Attracting and retaining top talent is crucial for organizations to grow and succeed—and performance management programs play a central role in this. But according to Gallup, “only two in 10 employees say their performance is managed in a way that motivates them to do outstanding work.” Clearly, organizations’ performance programs aren’t doing what they were designed to do.
Your performance management system should be a productive, positive and collaborative process that supports employees’ positive contributions to the workplace and highlights opportunities for continued growth and development. Here, we discuss five key strategies to achieve this, creating a performance management program that will set your business apart and enable you to retain top talent.
1. Set SMART goals to achieve optimal growth
Employees should work with their direct manager to set S.M.A.R.T goals (Specific. Measurable. Achievable. Relevant. Timely. ). SMART goals provide a framework by which to develop plans for each individual, team or the entire business.
For example, a sales rep might set themselves a SMART goal to achieve $X million order value by the end of Q1. This goal is precise, measurable, and time-bound. When setting SMART goals, be sure to get input from multiple people to ensure the goals are realistic—you should aim to set stretch targets but make sure they aren’t too out of reach—you don’t want to set someone up to fail.
Generally, you can set all the expectations and SMART goals in the world, but if they are not adequately aligned to the organizational goals and strategy, they may as well be drafted on a piece of paper and trashed. Ensure your SMART goals are set from the top down to make sure this doesn’t become a reality.
So, you’ve set your goals–but how often should you review them?
2. Replace annual reviews with personalized quarterly reviews
Long gone are the days when organizations plan for reviews once a year. Quarterly reviews are a chance to gather timely feedback compared to annual reviews, which drive away talent since the lines of communication aren’t open frequently enough.
Ensure you factor key conversations into your regular one-on-one meetings monthly or quarterly. This allows managers to receive direct reports of employees’ self-evaluations as well as other performance metrics based on individual and departmental goals.
The review should be focused on the behaviors and values of the organization as well as its objectives. For example, at 360Learning not only do we self-evaluate based on our performance and targets, but we also show how we’ve lived by our company pillars to achieve them.
As a manager, you must stay close to how your teams are making progress and provide support where needed. To provide the required support to your employees, you must be attuned to how individuals are progressing towards their goals.
Therefore, dedicate some time in your regular meetings for reviews or assessments. This aspect of the performance management process is key to ensuring you set up your teams for success.
At this stage, employees and management must review the previous quarter and assess how well the performance management program has worked. You can ask the following questions during reviews:
- Were individual and organizational objectives met? If not, why?
- What obstacles did team members face?
- What training or coaching would help individual employees perform better?
- How did management feedback help? If not, why?
- How could the program be improved?
- Were time and resources spent on this program effectively?
Incorporate feedback linking an employee’s individual objectives and goals with those of the department and organization. Peer reviews and 360-degree feedback are some of the most effective practices that help enhance the performance of managers and other executive personnel, so all the factors related to organizational performance get optimized profitably and sustainably.
So, what should you focus your conversations on in your quarterly review? The answer is your OKRs.
3. Use OKRs to set the foundation for success
As we’ve already mentioned, goals set the foundation for organizational performance management. What most people overlook, however, is the fact that long-term objectives are easy to break down into attainable, segmented steps, popularly known as key results. This makes more relevant and powerful tools for managers and employees alike.
Specific and measurable, though flexible enough to evolve, objectives and key results (OKRs), make it much easier for various parties involved to keep track of the ongoing process.
Ideally, OKRs should be discussed and agreed upon in a continuous open dialogue. An efficient talent management software should facilitate this process by offering managers and employees a digital platform to review agile goals on an ongoing basis. They can evaluate, reactivate, or put agile goals on hold and provide real-time feedback.
OKRs focus on identifying common objectives and breaking them down into measurable and attainable components, unlike other goal-setting systems such as Key Performance Indicators (KPIs). In contrast, key performance indicators are often used to set entire organizational goals, for example, by defining a customer retention rate or a particular profit target. KPIs measure performance but fail to identify specific areas that require attention.
In a performance management program, the OKR system helps employees recognize that they should also have a say in where their organization should go and how to get there. This deviates from the traditional top-down management approach and empowers employees and cultivates buy-in. The bottom-up approach can help employees feel valued and that their personal opinions and aspirations are considered.
Next up, another key performance management strategy: maintaining regular development conversations.
4. Maintain regular development conversations
Frequent scheduled conversations create excellent opportunities for employees and managers to assess and discuss performance-to-date. They also get to discuss how to reach their goals better.
During these conversations, both parties build and evaluate performance and development, and the tone and atmosphere reflect the process.
You can schedule check-ins based on predetermined intervals. For example, you can remind managers and employees to have a career development discussion at a particular point in the fiscal year. You can also leverage customizable check-in forms to shape aspirations conversations around critical topics such as professional growth and goal alignment.
The last performance management strategy is incentive management. But what should that look like?
5. Don’t forget incentive management
Incentive management should not be limited to team members’ one-time benefits and cash bonuses. Incentives aren’t necessarily monetary, although they can include financial compensation.
Regardless of the department, you can reward employees using incentives like bonuses for high performance, customer surveys, L&D incentive programs with reimbursed tuition, or rewards for participating in an educational event. Other rewards could include stocks, new projects, flexible working options, office perks, leadership opportunities, charitable donations in the employee’s name, company-wide recognition, or L&D opportunities.
Employee reward and recognition can help as an employee retention lever. Employees are more likely to stay loyal and committed to the company when they are recognized and rewarded for their job.
As a manager, you should ensure incentives are made a habit throughout your tenure. A reward can be as simple as creating a Slack message recognizing an individual for their hard work. Or something more in-depth such as a card, gift, or a shout-out in a team meeting.
And, of course, during performance review sessions, focus on the rewarding aspect. An employee who over-performs exceeding expectations should be rewarded. In some cases, that will bring promotion and praise. In others, it might be a merit increase or an extended time off.
By celebrating success and achievement publicly, employees are more likely to feel recognized and valued for their hard work. According to a Gallup survey, public recognition and incentives are one of the most memorable effective performance management methods.
So, those are our five key strategies for creating a great performance management program. But, how will you know if your program has been effective?
How will you know if your program is effective?
After implementing these strategies, how will you know if your performance management program is successful? You will recognize the following:
- High morale and motivation
- Low turnover or disengagement
- Organizational goals are easily met
- Employees understand and appreciate how they need to improve
- Reviews are conducted consistently and on time
An effective performance management program is more than just building a workplace that works. It is about having the right leadership driving the company towards a performance culture, interpersonal relationships, teamwork and constructive feedback.
Last but not least: Refine your performance management program to stay relevant
Start with frequent conversations with your workforce about areas that need improvement and recognize their success. This will create opportunities for open dialogue with your employees as well as empower them with individual accountability to reach the goals you set for them.
Remember that most employees want to develop their talents, perform well and grow as professionals. A holistic, humanized approach to performance discussions will help lead employees on the right path within their professional journey. And with the right performance management technology, companies can develop ongoing, collaborative and agile performance management processes that focus on maximizing the potential of their employees.
Freddie Campbell is Content Lead for the UK market at 360Learning, a collaborative learning platform that enables companies to upskill from within by turning their experts into champions for employee, customer and partner growth.
