Navigating Performance Management: The Ultimate Guide!

Are you confident about your choices for this performance management process this season? And are you providing the rightful incentives and resources to your most valued employees?  

If not, it's time to start reflecting on your performance of management. And to not let your performance management process seem oldish and gray, you must first bring on justifiable objectives of performance management that truly drives your company’s output. 

But how to assess and spot these precious employees among a  seemingly huge and active workforce? What enterprise performance management tools are important for these sessions?

The overall employee performance management system needs to be well defined in terms of the vision and respectively the employee progresses. Before we jump into the dos and don'ts of the enterprise performance management system, we must first understand ‘what is performance management’ in detail. 

What is Performance Management?

Performance Management system is a method of mobilizing human assets of the organization to perform profitably. It contributes to the development of organizational standards while aiming to empower individual employees. In layman terms, HR’s set up a stage for their employees to perform at their best, and it includes aligning their personal ambitions with the company’s strategic direction.

Who does Performance Management affect?

Your performance of management affects both the employees and the organization on various aspects, namely the growth opportunities, upskilling, work life experience, strategic achievements, and success. Here's the impact you can expect from changing your performance management system: 

• For Employees- A Pathway to Excellence: Performance management fuels a motivational fire, by providing attention to workforce skill gaps, arranging training and learning opportunities for them, ensuring recognition for their efforts and clarifying job roles with respect to contributions. Hence, it is a path guide for corporate employees, driving their potential towards personal excellence and professional development.
• For Employers- A Formula for Success: Performance management is the engine that rages organizational productivity. It’s an opportunity to fix hiring mistakes and ensure the right talent is nurtured. Activities of performance management ideally enhances job satisfaction, and ultimately, retains top performers. It’s about building a workforce that’s competent, committed and aligned with the organizational vision.

How Performance Management impacts Organizational Performance

Performance management process is the ladder that supports and bridges organizational performance to new heights. It streamlines workforce efficiency, boosts employee engagement, and ensures that every team member’s goals are in sync with the objectives of performance management. Employee management is a holistic approach to structural and functional reforms that turns individual potential into collective success.

How does Performance Management differ from Performance Appraisal?

While the performance management system keeps happening throughout the employment cycle, performance appraisals are quarterly or yearly checkpoints. Here’s a table that captures their differences:

For a deeper understanding of the distinction between performance management and performance appraisals,  check out our blog post Performance Management vs. Performance Appraisal

Why is Performance Management important?

Performance management is the key to unlocking excellence for organization through optimal use of human resources. It targets to identify gaps, growth opportunities, and potential of the teams in an organization. The continuous performance management process in a team can also provide leads for future performance appraisals of the members. Some key advantages of adapting regular performance management are:

• Connecting employee activities to company goals.
• Strategizing performance growth as per available opportunities.
• Fostering clear communication and employee engagement.
• Visualizing deserved recognition and performance appraisal.
• Tracking performance of individual contributors and identifying training needs.

The Performance Management Cycle

Let’s understand the performance management cycle closely with an exclusive discussion on how the steps of enterprise performance management process unfolds: 

Performance management goals

There are two main objectives of performance management-firstly, to identify potential managers and high performers. Secondly, to check the trainability of the workforce with detailed analysis of average performance. To achieve these objectives, HR Managers traditionally use Bell Curve Appraisals method. It focuses on the average performers and can only be advantageous if you believe in the trainability of your employees. 

Gradually as the goals expanded to cover skill gaps, employee engagement, attrition, etc. The need to gain clarity on distinctively performing or not performing employees became important. The high performers are not just a little better than the rest. In fact, they make a huge gap in skills and competencies in comparison to the other workers. 

Ideally, as soon as these non-performers are replaced, your work productivity dramatically increases. The competition of the good employees will then either be amongst themselves or with the other high potential employees. It will ultimately improve the quality of teams and drive the progress towards organizational goals. 

If you are about to hold a meeting for performance appraisal soon, make sure you correct your perspective this time. The sections ahead will accompany you through the best strategies to identify the gaps in the workplace and improve them. 

What are the stages of Performance Management?

Once you know the enterprise performance management tools that can be used to identify existing gaps of skill and competencies between your high potential employees and the rest of the workforce, things become further smooth. But, before making choices of tools, there are a few introspective questions that you may consider:

• What's your plan with high performers and high potentials in a team?
• What arrangements can nurture the high potential employees?
• What to do about the rest of the workforce? 
• Have you outlined your organizational target?
• How to combat the risk of attrition for the high potential employees?

Don't worry about losing the right human capital if you have assessed your employees thoroughly. And if you are stressing on the possible loss of employee population, we have got your back with the best recruitment assessments. You only need to make sure of a few things in advance:

• You are evaluating your employees rightfully through bias-free assessments. 
• You are aware of the weaknesses and strengths of your employees. 
• You are updated on the development of your employees' personal and professional goals. 
• You are sure of all the competencies that make up your future leaders. 
• You have an eye out for the accomplishments and skills of your employees. 
• You are informed about your employee's intentions of attrition or retention. 

Performance Management process: Best practices

You must be aware of the fact that your workforce only constitutes 5-10% of high potential employees. Now let's run a quick self assessment for you. Ask yourself if you can compromise these few high potential employees for a maximum number of average employees? If your answer is yes, you are still following the leads of the bell-curve to evaluate your workforce. If your answer is no, Kudos!  

1. Traditional 10-70-20 Rule

Traditionally, the work performance of a team is plotted against the categories of high performers, average performers, and low performers. The graph (see, Graph A above) typically presents the employees in 10%, 70%, and 20% respectively. It focuses on the maximum number of employees falling under the average category and allows the managers to take actions for improving their performances. 

Meanwhile, the minor percentage of high performers get neglected due to excessive emphasis on training and development of the majority. As, in this case, the resources of the management are directed towards bettering the performance of the average employees without a guarantee of results. If you are practicing the same, beware! Because you might be losing your high potential employees to deprivation of attention soon. 

2. Much Accurate 20-80 Rule 

There's something that you need to adapt starting today, from this very moment. The reflection of your workforce performance on a non-linear graph of POWER LAW. The power law is a function that explains the relativity between two variables. In the context of HRs, it is the relative difference between high performers and low performers. Too much to register?

Let's say, employee A is as good as how bad employee B is. Which means, this graph plot represents the direct alternate employees in respect to their job performances. Here, the high performers occupy the tails, i.e are a part of 20% of the population. Whereas, 80% of the others are considered as employees that need to be trained for better performance output.

The interpretation of this will not only help the management to initiate the right training for low performers, but also will help in prioritizing the high performers. It is because the gap between a good performance and a bad performance will now have more clarity and accuracy. 

Are you curious about this 'Power Law' term? Let us help you out with that.

Unlike the normal distribution curve where the focus is on average performers, here, in the Power Law function (refer to Graph B above), the focus is on the gap between the good performers and the bad ones. It is typically presented with a 20-80 proposition, where only 20% of the employees are responsible for 80% of the output in an organization. 

How to Improve the Performance Management Process

A daily performance management in HRM sounds like too much work, right? Along with the traditional performance management tools such as employee surveys that measure workforce productivity and engagement metrics in the job position. You might also want to know your workforce better by assessing their personality, potential, and leadership qualities. And it definitely can not be recorded through any performance reports. This makes psychometric assessment an essential performance management tool.

The PMaps HiPo Assessment will help you predict the upcoming leaders of your organization. To be particular, it gauges your employees' ability, aspirations, emotional intelligence (skills of handling emotions), general intelligence (awareness), and engagement levels. Furthermore, you can employ 16PF Managerial Assessment to find deserving leaders and managers for your teams. 

Best Performance Management examples

The top tier companies have already leveraged technology to automate processes, provide real-time feedback, and use workforce predictive analytics for informed talent management decision-making. Some of these companies are Deloitte, Adobe, Accenture, Microsoft, Netflix, Google, and Uber. A quick sneak peek into the practices incorporated by them to drive the change: 

• Cargill: Focusing on daily encouragement and empowerment to inspire employee performance.
• Accenture: Disrupting traditional HR practices by personalizing employee experiences and leveraging digital tools.
• Deloitte: Simplifying their employee performance management process to focus on future potential rather than past performance.
• Juniper Systems: Highlighting employee development through continuous learning opportunities and regular feedback.
• Kelly Services: Using an enterprise performance management system that emphasizes clear communication and goal alignment.

Conclusion

Performance management in HRM is the backbone of a growing organization. To support your post hire employment evaluations, PMaps is willing to help you with cutting edge assessment tools. Let’s achieve high performance of management goals together. With us, you will be able to not only hire the best talents, but also orient them appropriately as per their skills sets and competencies. 

We can assure you the right identification and retention of your valuable high performing as well as high potential employees. Join hands with us for better recruitment and employee management. You can contact us through email ssawant@pmaps.in / assessment@pmaps.in or call us at +918591320212.