they become more passionate and accountable to them.

Trans­par­ent com­mu­ni­ca­tion and col­lab­o­ra­tion

 Employ­ees want  their man­agers and lead­ers to be open and authen­tic about performance. For example, when a business is going through a difficult time, being transparent with employees brings with it a sense of ownership and accountability. On top of this, they want real-time com­mu­ni­ca­tion while build­ing healthy rela­tion­ships with their col­leagues and man­agers. This will involve reg­u­lar feed­back and hon­est dis­cus­sion in the form of catch-ups or 1-on-1’s. 

Employ­ee recog­ni­tion

 An effec­tive per­for­mance man­age­ment sys­tem will include employ­ee recog­ni­tion and reward. As a result, employ­ees will feel val­ued and appre­ci­at­ed for the work they do and the effort they put in. Using technology, it has never been easier to deliver recognition. Secret: shout outs can be automated to a certain degree!

Hon­est and reg­u­lar performance feed­back and reviews

 The more fre­quent and pre­cise the feed­back, the bet­ter indi­vid­ual per­for­mance. We’ve all had the regular weekly meetings with the word’s “sync” or “align” in them. While grinding at times, if delivered properly it will boost performance significantly. Employ­ees want reg­u­lar insights into their work and the bet­ter-informed employ­ees are regard­ing their per­for­mance, the bet­ter able they are to improve and excel.

Employ­ee performance devel­op­ment

 No ambi­tious top per­former wants to remain at a com­pa­ny long-term with­out hon­ing and devel­op­ing skills. Advance­ment and devel­op­ment are impor­tant to employ­ees — not to men­tion, com­pa­nies stand to ben­e­fit when employ­ees are more skilled and capable.

So what is effec­tive employ­ee per­for­mance management?

Hav­ing all of the ele­ments of the per­for­mance man­age­ment process in place is very impor­tant, but this will not nec­es­sar­i­ly lead to effec­tive per­for­mance man­age­ment for your organ­i­sa­tion. As a result there are many oth­er fac­tors in play, such as:

• Hav­ing the proper buy-in from senior man­age­ment to per­for­mance management.
• Ensur­ing the per­for­mance man­age­ment cycle is con­tin­u­ous rather than annual or ad hoc.
• Ensur­ing per­for­mance con­ver­sa­tions are engaging and not​ ‘tick-box” exercises.
• Hav­ing leading per­for­mance man­age­ment soft­ware significantly reduces the administrative pain involved with performance management.
• The skills and will­ing­ness of your man­agers to deliv­er effec­tive per­for­mance man­age­ment on a day-to-day basis.