Employee Performance Management: Definition & Best Practices

Giving feedback and setting expectations are critical responsibilities of all managers. To help their teams grow and deliver on business goals, giving positive and opportunistic feedback is a key skill to being a great manager. This is where employee performance management, enhanced by tools like the HIGH5 strengths test, becomes invaluable. Though, feedback should never be a one-time event; feedback should be ongoing and recurring, helping the employees grow while delivering business results. That is where employee performance management comes into play. In this article, we will discuss what employee performance management is and the benefits it brings to an organization.

What is employee performance management?

Performance management is a method used to sustain and improve employee performance in companies. It includes setting expectations, measuring employee results, providing coaching and feedback, and evaluating performance over time against the organization’s goals [1] to measure productivity. At its core, it’s about aligning individual strengths with organizational goals. By utilizing tools like the HIGH5 strengths assessment, companies can identify and harness each employee’s unique talents, leading to more effective performance management and ultimately, improved organizational outcomes.

Performance management is most commonly referred to during the annual performance review cycle, but this is not the only time performance management takes place. Performance management happens throughout the workday. It can occur during meetings, where both the employee and the manager work together to discuss past performances and future goals. It can happen in a monthly one-on-one meeting with a manager and employee. It can even happen in group settings.

Pro Tip From HIGH5

When implementing a performance management system, integrate strengths-based discussions using HIGH5 results. Encourage managers to have regular “strengths check-ins” with their team members, focusing on how employees can leverage their top strengths to overcome challenges and achieve goals.

Key components of a performance management model

The performance appraisal or annual performance review, is the most common and talked-about performance management method, though, it should not be the only one. Performance reviews should be one piece of a larger performance management system. A performance management model aims to define the job of each employee and provide measurement and development in alignment with those job definitions and the business goals.

Performance management happens throughout the employee life cycle. It usually begins when a person is hired and ends when they leave the company or switch to a new position. Managers play a constant and crucial role in the employee life cycle, hence strong performance management systems target the interaction between the manager and the employee.

Normally, it includes several key components such as:

having or developing clear descriptions for each position in the company
recruitment of potential new hires
making an offer to the desired candidate and negotiating their terms
providing training when needed
giving regular feedback and coaching sessions when required
conducting performance appraisals
having a rewards and compensation system in place
providing career development opportunities
organizing exit interviews and analyzing their results

Pro Tip From HIGH5

Make strengths identification a key component of your performance management system. Use the HIGH5 assessment during onboarding and periodically throughout an employee’s tenure. This allows for continual alignment of roles and responsibilities with evolving strengths and interests.

Importance of employee performance management

No matter what size an organization is, the leaders of an organization should be aware of the state and performance of their employees. A strong performance management system helps define the critical role and the responsibilities of each position and thus gives management different instruments to evaluate employee performance and respond accordingly. By having a proper system in place, the company and its managers have a way to give all employees a performance boost and thus make the whole organization run smoothly by perfecting the way each individual does their job.

Managers play a large part in the performance management process, including setting and exceeding performance goals. Statistics show that managers who are involved in helping their employees align their performance goals with the organization’s needs see a 56% increase in employee productivity [2].
Here are some additional employee performance management benefits:

keeps employees engaged
develops a good employee/manager relationship
helps retain talent in the organization
aligns the company goals with the individual ones of each employee and their position
identifies training opportunities
improves communication between managers and employees
builds autonomy and accountability among team members

Let’s discuss the three most important benefits of performance management.

1. Keeping employees engaged

It’s important to keep employees engaged and that likely won’t happen, if they receive feedback only once a year. Organizational management studies show that employees enjoy getting frequent, timely feedback. A recent study found that employees who receive daily feedback from their manager are 3.6 times more likely to be motivated to do outstanding work, compared to those employees who receive feedback annually [3].

While daily feedback might not be feasible for managers of large teams, for organizations to keep their people engaged, a strong performance management system should include either monthly or quarterly performance reviews. These monthly or quarterly performance reviews are typically less formal than the annual performance appraisal and instead serve as check-ins, where both the manager and the employee can discuss current issues, potential roadblocks, or recent successes.

2. Retaining employee talent

It is not enough to meet with employees for one-on-one conversations on a regular basis. Managers must also allow these conversations to be employee-driven. Employees should come to the conversations with questions, topics, discussions, and feedback, not only about their work but also about their career development. When employees feel that their managers are invested in their careers, they’re more likely to stay in the organization [4].

3 Main Importance of Employee Performance Management

3. Developing leaders from within

By retaining good performers in the company, the management team gets a pool of future leaders that may develop within the organization. This helps lower the costs of recruitment of new hires, as it allows the company to save from spending on training and onboarding. Furthermore, by growing leaders from within, organizations can begin creating lasting cultures.

Pro Tip From HIGH5

Leverage the HIGH5 strengths assessment to create personalized development plans for each employee. This strengths-based approach can significantly enhance engagement, talent retention, and overall organizational performance by focusing on what people naturally do best.

3 feedback models for employee performance management

Performance management relies on continuous and timely feedback. While giving feedback can be daunting, there are a few models managers utilize to deliver feedback to their teams.

Even-better-if model

The even-better-if (EBI) model is ideal for individuals or managers who are extremely uncomfortable with giving feedback [5]. Using this model, the manager recognizes the employee for a job well done. They compliment them on a task or behavior, highlighting how good they were. Then, the manager follows up with the phrase, “It would be even better if…” and completes the sentence with an area of opportunity for the employee. The manager would take this moment to quickly highly what the employee could have done better to meet or exceed expectations.

The EBI model is simple and easy to use, but it should not be a manager’s go-to feedback tool for the long term. With prolonged use, employees will assume that every recognition will be paired with constructive feedback. I maintain employee engagement and still provide feedback, managers should strive to use the BIS or GROW feedback models.

BIS Feedback Model

The BIS model is a common feedback model, standing for behavior, impact, and solution [6]. First, explain the behavior you saw, then detail the impact of that behavior. Follow up the conversation with a solution. The BIS model is often used for managers who are new to giving feedback or not yet comfortable with feedback.

GROW Model

Managers also use the GROW model for feedback and coaching [7]. The GROW model is often used by seasoned managers and coaches who are comfortable giving feedback. With this model, managers ensure the feedback conversation is a two-way dialog between both the manager and the employee. GROW stands for:

G – What is the goal of the conversation?
R – What is the reality of the situation?
O – What are the options and ideas for a solution?
W – What is the way forward?

Regardless of the model chosen, it’s imperative that managers solicit a dialog. Feedback should never be a one-way conversation. Ask open-ended questions throughout the conversation to help and coach the employee toward solutions. Lastly, feedback isn’t just constructive. Feedback should also be given as recognition. You can utilize the BIS model or the GROW model to give recognition to the employee as positive rewards and affirmations.

The purpose and goals of employee performance management

Purpose:

create a system that helps employees and managers collaborate in a meaningful way that leads to increased productivity.
lets both parties manage and track their goals, as well as the company objectives

Goals:

increased productivity and improved performance plan
boost employee engagement
develop future leaders and retain talent in the organization

List of 15 best practices for employee performance management

Performance management can be tricky, especially for new leaders and leaders of large teams. With some best practices, managers can keep employees engaged and invest in their career development while managing performance.

1. Have a definition of each role

For an employee to do their job properly, they have to know what’s expected of them. That’s why it’s important to have outlined the responsibilities of each role within the organization.

2. Set business and development goals

Encourage your employees to creative business goals (specific and related to their job) and development goals (learning goals to assist with their career development). Meet with your employees to review these goals and document them in a place they have access to. Then, check in on these goals during your monthly, quarterly, and yearly performance conversations. If an employee struggles to meet his objectives, a manager can put him on a performance improvement plan that will have specific goals aimed at improving the overall work of the employee.

3. Monitor progress

Use analytics to measure the performance of employees and see how they’re progressing according to their pre-set targets. If you see that they’re struggling for a prolonged period of time, look for ways to help them. Follow-up communication is key, as it’s all about the way in which the manager assists an employee. The manager should avoid micromanaging and allow the employee the space, coaching, and support to complete the tasks on their own. If a manager is too helpful, that may tamper with the success of their employees in the long run.

Employee Performance Management – List of 15 Best Practices

4. Perform regular coaching

Coaching is the practice of asking open-ended questions to help people find the answers already within them. Coaching can help increase engagement, so it’s best practice to use coaching when you can. Coaching may also help the employees and deter employee burnout. It’s important that the manager doesn’t try to solve every single little issue that an employee may have, but also shouldn’t leave them alone to deal with big potential roadblocks. If employees are struggling, the manager should perform some one-on-one coaching and try to aid them in solving their problems. This can happen through the development of new coaching skills or by recognizing common errors in the current situation.

5. Have guidelines to follow

People tend to perform better when they have guidelines to follow. That way they won’t have to second guess every decision they make and can work in peace, knowing that they’re doing exactly what’s required of them. Provide some guidelines, instructions, resources, or even another person to help set the expectations.

6. Create a culture aligned with the organization’s goals

It’s important to have all your employees aware and in tune with the organizational culture. That’s why the values and beliefs should be shared with everyone in the organization from the first day they step foot in the company. It should also happen with individual employees during the regular check-ins with their manager, as it will help nurture specific behavior.

7. Create cross-functional meetings

In large companies, it can be easy for employees to feel lost in silos. Sometimes, they may even be unaware of the functions and responsibilities of other departments. That’s why cross-functional meetings, projects, or networking events create a strong, collaborative culture. And in return, by understanding the function of each department, the organizational goals can be met with more ease.

8. Give actionable feedback

SMART goals are a cliche, but one that certainly works. The feedback process should always be actionable so that employees have clear steps to take and follow, once it’s been given.

9. Don’t make it personal

Tensions can arise in performance appraisals if the consistent feedback is not constructive, but feels rather personal. Managers should avoid making character assessments and focus more on behaviors that the employee has taken. Constructive feedback is key to a good relationship between the manager and the employee.

10. Managers should receive coaching and development too

Companies often forget that giving feedback about employee performance and in general managing people is a difficult job. That’s why managers need to be trained in these skills. This is an important part of their professional development that is often skipped by some companies. Managers should invest in their own development by taking trainings, collecting feedback, hiring a coach, or meeting with a mentor.

11. Collect 360-degree feedback

360-feedback surveys collect feedback from people in every direction – above, below, and next to an individual. Many companies use this strategic feedback approach to give multiple-source feedback to employees so they can see how their work is perceived from different angles. All employees, including managers, can benefit from 360-feedback surveys.

12. Don’t rely only on consistent performance reviews

Coaching meetings, training, and one-on-one talks are also keys to a working performance management system. Organizations should also aim to hold an all-employee meeting at least once per quarter, as this is deemed a good practice in most huge companies.

13. Problems have different sources

Management shouldn’t always blame the people for problems that arise. Strong managers find the root cause of problems, rather than blaming people. Consider the different reasons as to what may be causing the current issues. The effectiveness of companies is measured by their ability to find holes in their existing processes and find ways to fix them. This can happen through additional meetings with important members of staff or by asking each person in the organization in the all-employee meeting that’s held once per year.

14. Give recognition and awards

Recognition is a type of feedback and it can boost performance. Give awards and recognition to encourage employees. This feedback tool is often left unused by the executive team but it’s a terrific appraisal tool that should be used for managers and subordinates alike.

15. Create a safe space

Performance conversations can be nerve-wracking conversations for employees. Many employees even face anxiety, angst, and fear of performance conversations. Create a good experience for your employees by scheduling time in advance to meet with them and sticking with that time. Employees can experience disengagement from a manager who changes their one-on-one meetings to attend to business needs. Once the one-on-one occurs, managers should create a warm, friendly, and safe space for employees to ease their nerves.

Pro Tip From HIGH5

When setting performance goals, refer to each employee’s HIGH5 strengths profile. Align at least one goal with their top strengths to increase motivation and the likelihood of success. For instance, an employee with the “Problem Solver” strength might excel at projects requiring creative solutions to complex issues.

How to identify and improve employee performance goals?

The best way to set goals is by tying them to certain objectives. That’s because it’s important to know what you’re looking towards. Goals should also be tied with future career goals and aspirations of the employees, as that will motivate them to further work towards achieving what they’ve set their sights on. To improve goal setting, managers and employees should be certain that the goals are attainable and measurable. One way to ensure that is by using the SMART method whenever there’s an appraisal coming right around the corner.

What is the difference between employee performance management and employee experience management?

Performance management is focused on reaching goals and objectives, while on the other hand employee experience management is concentrated on the way the employees feel throughout their journey in the company. Performance management can significantly impact employee experience management.

Employee performance management FAQ

What is the performance management process?

The performance management process is a way to evaluate employee growth, strengths, and weaknesses. Teams come together collaboratively to discuss how they can improve. They track certain agreed-upon metrics to see if they meet their goals, improve their skills, and satisfy customers. Teams often introduce new employees to rules before tracking their performance and giving feedback.

What is the difference between feedback and performance management processes?

The performance management process is a way to evaluate employee growth, strengths, and weaknesses. Teams come together collaboratively to discuss how they can improve. Feedback is only one tactic used in the performance management process.

What is the difference between feedback and performance appraisals?

Performance appraisals are formal performance evaluations of an employee. Performance appraisals generally rate an employee on their job against their job description and company values. Feedback is less formal and should occur regularly throughout the year. Feedback is rarely documented.

What are performance improvement plans (PIPs)?

Performance improvement plans (otherwise known as PIPs) are documented, formal disciplinary notices to employees that their performance needs to improve. Managers use performance improvement plans for employees who are performing far below expectations and need help improving their performance. Performance improvement plans are created in collaboration with a manager and HR, documenting the steps an employee needs to take.

Then, the manager delivers the performance improvement plan to the employee via verbal conversation and written communication. The manager and employee then work together to improve the employee’s performance. If the employee does not follow the performance improvement plan, then the employee may face more disciplinary action, reassignment, or even termination.