Performance management, when done ‘correctly’, can be positive for both the organisation and individuals. It ensures a shared understanding of expectations and recognition of work over the past year and provides opportunities to discuss career development in a supportive manner. However, when it is inappropriately designed or executed, it can have a negative impact. Furthermore, it may affect employees’ perspectives towards other HR issues and working for the organisation.

What is a Good Performance Management System?

The traditional appraisal performance development review remains the most used form of performance management. Typically, this involves the review of objectives from the previous year and then looking forward to agreed objectives for the future.

There is no one fixed off the shelf approach. There are lots of variables to be taken into consideration. They work best when they are tailored to an organisation – reflecting size, variety of roles and structure, as well as the type of organisation and the industry in which it is based. 

Good systems aren’t a standalone once-a-year process. They also are not a replacement for ongoing people management, and employees shouldn’t be informed of concerns for the first time during this meeting. Ongoing communication by managers and their teams throughout the year is important.

Effective performance management systems should link to other key HR areas. For example, a key purpose is to identify learning and development opportunities for personal and organisational growth. Similarly, if the organisation has defined a talent management strategy, this should be aligned with the performance management processes. In some organisations, there is a direct alignment to a reward strategy and process. 

Meetings should be a genuine two-way conversation so that both parties have a chance to reflect upon what has taken place over the relevant period and plan future objectives. It also provides a useful opportunity for both parties to review the job description to agree if it is still representative of the role.

Nonetheless, managers who carry out the process should be appropriately trained to understand how to use the organisational system as well as enhance their communication skills. Managers should fully prepare for the meetings to demonstrate its importance and in advance, they should be cognate of what they can offer in terms of learning and development and/or recommendations for changes to the reward package. Managers should also role model good practice and fully engage with their appraisal meeting.

How to review existing system?

Before deciding on designing a whole new system, it would be beneficial to review the existing one to see which components could be taken forward. Consider setting up a task and finish group in which different stakeholders are invited to share feedback on what works well and what could be enhanced.

Depending on the design of the current program, it would be useful to see if any data available could inform the thought process. Depending on the information system, an organisation may be able to look at data such as employee retention, number of internal promotions, etc.

In global organisations, HR must consider the extent to which there should be some commonality to reflect the overall vision and mission whilst at the same time reflecting cultural or country-specific characteristics.

When undertaking the review, an objective hat must be worn. Otherwise, there is a risk of the horns or halo effect. A comprehensive evaluation would start from the bigger picture and assess how it aligns with the mission, vision, priorities, and KPIs before drilling down to consider whether the right questions are being asked.

In the first year, there is typically some confusion about the connection (or lack of) between probation periods and performance management. This should be clarified by the organisation and appropriate information shared as part of the onboarding process.

Perhaps Get Creative

If an organisation is either overburdened with forms to complete or perhaps a team who is very keen to do things differently, there are ways to make the process a little different. For example, an employee in a creative role could physically showcase their outputs to demonstrate their work over the last year. Another alternative is to request a PechaKucha presentation where they can illustrate their achievements. There could also trial of a system whereby appraisals become walking conversations where the pair leave the building, and discuss whilst walking, to avoid any interruptions.

Moving Forward

It is enormously frustrating for employees when they spend time and effort preparing their documentation and for their meetings, and then nothing happens afterward. This is likely to demotivate them from going the extra mile the following year. Therefore, HR has an important role to play here in having clear timescales of what will happen and when. Crucially, they will ensure that actions are followed. There needs to be clear accountability for this, and the outcomes and outputs should be disseminated. For example, an overview of all the learning and development that was carried out in response to requests made in the performance review meetings.

Gathering feedback at the end of the cycle is important, to understand all parties’ perceptions and experiences. It is important that this takes place after all processes are complete and that it is anonymous so that colleagues feel that they can be honest.

Recommendations

As discussed above, performance issues shouldn’t be stored up for an appraisal meeting. During an employee’s induction, expectations and requirements should be made clear to them as well as ensuring that appropriate mentoring and support will be provided. Regular meetings should be undertaken to review performance and ensure that outstanding development needs are met.

If a manager identifies a concern over performance, it should be dealt with quickly so that there is an opportunity to resolve it before it escalates. Confidentiality should be maintained with only appropriate people being consulted, and line managers will need to be trained in the different techniques that can be employed to enhance performance. From an organisational perspective, there should be consistency in the way that problems are dealt with so that employees don’t raise concerns about bias.