Performance management has changed significantly over the past ten years. And as the face of the modern workplace continues to change even today, the way we look at employee performance changes along with it. Many companies have ditched the yearly performance reviews and opted for continuous performance management. They are more focused on the individual’s happiness and growth at the company and beneficial for managers who want to do their best to keep the turnover rates low.

If you’re looking to revitalize your performance management system, then look no further. Below we’ve compiled a list of steps that set the groundwork for an effective, employee-centric performance management system.

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Why you should change your performance management process

General Electric has had the same performance management and review method since the 70s, well into the 00s. Their head of HR, Susan Peters, mentioned in an interview that these practices became more of a ritual, rather than a tool to keep the company moving forward. She was glad to see their restructuring of the system, as she herself said the workspace was becoming more “millennial”.

Decades-old performance management simply won’t do anymore.

Perhaps the most resonating example in the business world, Microsoft’s 180 shift to a completely different performance management system caused quite a few companies to follow suit. The likes of Adobe, Cisco, and IBM, to name a few, dropped the infamous “bell curve” method for one that was more flexible and reflective of the modern workforce.

And while they haven’t seen groundbreaking changes, they noted the employees have become more motivated, there was less turnover, and results were better.

In contrast, yearly reviews, along with poorly structured performance management methods had the tendency to pit employees against each other, cause friction, stress, and high turnover rates.

The building blocks of an effective management system

Through our research, we’ve found that four notable elements keep being repeated multiple times throughout CEO interviews, HR webinars and reports, and business journals.

  1. Learning what makes your current process faulty
  2. Crafting a performance management framework
  3. Staying on top of time management, and
  4. Giving meaningful feedback through reviews

1. Analyze your current practices

When it comes to implementing a new performance management practice, you first need to take a good look at the one you’ve had so far. Carrie Herzog of Terra Information Group held a webinar on performance management where she discussed this as the first step for any company.

As Herzog advises based on their own experience, HR needs to objectively look at the performance management process currently in place and why it’s not working. You should analyze:

  • How employees see their performance reviews;
  • How often do you do those reviews;
  • If they are archived and forgotten or used for further documentation and improvement;
  • If reviews cause friction between employees, forming a breeding ground for competitiveness instead of collaboration;
  • How detailed are the reports;
  • How closely you pay attention to the process, not only the end result of an employee’s work;
  • Does your performance rating rely on checking boxes or a 1-5 grading system?

2. Create a performance management framework

The next step in the process consists of forming a steadfast plan you will follow throughout the year. Below is a list of crucial things to pay attention to for effective performance management.

Set yearly goals

First and foremost, you will need to adopt a forward-thinking attitude.

Ask yourself about the company objectives for the next year. How can each department, team, and individual, in that order, contribute to the bigger picture? The goals and objectives of each team (and individual, subsequently) will then need to be aligned to that of the whole company.

Because the performance of an individual should have a rippling effect that helps push the company forward.

Businesses that used single, yearly performance reviews can be too late to spot how an employee’s work has strayed from the overarching goals. And in most cases, it happens due to neglecting to track their progress and realign their individual goals in time. Quite often, employees are unaware of what the company goals and objectives are!

Make smaller goals

The yearly plan focuses on greater areas of improvement, but to be able to keep your performance management at a steady pace, you will need more “easily digestible” chunks of time.

Depending on the company goals and direction, your tracking periods should be no longer than six months. Ideally, you would divide your year into three or four crucial periods, and at the end of each period, there would be an employee’s performance review.

It’s a great way to track progress in smaller increments. You tackle larger goals in a step-by-step fashion, giving the employees or teams enough time to learn and adapt.

Create a performance (improvement) plan

The crux of every performance management process is its plan.

Together with your HR department, you can craft a more detailed quarterly or monthly plan for:

  • Areas to track (productivity, efficiency, communication, punctuality, ingenuity, etc);
  • What additional learning you can provide them;
  • Dates for performance management reviews;
  • Contingency plans in case the goals for that time period haven’t been met.

💡 We have addressed these points and more in two detailed articles on individual and team performance planning guides. You can take a look at them here:

After forming a performance plan, it becomes much easier to oversee the progress employees make.

Track progress

While you can track how the employees are doing by their time tracking repots or judge their efficiency based on deadlines they meet, there are other avenues that make up an employee’s performance.

Thomas Kolopoulos of Delphi Group wrote about a practice his company has been using: the real-time 360 evaluation. It relies on assessing an employee’s performance progress also according to their reliability, communication with peers, interactions, consistency, and so on.

In this way, one gets a full view of how an employee is doing on a much larger scale than just statistics. Through anonymous forms, employees are every now and then asked to describe their work relationship with a specific coworker (their communication, dynamics, problem-solving, etc). Then the collected data is reviewed and assessed by HR or the manager, and used in the performance management report.

Stick to the designated check-in times

While you would think that having a meeting with an employee every three months is taxing, consider the alternative.

A yearly review would require you to spend hours gathering data from well over the past 11 months and make a generalized comment on a person’s work ethic. Add to that the fact you will probably have to do several performance reviews in a single day – you’ll be spending more time in meetings doing the same thing over and over again.

With continuous performance management, you spend much less time preparing, and the meetings themselves last shorter. You can finish all the performance reviews much quicker and with shorter preparation time (as you’ve tracked their data regularly).

Make a yearly review

In the case of continuous performance management, a yearly review makes much more sense. In the example we’ve provided here, by the end of the year you will have had three bigger check-ins with the employee (or the team). This will give you a more detailed overview of the overall progress they’ve made.

Additionally, the employee has a much clearer idea of what you as a manager have been focusing on as you’ve tracked their progress. So, they’ve had enough opportunities to timely address any issues or gaps along the way.

3. Keep a tight schedule

Time management is a big part of every good performance management system. Here is an example of the factors you need to work on, to establish quality time management on a departmental level.

Individuals:

  • Track time on their own tasks;
  • Take note of which tasks took them less and more time than expected;

(these are used for later performance reviews and analyses, as it’s valuable insight)

  • Communicate with their coworkers clearly and without any barriers ;

(such as shyness, introversion, run-on discussions, etc.)

  • Address distractions and work on them alone or with the manager’s help;
  • Keep a watchful eye on approaching deadlines.

An employee is treated as a single unit that has their own workload to fulfill within a day, week, or month. The individual time management techniques and improvement are left to their preferences, with help and guidance from the manager.

Teams:

  • On top of individual deadlines and tasks, teams have overarching deadlines (milestones) and criteria to fulfill. These should be the sum of all the individual tasks.

(ex: the marketing team needs to hit 10 new blog posts in a month, which is divided among the writing staff to their individual quotas)

  • Agree on a communication code;

(when they communicate through chat, when through email, when they should text or call, or come to someone’s desk to discuss things in person)

  • Meetings have their own set of rules which ensure the most efficiency;

(a time cap on how long a meeting can last, how many per week, during what time of day, as well as who needs to attend them and keeping a schedule).

  • Review their collective results to identify problems and successes concerning their time management, and find ways to improve or repeat good practices.

Teams are comprised of multiple employees, but with them, time management needs to be addressed on a bigger scale. Certain time management practices will be generalized and used by the whole team, regardless of individual preferences. Similarly, the team together chooses the common ground regarding communication, overtime etiquette and workload transparency. You won’t be looking at each person’s performance, but the collective results, which will depend on how well the team members collaborate.

4. Make your reviews meaningful

Even reviews have their own etiquette. Modern performance management processes advise frequent one-on-one meetings with employees to reevaluate goals, discuss progress, and further steps. Naturally, your feedback in these meetings will have to be as informative and useful as possible.

As a small help, we’ve compiled a list of things you can keep in mind during those meetings, as well as written feedback.

1. Analyze both failures and successes

While it may be tempting to focus only on the negatives and how you can learn from them, it can be terribly demotivating. It’s important to analyze successes as well.

Find out what made certain results so successful and identify great practices. Maybe some employees proved to be great communicators, so their methods can be useful to others, or someone handled great deadline pressure with ease and you’ll want their insight into stress management.

These are all great opportunities to learn from success just as much we look at our mishaps and see how we can do better. Work on dissecting good practices so you can repeat stellar results.

2. Refrain from generalized feedback

It’s always a plus to recognize an employee’s effort. Just keep in mind to avoid phrases such as:

  • “We’ve noticed you’ve been working hard lately”,
  • “Your work ethic is good/great/admirable”,

Or any other blanket statement that will actually reveal you haven’t been paying attention to them. If you’ve closely followed someone’s performance, then it shouldn’t be too difficult to find one or two instances where they potentially excelled. Addressing specific situations is more valuable, precise feedback.

3. Formulate your criticism

Criticism needs to be worded properly for it to sink in. If you deliver it poorly, there are only two ways it can go:

  • The employee gets defensive, finds excuses, and begins to dig themselves in even deeper, starting to feel insecure, or
  • Senses criticism as an attack, and will most likely brush it off, not applying any new advice or suggestions.

Work with an HR rep to find the best way to approach each employee or the team as a whole. While you want to be direct and to the point, contextualize the issue, ask for their opinion on it, and what they would do differently in hindsight. Show them you are there to help and not judge.

4. Offer solutions and suggestions

The aim of these one-on-one meetings is to discuss an employee’s performance, whether you will need to change something in their goals and objectives, and how they can improve in the future.

The key word is discussion. It needs to be two-way communication.

Avoid dumping all of the statistics, data, and reviews from other managers and coworkers, and then asking if the person has any questions. Take your time to go through the information, and pause every now and then to let them speak as well. Also, let them ask you anything they want as well.

5. Try not to be an “executive”

Treat each other as equals as much as you can. It can be a learning process, but the more you try, the easier it will get. It can be tempting to share your years of experience and offer multiple advice from your managerial position.

This can only create a divide between you and the employee, and make them feel talked down to. Focus on them and their performance, and keep your position and influence to the side.

6. Ask questions and engage

As we’ve mentioned before, keep the meetings a two-way street.

Don’t talk too much and for too long. Ask for opinions whenever you can, and see how the employees open up over time. You want to build a professional relationship that is based on trust and open communication.

Only then will they be fully receptive towards feedback, be more inclined to improve, and even look forward to the performance review. Keep these meetings a conversation, not an information dump.

In conclusion

Performance management is a multi-step process. Many companies have swapped their yearly reviews with continuous performance management that offer. And while it can sound like a lot of work, if you put a solid performance management system in place, it becomes easy to handle and master. All you need is an overview of what needs to be fixed in your current management, a new performance management framework or plan, a solid schedule to stick to, and good performance review etiquette.