Performance management positively impacts employees’ performance and productivity.  Data from Development Dimensions International – an international major in the field of HR Consulting, shows that the percentage of goals achieved by employees increases substantially when a formal performance management system is put in place.

With a good performance management program in place, managers indicated that employees hit 21.5% more of their goal targets.  Similarly, employees estimated that with an effective performance management system, they achieve 8.3% more of their goals.

On another note in In 2010,Gallup conducted a research and found that Indian employees, especially those who have worked for three to ten years for a company, strongly felt that most performance management systems are not enough to differentiate high performance. It will not be good to throw the baby with the bath water. So what are the basics of a good performance management system?

Setting Clear Targets—Senior leaders set goals that are meaningful for the organization and for the team.  The goals have to be SMART

1.     Specific

2.     Measurable

3.     Attainable/Achievable

4.     Relevant

5.     Time-Bound

Setting clear performance expectations and goals gives employees a clear understanding of expectations and how they can improve their performance.Managers then cascade these goals to their direct reports and establish individual objectives that are linked to corporate goals.

Setting Priorities & Distributing Work—Managers develop and implement project plans to get work done; they prioritize work and set realistic expectations with employees regarding project tasks.

Monitoring Day-to-Day Performance—Managers track employee performance on a continuous basis and provide timely and accurate informal feedback and coaching. Feedback throughout the year helps employees continually develop and reinforces positive habits. Both Managers and employees have no surprises at the end of the year.

Assessing Performance and Providing Constructive Feedback—The formal Performance management review process includes employees Self-evaluation and subsequent review by direct managers. Formal feedback should be candid but managers should help employee improve by concentrating on strengths rather than beating them on their weakness alone. Thereafter employee’s use the performance feedback to create development plans (DPs) to improve specific areas.

Linking Pay to Performance—Employees receive merit-linked bonuses and pay increases based on the performance review conducted jointly by them.

Research has time and again indicated that managers are one of the key drivers of employee performance since they are directly in touch with employees and can thus support employees to achieve results.  However, despite their significance in the process, managers have room to improve in performance management activities.

Organizational culture has a high impact on manager’s and leadership teams effectiveness at and commitment towards performance management.  As a result, it is important for an organization to encourage a high performance culture by ensuring that managers and employees understand business strategy and goals. And they are focused on the right priorities with a clear focus on delivering better quality results.

Good performance management programs are inbuilt in the culture and occur throughout the year instead of just during the annual review cycle.

Thanks

Jappreet Sethi

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