How to build effective performance management
JASMINA RIDZI, HRM CONSULTANT, AMITAS D.O.O.
An effective, continuous performance management process that delivers high productivity and profitability is key to ensuring the company’s growth. The process involves setting goals that are aligned with the strategic objectives of the company, planning activities to achieve the objectives, monitoring and evaluating progress, developing competences and taking care of employee satisfaction and motivation.
The ABC of performance management
Performance management is one of the most important HR processes. It ensures the achievement of the company’s goals through the achievement of personal business goals. If management is doing it correctly, it raises the satisfaction and motivation of the employees. Employees are motivated by the fact that the goals are clear and not everyone has their own idea of what is a priority and because they always know the direction of progress. Employees who regularly receive feedback and recognition for their performance are more satisfied and motivated than those who feel that their efforts are not noticed anyway. The performance management process has a direct impact on the company’s performance itself, so it is important for companies of all sizes.
In an effective performance management process, roles are clearly defined. HR professionals participate as administrators of the process, managers as implementers and employees as active participants. Many times, performance management processes are not successful simply because administrators and implementers do not know how to fulfil their role in the process. Just setting up the process is not enough; it is necessary to acquire the appropriate competences and have adequate information support for the implementation of the process.
What contains effective performance management
Effective performance management includes planning and setting goals, objectives and key results, monitoring performance indicators, activity correction and process improvements.
There are two main areas or levels of performance management. First, we need to set the company’s goals for a certain period, which we call business performance management, and then, through the creation of personal business plans, ensure that the company’s goals are achieved.
-
Manage the company’s business performance
Goal: Higher profitability. Using different metrics is just a means to that end.
Business performance management shall cover:
- setting company’s goals,
- setting and monitoring strategies to achieve the goals,
- definition, monitoring, and analysis of metrics (KPI),
- monitoring and improving the efficiency of work and management processes to achieve the goals.
-
Manage employee performance
Objective: Raising the performance of employees and leaders in line with the company’s business performance objectives
Employee performance management is a continuous process of communication between managers and employees to ensure the achievement of the company’s strategic goals.
The process includes:
- setting business and development SMART goals and objectives,
- setting measurement criteria and expected results,
- monitoring of implementation
- giving feedback,
- developing competences of employees,
- assessing the performance,
- reward the success.
Employee performance management flow
The process takes the following steps:
We can take all the steps remotely, but we must not ignore personal contact and build a relationship between manager and employee. It is recommended to perform steps in regular performance interviews.
The length of the performance management cycle itself depends on the nature of the work, but the trend is shortening. The 12-month cycle and annual interviews are a thing of the past. Companies note that a more agile approach is needed. The most popular is the quartile cycle. The trend is also to empower the employees to perform some steps alone or with minimum help of the manager.
How future performance management will look like
Current staffing trends suggest that the future of performance management will become increasingly agile. Autonomy and flexibility will take precedence, which means that micro-management will be the past. The archaic focus on hours spent in the office is already a thing of the past. A performance management process based on achieving results is essential. Such a process is also important for the management of employees working remotely or hybrid.)
Some companies, including Netflix, are already experimenting with concepts such as unlimited vacations, and employee performance remains as high as ever. The motivation and productivity of employees is ensured by clear communication of expectations, frequent feedback, access to information, mutual trust and empowerment of employees to make decisions.
How to build an effective performance management process
For the performance management process to bring the desired results in practice and benefit managers and employees, it is crucial to ensure the following:
- Clear performance management process,
- Qualified HR experts to guide the process,
- Qualified managers to implement the process,
- Appropriate information support.
All this is necessary. It often happens that companies miss one of these four elements, and as a result, failure is guaranteed. Training alone will certainly not lead to an effective performance management system in practice, and informational support for performance management alone will not ensure transfer into practice. Performance management is extremely crucial to the very success of the company, so we must give it due attention. It is best to find a solution that provides all four elements, which means setting up a process tailored to your needs, training for HR and managers, and adequate information support. It is true that such solutions are extremely rare, but luckily there is FledgeWorks.
Jasmina Ridzi, 9. april, 2021/TAGS: HRM, Performance
FledgeWorks