10 Components of a Successful Performance Management System
Performance management has arguably been one of the defining trends in human resources in recent years. Yet regular performance appraisals often have a negative effect on employee morale. I suggest that the problem here is one of understanding the crucial difference between performance appraisal and performance management. It might initially seem that this is merely a matter of semantics and it is true that the two terms are often used interchangeably. A good performance management system, however, goes far beyond performance appraisal and should therefore avoid the negative connotations of that term.
Effective performance management should be concerned with positive development, both for employees and for the organization. Performance appraisals produce groans all round and can make employees feel they are being held under a spotlight, a situation that is hardly conducive to good morale. Additionally, it can be very difficult to quantify some employee strengths that nevertheless make a strong contribution to the effectiveness of the workplace.
Implementing a positive performance management system may require a fair amount of work initially but, once the fundamentals are in place, it should run smoothly. Performance management — used appropriately — can promote a business’s effectiveness. Effective performance management should fulfill the following ten criteria:
Have clear, easily defined job descriptions for each and every specific position in the organization.
Ensure that employees’ goals are aligned with those of the organization.
Establish priorities for both the organization and the employees.
Involve collaboration between managers and employees; two-way communication is essential to successful practice. An organization that has a successful performance management system in place will foster an open environment that allows for freedom of discussion.
Obtain input from employees and provide a framework for managers to respond to this.
Recognize employees’ accomplishments, even those that may be difficult to quantify.
Allow for frequent, continuous feedback, including informal feedback, that is both positive and constructive; this could include 360° feedback that includes comments from peers, customers and supervisors.
Provide employees with adequate resources and professional development opportunities: courses, seminars, opportunities to attend conferences, mentoring, etc.
Give management the necessary information for decisions on promotion, salary increases and terminations.
A performance management system that is, once implemented, relatively easy to administrate, and that allows for managers to actively listen to their employees, will result in a positive and productive workplace where everyone feels valued and respected. If goals for future performance are set, they should be mutually agreed on and should be, ideally, SMART goals: specific, measurable, attainable, realistic and timely. If competencies are part of the performance management process, then each employee should have a competency profile.
Above all, it is essential to foster a workplace environment where two-way communication is encouraged and where feedback is mainly positive or constructive. Performance management should focus more on encouraging and developing employees’ strengths and providing opportunities for growth rather than annual appraisals that are directly linked to raises and bonus payments.
Shift iQ offers companies a performance management system that is both efficient and user friendly. Results from performance measurement initiatives can be analyzed instantly and provide feedback that links directly to its Learning Management System, Compensation Management System and its Talent Database.