The three components of an effective performance management process

This is an introductory article to Creating a Performance Management Process That Works, a guide we created together with Jason Lauritsen, HR expert and author of Unlocking High Performance. Want to get the most out of your performance management process? Download the free guide here.

 

There is no shortage of supposed “best practice” articles on the design of performance management processes. But increasing numbers of organizations are recognizing that how you measure, support, and reward performance is highly organization-specific.

Unfortunately, it’s not enough to ditch the annual performance review and hope for the best. You need a clear understanding of the core components of effective performance management and how these components interact to unlock employee potential.

A framework for performance management

An effective process will address these three interlinked components:

  • Planning – do employees know what you’re evaluating?
  • Cultivation – creating the space for employees to bloom
  • Accountability – making performance a proactive process

What each of these components looks like will be unique to your organization. But understanding them is crucial to helping your employees grow to high performance. Let’s look at them in greater detail.

Planning – do employees know what you’re evaluating?

CIPD research found that the most central factor in how people respond to feedback is whether they see it as fair. Without knowing what is expected of employees and what they’re being evaluated on, fairness might be a big ask.

Setting out clear expectations is therefore crucial to the success of your performance management process. Likewise, it’s important that employees have the resources and know-how required to meet these communicated expectations.

Communicate expected behaviors and company values, and set clear goals. Managers could have dedicated conversations in 1:1s to identify development areas and workload management issues.

 

Cultivation – the missing piece

It’s unsurprising that the bell curve system, which focuses heavily on top and bottom performers, fails to be a source of motivation for the majority of employees. Enter the missing piece: cultivation.

An effective performance management process strives to cultivate employee growth. Just as farmers water their crops while removing barriers to their growth, performance management should allow employees to overcome challenges and fulfill their potential. This is rooted in an understanding of motivation and how work actually gets done.

Traditional performance management focuses on extrinsic motivators, such as reward, promotions, and merit increases. Research from Daniel Pink and others has highlighted that, particularly in knowledge-based and creative industries, intrinsic motivation is more effective in sustaining higher levels of employee performance.

Give employees a purpose in their role and help them to recognize how their work impacts the organization, its customers, and wider society.

Setting out clear development plans can also drive intrinsic motivation – consider promoting a culture of coaching across your organization. Note: Are your managers trained to play such a coaching role?

 

Praise and recognition are key to driving this cultivation culture. Whether private or public, recognition encourages a sense of progress, which is an intrinsic motivator highlighted in Kenneth Thomas’ research.

Accountability – making performance a proactive process

Traditional processes are often compliance-oriented. They aim to create a formal record of performance to decide who receives a bonus or promotion, and as evidence to inform terminations.

This is a worthy goal from an HR perspective. But many question whether this backward-looking, rigid, and seemingly arbitrary record accurately portrays the various ways in which employees contribute to an organization’s success.

Effective performance measurement moves away from this punitive process. It encourages proactive engagement from the employee in their ongoing performance and future development.

An effective approach to accountability recognizes that:

  • Contributions to success are multifaceted – and not always easily visible
  • Work is collaborative, and contributions might be hard to quantify
  • Employees need the opportunity to take ownership of their success while learning from experiences
  • Performance is happening all the time, not just once a year

 

Next steps

The three key interlinked components of planning, cultivation, and accountability offer you a framework to reflect on your performance management process.

Your organization might already be succeeding with some of the initiatives outlined above, but perhaps there are others you’d like to incorporate into your performance management process.

Together with HR expert Jason Lauritsen, we’ve developed an in-depth guide on the framework outlined above, to offer further insight on the practical implications of applying it in your organization. Decided that you need to revamp (or create) your process? With the guide, you’ll receive a handy planning calendar and worksheet to help you on your way.

Further reading

Creating a performance management process that works (+ Calendar and Worksheet)

Communicating a performance management process

How performance management can foster diversity and inclusion

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