An organization is not only a physical infrastructure but is made up of its values, goals, societal objectives and most importantly their employees. An employee is not just a person who is working for you. They are the building blocks that represent a company to the world.
To do well in the organization, it is important for the employees to know their weak areas that need improvement so that they can improve themselves and give their best.
Now, evaluating the performance of each employee would be too difficult and time-consuming. Therefore, there is a performance management system to do the same.
Performance management is a process in which the employer monitors, evaluates, examines and communicates with employees to make sure that their performance is aligning with the companies’ expectations and goals.
In simpler manner, we can say that it is a process where the manager supervises the overall performance of the employee ensuring that they are efficiently and effectively contributing to the company.
To evaluate and compute the performance of an employee the employer uses a performance management system. It is an automated, collaborative and continuous processing system that works with employees and employers to meet their expectations and goals.
Performance management is built through establishing communication between the manager and employee. The manager should be able to understand what expectations the employee has, and the employee should understand the needs and goals of the company.
What else do we need performance management system for?
- Ensures high productivity: Performance management ensures that the team is highly productive. It can help employers to encourage and invigorate the team to bring out their best.
Adopting a performance management program can help to reduce stress, distributing workload equally and maintaining a harmonious work environment.
- Brings transparency: A good performance management system can help the employee and the employer to establish clear and concise communication.
This brings transparency to the management, ensuring that organizational goals and the personal goals of employees are being met.
- Establishing communication: Having a performance management system helps the employer to engage with employees in a timely manner.
Conducting weekly meetings and monthly check-ins for the team can help the employer to understand the problems faced by the employees. It establishes a better communication series between them.
- Increases employee retention rate: When you understand and find out a solution to the problem of employees it encourages a sense of loyalty in them.
Managing the performance of employees, maintaining good communication with them and providing them with feedback will persuade the employee to stay in the company for a longer period. This increases your employee retention rate.
- Helps in personal growth of the employees: Performance management not only helps the manager to know their employee better, but it also ensures the growth of the employee on a personal level.
When given feedback the employee understands the areas where they need to improve themselves. This helps them to bring more to the table and become better.
- Evaluate accurate performance measures: Since the Performance Management System is a technological and consistent way of evaluating performance, it will ensure that the computation is highly accurate and unambiguous.
Many organizations cannot achieve an effective performance management system, which is a nightmare and hindrance to their success.
An abstract from the report generated by Deloitte shows that redesigning the performance management system is a high priority for 79 percent of the executives. Poor metrics, poor targets, lack of transparency, and lack of management engagement leads the organization to this dead-end situation.
There are five essential components to be kept in mind while implementing a performance management system:
- Planning: The first and foremost step in building an effective Performance Management System is to plan. Plan, here is defined to create a layout in accordance with which the process is to be continued.
This might include setting up the goals, selecting the Key Performance Indicators (KPIs) against which the employees’ performance will be measured, creating a Performance Management Budget, actions to be taken as per the current Performance reports.
- Monitoring: One of the most crucial components with which we can achieve Performance Management efficiently is monitoring. Continuous supervision and review are essential to keep track of the performance metrics throughout the time.
Reviewing needs proper communication and participation from both the employee and the employer. It helps them to understand and identify problems and work upon them together. Employers can utilise various tools like 360-degree feedback, 9 box matrix bell curves and more to monitor transparently.
- Developing: Employees feel motivated and enthusiastic when you give them an opportunity to grow and learn. In this instance, developing means the employees’ personal growth.
Individual goals are aligned with the organizations. Thus, creating an employee centric approach in terms of their growth and development can help the employer to achieve an effective Performance Management System.
- Rating: Rating, here, means evaluating the employee performance against the KPAs and other factors to know the status of their growth and performance.
It is essential to know who is performing better in the crowd for future reference. A rating record ensures that the performance evaluation is accurate.
- Rewarding: Rewards are like a push. This push is an effective source of motivation that ensures higher performance for an employee.
Rewarding an employee for their better performance in any form creates a spark within them. This spark allows the employees to work better than ever next time.
Summing Up
Performance management is not an option anymore. It has become a compulsion to every organization these days. The better you work with your employees, the better your company becomes.
I hope we enlightened you with some interesting facts and great knowledge. We’ll keep bringing in more for you. Till then Keep Reading, Keep Thinking and Keep HRing!