Successful performance management shouldn’t be just a formality, it’s a continuous process of aligning goals, tracking progress, and developing people.
With just 2% of CHROs strongly agreeing that their performance management system inspires employees to improve, there’s a clear need for a better approach. A well-designed performance management plan brings these activities into a clear framework, helping managers and employees understand what’s expected of them—not just during formal performance reviews, but throughout the entire year.
The Importance of a Performance Management Plan
Performance management is an ongoing cycle of setting expectations, tracking progress, and providing feedback to drive overall organizational goals.
A performance management plan is a structured and systematic way for HR and talent management teams to plan, track, and align performance goals with the wider business.
A successful plan will typically encompass several components, all of which will outline and share the steps, activities, and milestones in your performance program, including:
- Goal setting
- Continuous feedback
- Performance reviews
- Training and development
- Rewards and recognition
While determining compensation increases, bonuses, and promotions (merit) is a key traditional role, treating performance management only as a tool for merit pay severely limits its value and often undermines its overall effectiveness.
Most performance processes serve three core distinct functions:
- Developmental focus: managers are focused on continuous employee feedback rather than retrospective scoring.
- Strategic and operational alignment: Ensure everyone in the organization knows how their work is connected to the larger picture
- Merit: the transactional side of the process, providing necessary documentation and data
Here are tips on creating a strong foundation for your performance management plan:
1) Define Clear Performance Objectives
To formulate strategic initiatives for the performance cycle ahead, look at existing processes and results. From here, you can determine what success looks like to your organization and how to get there. This should involve:
Understand Business Plans and Priorities
Before establishing individual goals or scheduling reviews, determine what your company wants its performance management process to accomplish.
Look at existing processes, employee feedback, business priorities, and performance results. From there, define what success should look like during the next performance cycle.
Gather Employee Feedback
Employees can provide valuable information about how well your current performance processes are working.
Use engagement surveys, focus groups, interviews, Slack channels, manager conversations, or other feedback mechanisms to understand employees' experiences. Ask whether employees understand what's expected of them, receive useful feedback, have productive conversations with their managers, and have access to relevant development opportunities.
Employee engagement questions can provide a baseline to see if perceptions of the process improve.
Establish a Clear Competency Framework
Employees want to know how they're progressing, and a clear competency framework can make performance progress easier to measure and assess. In fact, Gartner research shows that when organizations translate high performance into a series of clear behaviors and use these defined competencies to recognize employees for their achievements in real time, they're almost six times more likely to deliver optimal outcomes.
Define the behaviors and competencies used to measure success during the performance cycle. This information should be documented and communicated with people so they understand the activities and attitudes that guide what they do.
2) Establish a Consistent Goal-Setting Process
Setting expectations for managers and employees and establishing realistic goals is an critical. Goals have to be relevant and personalized, and managers and employees need to base them in reality (with a bit of stretching for good measure). Consider the following:
Using the SMARTER Framework When Setting Goals
SMARTER goals set the expectation for performance outcomes and results with clear parameters, making goals easier to track and evaluate. Be sure that each goal sticks to the following structure:
Cascade Company Goals Down to the Team and Individual Level
Each team and department within the company hierarchy should have objectives and key results that support organizational goals. When each level reinforces the one above, the organization is much more likely to achieve its goals.
This creates a line of sight between everyday work and organizational strategy. Employees should be able to answer a relatively simple question: How does what I'm working on contribute to what my team and organization are trying to achieve?
At the same time, avoid forcing every individual goal to map mechanically to a corporate metric. Some goals may appropriately focus on skill development, collaboration, process improvement, or preparation for future responsibilities.
Make Goal Setting a Collaborative Process
Managers should establish clear expectations, but goal setting also benefits from employee participation. During goal conversations, consider:
- The employee’s current role and desired career path
- The links between employee goals and organizational objectives
- Training and development opportunities that will help build skills, knowledge, and competences
3) Make Sure Feedback Happens More Than Once Per Year
Feedback shouldn't flow in only one direction or come exclusively from an employee's direct manager. Take advantage of techniques including:
Regular Manager-Employee One-on-Ones
Engaging in meaningful conversations is a top priority for any employee, and builds a strong sense of trust between employees and managers.
One-on-one meetings should occur weekly or every other week to monitor goals, adjust deadlines or priorities, and provide actionable feedback based on performance.
Agendas are key - without them, one-on-one meetings can turn quickly into generic task updates which don't leave a lot of room for growth conversations.
Promote Ongoing Feedback
Peers feedback helps managers gain a deeper understanding of employee competency, attitude and on-the-job performance that line managers might not see in the day-to-day. Providing mechanisms to collect skills feedback can offer greater clarity to delivering more targeted and relevant learning.
Invest in Training and Development
Proactive performance management is all about giving your people the tools to be the best they can be—and this requires a holistic approach to talent management. With a view into your organization's existing roles and skills, you can see how your people leverage these skills and connect employees to the opportunities that enable performance and growth.
There's a strong link between employee development and performance [McKinsey]. Organizations investing in their people through skills development are over four times as likely to outperform competitors and 1.3 times more likely to develop high-performing employees.
4) Conduct Regular Reviews and Performance Evaluations
Periodic reviews equip managers and employees with a more accurate picture of performance. Aim for these conversations to take place quarterly or bi-annually and consider:
Make the Performance Framework Transparent
Employees should understand how their performance will be evaluated before the review takes place. Communicate the criteria used to assess the performance, how ratings work, how managers will use the data, and more.
A performance review shouldn't contain major surprises. Regular conversations throughout the year should give employees a reasonable understanding of where they stand before a formal evaluation takes place.
Increase Visibility With Data
Performance reviews should draw on more than a manager's recent impressions. Depending on the role, relevant information might include:
- Progress against goals
- Specific metrics unique to roles
- Skill proficiency
- Customer or stakeholder feedback
- Peer feedback
- Data from previous performance conversations
5) Talent Reviews
Talent reviews can work alongside performance conversations, giving you visibility of talent at a macro level, informing development and succession planning activities, and motivating your people through rewards.
Calibrate on Talent Reviews
It's good practice for managers to review the talent that exists within their teams on a quarterly or semi-annual basis based on their potential and performance.
Assessing behaviors and competencies alongside other managers and referencing performance data helps to spot development opportunities and identify high performers.
Factors such as the potential for growth and alignment with the company's mission all portray an accurate and rounded view of employees, which can then be used to adjust goals and development activities.
Target Succession Planning Efforts for the Future
Connecting performance management efforts with succession planning initiatives helps you to spot your high performers and those with the skills to advance into more senior roles.
By identifying those with business-critical skills (and those who display the behaviors necessary to step into leadership roles), you can target development activities and strengthen the pipeline of talent within your company.
Tie High Performance Into Recognition and Rewards
Establish and share a rewards system that aligns with performance goals and recognizes your people for their positive contributions. This way, people know how their efforts feed into organizational success.
Positive reinforcement and strengths-based feedback doesn't just have to come from the highest levels of your organization, and your people should be encouraged to praise and share positive feedback with peers on a regular basis.
Supercharge Your Performance Management Strategies With Bridge
Bridge Performance Management helps organizations develop their employees with performance conversations, career development plans, skills feedback, talent reviews, and 1on1 agendas. In one unified experience, it’s easier than ever to align goals, identify skills coverage, get continuous feedback, and make informed talent decisions. Bridge has helped thousands of organizations drive growth through engaged and aligned teams.
