Learn more about performance management systems

Managing efficiency and productivity with the use of a performance management system

The overall goal for introducing a performance system is to improve the effectiveness of all your employees so your business can prosper.

Performance management is the general term we use to describe how staff performance is being managed within a business.

The use of performance management systems is important to get the very best out of your staff.  Managing your staff well will create a productive and efficient work environment for everyone.

Performance management systems

The performance management cycle

A management system will help you track the performance of individual employees, teams, departments and the business overall.

The system is made up out of different steps, from planning a strategy to reviewing the final results of that strategy. Each step of the performance management system feeds into the next and for that reason we could look at this process as a cycle, the performance management cycle.

The performance management cycle includes:

  1. Planning performance
  2. Monitoring performance
  3. Developing performance
  4. Reviewing performance
  5. Rewarding performance

Reward management has become much more popular in recent years, with many large companies focusing on using rewards to motivate their staff members.

Automated Performance management systems

Did you know?

83.9% of HR professionals and management team members said they feel well-done appraisals have a clear positive effect on performance.

This can lead to engaged employees who take, on average, as little as 2.69 sick days per year and are 87% less likely to leave the company which in turn can provide significant cost savings to your business.

Kaplan. Survey of 170 companies

Internal obstacles to optimal people management

HR professionals clearly understand the importance of optimal people management. However even they can often face significant internal obstacles. When performance management systems aren’t set up properly mistakes can easily be made.

Often made mistakes are:

  • Poor planning of the performance strategy
  • Badly defined performance goals
  • Set unachievable targets for staff and management
  • Lack of monitoring of progress
  • Not adapting to external changes adequately
  • Lack of communication of strategy and goals to employees
These mistakes will cost money, waste time and decrease staff satisfaction rates!

Optimising productivity through effective performance management systems

Automated performance management solutions (HRMS)

A new class of automated performance management solutions (HRMS Human Resource Management Systems) has emerged to specifically address business’s needs.

Generally a good performance management solution will assist a business in tracking and ensuring that your performance management system is being implemented correctly. It furthermore assists the leadership team with other areas like:

Performance management is a complex area of HR. However, an effective performance management system will enable managers to evaluate and measure individual and team performance easily and in a structured fashion.

Optimising productivity through effective performance management

Performance systems optimise productivity and:

  • Align individual employee’s actions with strategic business objectives
  • Provide visibility and clarifies accountability related to performance expectations
  • Documents individual performance
  • Establishes focus for skill development
  • Creates documentation for legal purposes

Many of the practices that support performance and leadership management also positively impact job satisfaction, employee retention and loyalty.

Recommended practices within your performance management system

We recommend to follow the below best practises when managing your employees with the support of a performance management system.

  • Deliver regular relevant job feedback
  • Set and communicate clear performance expectations
  • Link performance to pay and rewards clearly
  • Identify career paths for employees
  • Evaluate performance and deliver incentives in a fair and consistent manner
  • Provide appropriate training and development opportunities
  • Recognise and reward top performers

Consequences of a poorly structured performance management system

Consequences of  poorly structured performance management systems

What is the impact of a poorly structured performance management process? Not managing your staff correctly and not reviewing your management processes could end up costing your company a lot of time and money in the long run.

Effects of poor people management can be felt across the business and can lead to:

  • Lack of employee engagement
  • High staff turnover
  • Low levels of productivity
  • Poor line management
  • Failure to recognise where recognition is due
  • Failure to recognise missed opportunities

Good management has a positive effect on job satisfaction. As a result, employee loyalty and employee engagement will significantly improve.

Furthermore, performance management systems will establish a clear link between performance and reward for each employee.

Timing of staff appraisals as part of your performance management system

Most businesses hold staff appraisals on an annual basis.

However annual processes will not always adequately alert managers to problems in a timely manner. It is therefore important to align your employee appraisals with businesses specific needs.

You could choose for more regular appraisals or hold more informal progress meetings. This will help managers stay up to date with their employees’ individual progress and will more likely be able to intervene swiftly when problems do occur.

A competent performance management system will incorporate a number of processes which will monitor, measure and reward performance.

Performance management system

Reviewing performance management systems

The progress of your performance system needs to be reviewed regularly in order to keep the system effective. During the review process, an employee should know how to evaluate their own performance and describe their achievements against the set targets. They should fully understand the process and feel that its a valuable experience.

The self-appraisals completed by the employee can then be used as the basis of a discussion between the employee and line manager. Following this discussion, the line manager will also provide the employee with their own feedback. After the discussion is finished and the employee self appraisal form has been reviewed the manager will give the final ratings on performance.

It is important to remember that the appraisal and review process engages both the employee and line manager to analyse any causes of poor performance and how they can be overcome.

A good appraisal will be valuable to the individual, the manager and the business overall.

Linking performance management systems with rewards and recognition

One of the most important aspects of performance management is rewarding good performance.

For example:

You can motivate employees by showing them they are meeting or even exceeding their targets, and as a result grant rewards.

Often employees value receiving personal recognition for their efforts as much as more tangible rewards.

Rewards can be financial in the form of a pay rise or bonus or can be through job promotions and access to enhanced benefits.

More and more businesses are linking performance to reward and recognition.

Systems for performance management

Employee participation

Each employee in the business is encouraged to participate in the performance management process. It doesn’t matter in which department an employee works, or at what level, they will always benefit from partaking in these procedures.

Feedback and improvement

Some employees will have issues or weaknesses that could prevent them from doing their best work. It is therefore important to make an employee aware of any of these issues they may have so these can be dealt with through the necessary training and support.

It is of course important to talk with the employee in a delicate but clear manner as these issues can be very sensitive. As these issues are sensitive these conversations can be difficult to have for even the most experienced manager. For that reason you should always ensure that line managers themselves are trained and supported in these tasks.

It may all sound very negative but in reality it is not. This feedback process allows the employee to develop competencies and as a result they will grow their confidence and will likely find their work more enjoyable.

It is simply necessary to review each employees’ performance. When an employee is not performing well it makes sense to increase the regularity of the reviews and set new targets. Some businesses may even adopt Personal Improvement Plans (or PIP) to manage these under-performing employees. These plans will guide the employee through the areas they will need to improve  and will also clearly state what the goals of the plan are.

In conclusion

Employees are often a business’ most important resource. In order for employees  to be most valuable, you will need to incorporate your performance management procedures across all areas of your business.