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Performance Management Best Practice

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Employee performance management is something which can easily be overlooked in a small busy organisation but the process provides you with invaluable internal data which will help you better achieve your business goals and incentivise employees.

The purpose of performance management

Performance management is designed to help keep your employees engaged in their work and maximise their potential. By monitoring performance you are giving employees more reason to take pride in their job and to go that extra mile for your organisation.

Aside from the benefits and incentives you provide for employees by monitoring performance, you are also evaluating assets which can be developed to benefit your organisation or which are inhibiting growth within your business.

Measures like profit and financial performance will tell you how well you have done in the past but not necessarily give you an indication of the current situation. By continuously managing performance a valuable dialogue is created between management and employees.

Step 1: Decide on a process

Employee’s performance should be managed in line with organisational goals and department plans. When introducing a new performance management system, it is wise to start at the beginning of the reporting year. Plan the date well in advance to allow time to train management and give plenty of notice to your staff. Once the date is set it is important to stick to this date.

Reviewing performance is a continuous process and would usually be made up of 3 parts:

Frequent informal meetings

These meetings allow line managers and employee’s to discuss current and future work, identify achievements and problems and provide the necessary feedback and encouragement.

Formal interim reviews

Formal interim reviews are typically held on a quarterly schedule. These sit down meetings are designed to discuss progress in line with an employee’s performance plan. Again line managers are expected to recognise achievements and give feedback on areas that need improvement. These meetings should give more in-depth comments than the informal reviews.

Annual appraisals

The most formal of all performance review meetings is the annual appraisal meeting. In this meeting the work carried out over the year is appraised. Usually the outcome of this meeting will be a formal rating of performance. The outcome of this meeting should be kept on the employee’s performance record.

Keeping an employee’s performance record is advisable as it will help in further performance review meetings. The performance records should include any changes in objectives or tasks for employees that have been agreed during performance review meetings.

Step 2: Train management

It’s so important that managers in charge of performance receive the correct training. Not only will these managers be largely responsible for praise and reprimand depending on performance, they may also deal with a wide range of sensitive and emotional employee issues. The results of performance reviews will have a big effect on staff morale and therefore the sensitive handling of success or short fallings in a performance review is essential.

Step 3: Defining an employee’s goals

The goals that you set employees should be in line with your business goals. Consider the following elements for each employee:

SMART objectives

SMART objectives stands for specific, measurable, achievable, realistic and timely. Here is an example of an objective that is not SMART:

“Increase sales and leads as much as possible”

Vs. a SMART objective which would be:

“Increase the volume of leads by 5% within 6 months”

Competencies / behaviours

Competencies or behaviours depending on what you’d like to call them are essentially behaviours which employee’s need to perform their role to a high standard. Competencies are linked to how people deliver objectives. For example, a sales consultant may need to focus on long term customer relationships so they come back for repeat custom, in order to hit sales targets.

Outputs and behaviours are both important so you should carefully consider the balance between the two.

Personal development

Personal development refers to the development employees need in order to achieve objectives and reach their potential.

Starting your performance management programme

Setting up a performance management schedule may seem like an unnecessary hassle for your business but the benefits it can provide are far reaching. If you would like help in setting up a performance management system contact one of our employment law experts for free advice today on 0161 115 6164.



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