7 benefits of performance management
Performance management is becoming increasingly agile in recent years, with many organisations moving on from the traditional approach of annual appraisals. The benefits of performance management are more important than ever after a year’s worth of continued disruption and adjustment during the pandemic. Let’s dig into these key benefits and how this can transform the working lives of your employees and your overall business operations.
What is performance management?
Put simply, performance management is the way organisations engage with their employees to evaluate their efforts and contribution to the company. It’s a way of assessing their strengths and identifying any weaknesses- but more importantly, finding ways to work on these areas to allow employees to grow and develop. Done correctly, performance management is a powerful tool to allow managers to get the most out of their team, and for each individual to thrive in the workplace. Together, these outcomes equal a happier, more productive place to work.
The traditional model of performance management would be the annual appraisal, where an employee and their manager would sit down for a performance review once a year. Having been designed in the 1970s, a lot has changed since then and companies are gradually moving on from this to manage performance in a more constructive and continual way.
Characteristics of agile performance management might include:
- Weekly or monthly catch ups
- Regular feedback
- Goal setting and continual review of progress
- Identifying opportunities for learning and development
Why is performance management important?
Performance management is key to getting the most out of your employees. Afterall, a common statement in line with business success is that your people are your most important asset. Without motivated and engaged staff, your business is never going to reach its full potential. Investing the proper time and management into your employees’ careers will reap benefits for both of you.
In a 2017 survey, Deloitte found that 90% of the organisations that took part saw an improvement in employee engagement after changing the way they approached performance management. Reviewing things in 2020-2021 found that one of the key objectives workers wanted to see in work transformation was a focus on employee wellbeing. A continuous approach to performance management will be important in providing the right level of support for employee wellbeing to be built into goals and objectives.
What are the benefits of performance management?
There are several key benefits to implementing an agile approach to performance management:
Improved employee engagement and motivation
Taking a continuous approach to performance management means that you get to spend valuable time on ensuring that your employees are working towards goals and objectives that will allow them to get the most out of their skills and roles. This in turn gives more opportunity for job satisfaction and reaching achievements.
Better talent retention
With people being such an important asset, it’s key to find ways to retain your staff. Having the opportunity to continuously work towards goals gives employees more autonomy and the ability to highlight areas they want to work towards, giving them a reason to stick around.
Set clear expectations and objectives
The use of SMART goals gives employees a clear set of objectives to work towards and an opportunity to contribute to the creation of these. Having these defined expectations means employees always know what’s expected of them, which in turn means that the business can be confident that everyone is fulfilling the correct duties.
Identify development and progression opportunities
Having this agile performance management approach means that you can easily identify employees who are performing well and might be suitable for promotion. It’s also a key tool for allowing employees to analyse their own development, giving them the chance to express where they want to develop and work towards. Regular catch ups will facilitate regular review of their progress.
Highlights training gaps
Another key benefit of performance management is being able to identify areas of weakness where employees would benefit from further training. Working with SMART goals also helps staff to pinpoint these areas themselves and communicate specific training needs.
Identifies potential risks
Where an employee might be underperforming or unmotivated, the correct approach will allow you to find out the cause of this and support them to get on the right path. Whether it’s mental health related, having too much to do or not being challenged enough- there are a number of reasons why this might be happening. An open conversation will give you what the data cannot.
Better overall business performance
All of the above benefits contribute to better performance within the business overall. Employees that are thriving will deliver better work and be more motivated to try new things and keep progressing. This underpins the importance of performance management and the value it can bring to your entire organisation when done correctly.