How to Adopt a Performance Management System and Why

Performance Management in work is a vital component of running a successful business. Not only is a robust performance management system used to manage and reduce underperformance, it is also an important way to encourage and motivate high potential employees. Although many people are concerned about performance management, considering it a negative part of working life, a well implemented performance management system will improve employee engagement, drive productivity and result in a more motivated workforce.

To understand how and why you should introduce a performance management system in your team, read on.

See Also: How to Give a Successful Performance Appraisal

1. Understand The Performance Cycle

Performance is a cyclical process. Understanding it as such will ensure that you adopt a performance management system that drives continuous improvement. The basic elements of the performance process should include setting expectations, regularly reviewing performance achievements, and them evaluating performance on a medium term (often annual) basis. The cycle should then start again, with new targets and expectations being agreed by the employee and employer.

Get more details about performance management principles and practices from the Chartered Institute of Personnel and Development, here.

2. Set Out Your Policy

Having understood the principles driving a great performance management system, it is time to design a policy that describes a process that works for your business. It is important to have a written document reflecting the policy you adopt, to communicate clearly with the team, and eliminate disputes that might arise later.

Your policy should answer the following points - when (or how often) should objectives be set? What is the process for agreeing objectives? How frequently should informal and formal reviews take place? What information should be captured in reviews? What happens in the case of disputes about achievement? What is the consequence for employees who fail to achieve the objectives set? What happens to support and develop top performers identified through the performance management system?

3. Design Your Documents

To enact the policy, you will need documents which can be used by employees and managers during the performance process. Example templates are available online and can be customised to suit your business.

You should consider writing documents to be used for employees to write down their goals and objectives for the year, and for managers to add their comments. These should be supported by a review document used to detail progress against targets at regular intervals. You will also need communication documents to help you explain your new process to the team.

4. Communicate The Change

Communication and training are necessary for all staff who will use your new performance management system. People may be concerned about the system and its consequence for employees. Skilful communication led by managers will eradicate this and help people get used to the new process.

Additionally, you will have to train employees to create their own targets and objectives according to your new process, and managers need to be trained in delivering a quality performance appraisal. Selected managers might also require training on dealing with under performing staff members, and identifying and stretching top talent.

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Resources are available online to help you set out a new performance management system. Check out reputation organisations in your own country to make sure your system complies with local laws - your local government website is a great place to start finding advice and ideas that comply with relevant legislation. There is an investment required in terms of time and effort, to implement a new performance management system - but if it is done well, you will find that the investment is well rewarded, with a business that values continuous improvement and a workforce that understands the expectations and opportunities available to them.

How is the performance management system implemented in your workplace? Do you think it is effective?