How to Design a Performance Management Process

Performance management these days is a very broad term and there's no one-size-fits-all performance management process for any business. While the HR space is full of buzzwords and a new trend pops up every week, the common ground of all effective strategies is a focus on continuous communication and empowering your employees to drive their own development.

Designing a performance management process that supports your company culture should begin before you even start looking for a platform to help you implement your process. We’ll take you through the key items you should be planning, so you can know exactly what you want to achieve and which tool will help you to get there.

What's in an effective performance management process?

At the broadest level the goal of performance management is to help employees to achieve the company’s targets and objectives. This can't be done without every employee receiving the guidance they need to achieve their own goals. An effective performance management process gives your employees the tools they need to manage their own development, with input from their manager and direction from the company itself. Employees are most engaged when they’re able to see how their achievements contribute to the success of the business and where they could add further value with improvement.

That leads to the “continuous” nature of performance management. Traditional appraisals encompassing a once-yearly check-in between employee and manager are just not enough to effectively support a team’s success. You’ll be spending far too much time reflecting on a full year’s work at once and losing valuable opportunities to raise issues as they arise. When regular goal-setting and feedback-gathering are a part of your company culture, this puts everyone on the same page at all times and lets team members make effective changes when they matter.

Where do you start designing your performance management process?

Ask yourself, “Why?”

Why do you need a performance management system at all? If annual appraisals are ineffective and employees want to drive their own development, why have a defined process for everyone? The key here is alignment and effective communication. Nobody works in a silo, and whether your team operates all together in one office or you have multiple locations around the world, you all need to be working to a common set of goals. How you communicate these to everyone involved should be one of the core pillars of your performance management process. The “What” can come later down the line, but if you have a system of accountability and transparency you can build open, trusting relationships between teams and at all levels of your business.

Define your company values

What do you value most as a business? Your company values should be at the heart of all the decisions you make.

Decide on 3-5 company values that you want to develop in every employee, or that every team member can contribute to. These should be actionable, not just qualitative. “Operate with integrity and determination” is a universally-adopted value. One of ours is “Dedication – we get it done”. The values you adopt help you to shape the outcomes that you want to support in your performance management system.

Decide on your measurable outcomes

From your company values, think about how you want to measure progress and achievements. Are you a sales-focused business, with clear monetary targets? In this case, a system that tracks KPIs would suit your outcome. Or instead of numerical targets, are your goals qualitative with action steps along the way? SMART goals or OKRs would work best for you. Deciding what outputs matter most will allow you to easily measure company performance in a way that’s relevant for you and will let you cascade this down through the business.

What's next?

At PeopleGoal, we want to help you to create an effective, engaging set of tools that support your team in their professional development and work to deliver your unique business outcomes. In our next few posts, we’ll start breaking down the individual elements of the performance management process itself and showing you how to build these up from scratch. Or download our whitepaper: Modernizing Performance Management - it's a complete toolkit with practical templates to help you design, build and implement new performance management processes.

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You can also email us directly at contact@peoplegoal.com. We'd love to hear from you!