People and Change

Making performance management work for your business

Neil Hughes
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At this early stage of the year, one of the things usually on the priority list is to set objectives for our teams.

I’m sure for many of us it’s not something we look forward to, and if you are prone to procrastination, it might slip down the pecking order!

However, managing employee performance is one of the most important factors in organisational performance, therefore, getting goal setting right is critical

Organisations that do this well can expect better overall business performance as well as higher staff engagement, lower staff turnover, and the costs of people churn are reduced.

Furthermore, senior management and HR will benefit from a modern performance management system as it can provide clear visibility to performance across the organisation, reducing the amount of administrative paperwork, and can flag up any potential issues, allowing for remedial interventions to be taken promptly.

So how to do it well? The first step must be strategic alignment. Ask yourself:

What are the organisation’s strategic goals and what part do my team and I have in delivering them? What are we responsible for delivering, and how do we go about it? What resources and constraints do we have, and how can I then cascade all of this to my team in a way that everyone is clear what their role is in delivering the strategy? 

Anapocryphal tale that shows how to do this well is the one about JFK on his visit toNASA in the 1960s. He asked a janitor sweeping the floor of a hangar, “What’s your job here?” and the answer was, “I’m helping put a man on the moon”.

This is one of the best examples of strategic alignment – everyone in the organisation is explicitly clear on their own roles and goals and how they align to the overall organisational strategy.

So, having set SMART goals (keeping them Specific, Measurable, Achievable, Relevant and Time-bound), what’s the best way to track performance throughout the year?

Research suggests that around 71% of organisations in the UK are either still using annual appraisals or were looking for the right appraisal model to move to. Notably, annual appraisals are usually designed to measure, not develop, and current research indicates that the organisations that are moving away from using ratings to measure performance, and towards more flexible “performance conversations”, are seeing better results and engagement from their people.

This agile approach to performance management engages both  manager and employee to regularly review their progress and be reactive to any organisational changes that may impact successful competition of the goals.

Having regular check-ins (monthly is optimal, but it will depend on the business context) provides opportunity for open and honest two-way feedback to be shared. Also, encouraging staff to review their goals through the year and flex to meet their current objectives, or strive to achieve more than what was originally set, will benefit the individual and the business.

Balancing these regular reviews of performance alongside genuine conversations about personal and professional development will keep the process engaging and productive for both manager and staff member.

These regular performance conversations can help create an employee-centric environment, where staff performance and development are front of mind in the organisation and people are intrinsically motivated to deliver high levels of discretionary effort.

If you are looking for a win-win blueprint for all involved, this may well be it.