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What is Performance Management?

Performance management is the process of aligning your organization’s goals and values with employee expectations and management of their work. It is a collaborative process focused on making employees, and therefore the organization, more successful and mission-aligned. Performance management establishes clear expectations, setting goals, monitoring progress, providing feedback, and supporting employees in achieving individual objectives that are aligned with the organization’s goals. The process involves multiple key factors forming a system. Performance management program refers to the practices, tools and processes used to carry out the performance management process: job descriptions, performance evaluations, goal setting, recognition and rewards, and training and development.

If you’re interested in learning more about performance management specifically participant workers, check out out this overview document in the Employee Success Program section – 

Why is Performance Management Important?

Effective performance management can assist employment social enterprises in achieving their organizational goals by ensuring that employee work efforts align with the organization’s mission, values, and established goals and objectives. Developing an effective performance management program ensures that employees understand their role and have the necessary support and resources to succeed. Performance management also helps organizations understand when an employee is out of alignment with expectations and goals. Overall performance management  is an important part of any organization’s growth strategy and supports equitable career advancement opportunities of employees. 

Impact of Ineffective Performance Management:

Ineffective performance management can lead to potentially negative consequences such as:

  • Employee disengagement
  • Lower productivity
  • Increased errors
  • Attendance issues
  • Higher turnover
  • Strained relationships between employees and management

Benefits of Collaborative Performance Management:

On the other hand, effective performance management practices can have a positive impact on both employees and the organization. 

Collaborative performance management can:

  • Help employees feel more connected to their work and the organization by providing clear expectations
  • Provide clear expectations and criteria for success
  • Support equity and inclusivity
  • Offer ongoing feedback and training towards employee development
  • Provide opportunities for recognition and reward
  • Lead to increased engagement
  • Improve productivity
  • Strengthen the link between employee tasks and organizational strategy

Best Practices

When developing and implementing a performance management model, it’s important to remember that performance management is an ongoing process that requires regular communication, feedback, and support.

Here are some steps you can take to develop an effective performance management program:

  1. Set goals and expectations proactively: Setting goals and expectations starts with a clear job description that outlines the essential functions of the role as well as the skills, expertise, and attributes required and expected for all employees and the role specifically. During the onboarding phase and throughout the employee life cycle, managers should reiterate and clarify additional expectations and goals.
  2. Understand unique learning and work styles: Employees have unique learning and work styles. Throughout the hiring and onboarding phases, it’s helpful to understand how an employee works, learns, and receives feedback. For example, the opportunity to work on projects that align with their unique interests and career goals can support increased confidence and improved performance.
  3. Communicate performance expectations clearly and regularly: Collaborate with employees to build a shared understanding of what positive performance looks like, as well as what underperformance looks like. Provide timely, ongoing feedback that focuses on both employee strengths and areas for improvement.
  4. Provide tailored coaching and support: To mitigate misalignment and underperformance, provide tailored coaching and support to help employees develop and grow within their role and the organization.
  5. Evaluate performance metrics and criteria: Evaluate performance metrics and evaluation criteria to ensure that they are relevant and applied equitably across the organization.
  6. Address performance issues proactively and with curiosity: Address performance issues proactively and with curiosity, seeking to understand the root cause of any underperformance and working collaboratively with the employee to find a solution that supports their growth and development.
    • Here’s a few considerations to help you navigate the sometimes tricky processes of addressing performance issues:
      1. Identify and understand the issue: Start by identifying the specific performance problem that needs to be addressed and gathering additional information to understand the root cause of the issue. Consider the impact of the problem and whether it’s a management or performance issue. Reflect on your management practices and whether you’ve provided clarity, built a strong relationship, and held regular check-ins.
      2. Check-in: Share your feedback with the employee, seeking their perspective. Be explicit about what’s in your respective spheres of control and the type of feedback you’re offering. Don’t make any on-the-spot decisions about performance improvement plans.
      3. Assess: Consider the problem’s impact, extenuating circumstances, teachability, and what parts can be addressed with available resources and time.
      4. Decide: Based on your assessment, decide whether to invest in the employee, coach them out, or let them go. Remember to check your policies and consult with HR or legal advisors before making any employment decisions.

Foundational Concepts

Effective performance management is founded on several key concepts, including:

  • Goal setting: Goal setting should focus on impact objectives aligned with the organization’s social mission, as well as individual development goals. Goals should be co-created through collaborative discussion.
  • Tailor goals for each staff member or team. Provide tailored coaching and support to help employees develop and grow within their role in the organization.
  • Get buy-in and agreement on goals.
  • Cascade goals down to your team. Align team-wide or individual goals with company-wide goals, mission, values, and desired impact.
  • Make goals challenging.
  • Feedback: Feedback is the process of providing specific, objective, and supportive observations to employees on their strengths and areas for growth. Effective feedback helps employees understand how their performance aligns with organizational goals and expectations, and supports their ongoing development and success.
    • Optimize feedback by giving positive feedback soon and often, and negative feedback carefully in the form of constructive or developmental feedback.
      • Plan well before giving feedback.
      • Give feedback in private.
      • Be specific and helpful, and provide examples related to the issue at hand.
    • When receiving critical feedback:
      • Communicate the value of feedback to employees.
      • Listen without rushing to respond.
      • Encourage employees to ask questions to ensure they fully understand the feedback.
    • Create a culture of feedback by having leaders ask for feedback.
  • Coaching: Coaching is a personalized approach to building self-awareness, developing strengths, and overcoming challenges.

“Make sure that team members know they are working with you, not for you.”

– John Wooden

  • Evaluation: Evaluation is the practice of performance assessment and the communication of performance feedback. The focus should be on development over rigid performance rating. Evaluation methods can include self-assessment, peer feedback, 360-degree feedback, and objective metrics.
  • Recognition: Recognition is the practice of acknowledging and highlighting employee achievements in line with the organization’s mission, values, and goals. Public and peer-to-peer recognition are powerful ways to reinforce organizational values.
    • Consider asking the team how they want to be recognized and rewarded through informal conversations or employee engagement surveys.
  • Career Advancement: Career advancement refers to opportunities and pathways provided to support employee growth and development. In the context of performance management, this means creating clear criteria for career advancement and providing employees with opportunities to develop the skills and experience needed to advance their careers within the organization. This could involve offering training or mentorship programs, providing opportunities to take on new responsibilities or projects, and establishing a clear process for promotion or career advancement.
  • Equity: In the context of performance management, equity means evaluating and addressing any indications of bias or lack of inclusion in the performance management process. For example, this could involve ensuring that performance expectations are clear and consistently applied across all employees, regardless of position, identity, and tenure.

Concepts in Action

Here is an example of effective performance management concepts in action:

A social enterprise with a 6-month transitional employment model sets a specific goal to increase the number of individuals who complete their transitional employment and move on to a permanent, quality job by 20% in the next year.

To achieve this goal, they hold an organization-wide meeting specifically to discuss the importance of this goal and develop a shared understanding in the context of this goal. The organization assigns managers to work with their departments to set team and individual performance goals that align with the achievement of this target.

To ensure that employees have the necessary support and resources, they provide relevant training and development opportunities to build the required skills and experience.

They also regularly monitor and track progress towards the goal and provide customized and timely feedback and support to employees as needed, resulting in overall improved organizational alignment and success.

Success Metrics

To measure the effectiveness of performance management practices, consider the following success metrics:

  • Mission-critical goal achievement: Measures the achievement of goals tied to the organization’s objectives to evaluate the effectiveness of performance management practices.
  • Completion rates for performance reviews and development plans: Evaluates the rate of completion for reviews and development plans to determine how well the performance management process is being followed.
  • Manager confidence in providing coaching and development: Measured through surveys to assess the effectiveness of coaching and development programs by evaluating the confidence of managers in providing these services.
  • Internal mobility and promotions as a percentage of open roles: Evaluates the effectiveness of internal mobility and career development programs.
  • Productivity improvements: Measures productivity improvements at the individual, team, or organizational level to evaluate the effectiveness of performance management practices.

Additional Resources

About S P A C E

S P A C E is a consulting firm that transforms the employee experience by creating a safe and positive work environment for all, particularly those who are most vulnerable to workplace adversity. They offer a range of services, including human-centered HR strategy and advisory, organizational development, and personal and professional development coaching and support.