how performance management works
a formal performance management program helps managers and employees see eye to eye about expectations goals and career progress including how an individual s work aligns with the company s overall vision it helps direct the funds allocated as a part of the company s performance budget generally speaking performance management views individuals in the context of the broader workplace system in theory companies seek the absolute performance standard even though that is considered to be unattainable performance management programs use traditional tools such as setting and measuring goals objectives and milestones they also aim to define what effective individual performance looks like and develop processes to measure it however instead of using the traditional paradigm of year end reviews performance management turns every interaction with an employee into an occasion to learn managers can use performance management tools to adjust workflow recommend new courses of action and make other decisions that will help employees achieve their objectives in turn this helps the company reach its goals and perform optimally for example the manager of a sales department can give staff members target revenue volumes that they must reach within a set time period in a performance management system along with the numbers the manager would offer guidance gauged to help the salespeople succeed focusing on continuous accountability creates a healthier more transparent work environment and emphasis on regular meetings can improve overall communications because performance management establishes concrete rules everyone has a clearer understanding of the expectations when expectations are clear the workplace is less stressful employees are not trying to impress a manager by doing some random task and managers aren t worried about how to tell employees that they are not performing well if the system is working they probably know it already percentage of workers who very strongly agreed with the statement my manager includes me in goal setting in a september 2022 gallup survey common steps in performance managementalthough off the shelf performance management software packages exist templates are generally customized for a specific organization s needs typically effective performance management programs include certain universal elements such as benefits of performance managementadvocates of performance management maintain that it not only helps organizations attain their goals but makes work more fulfilling for individual employees with the bottom line benefit of improved worker retention for example workers often feel blindsided by negative annual performance reviews while performance management may also incorporate annual reviews the ongoing feedback that managers provide throughout the year should result in fewer unpleasant surprises as the polling firm gallup which conducts worldwide surveys on workplace issues puts it effective performance management requires managers to think of themselves as coaches not bosses and when managers have timely performance related conversations that reflect this principle manager employee interactions feel encouraging engaging and rewarding in ways that annual reviews do not the benefits can also extend outside the organization with studies showing that performance management often produces greater customer satisfaction 