What are the advantages of performance management?

The role of a smart, progressive HR department should be to get the very most from the people within an organisation. It’s not just about monitoring what has happened and keeping data on the status quo – it’s about using that data to help to unlock the potential of the people at a business’ disposal and affect positive change. People are a big investment for a company but it’s important not to lose sight of the fact that this is an investment that can be grown.

Right at the heart of this is performance management. This is far from a new concept – employees have long been set targets and had appraisal meetings – but it’s one that many miss an opportunity with. One study found that 58% of businesses felt that performance management processes are not an effective use of their time and just 8% feel this is highly effective at driving business value.

Rather than suggest performance management isn’t a valuable investment, these numbers merely go to show that too few people undertake performance management in a way that delivers value and there is a distinct danger that many have lost sight of what they are hoping to achieve in the first place.

Motivation

Money alone is not enough to motivate employees – despite what some people may assume. Indeed, one survey found that 78% of employees felt that they would not work significantly harder for a bonus worth 10% of their annual salary. Businesses have to be able to offer other incentives to motivate their workforce and performance management is a key part of that.

This is the chance to set clear goals to work towards, map out a training programme to boost an employee’s skills and explain their potential career path. All three of these things can provide effective motivation and give an employee a sense of engagement and focus in their work.

Communication

Speaking of engagement, proper performance management – with regular progress checks, flexible goals and mutually agreed pathways – also helps to boost effective communication, giving line managers chance to pass on key information and fill someone in on how they fit into the wider picture. There’s nothing worse than feeling ‘out of the loop’ – and performance management can prevent this. People should know what they’re doing and how to get there – and feel they know who to come to if they have any issues with this.

Line manager understanding

Line managers play a pivotal role in an organisation. They’re the people tasked with communicating a business’ vision to those on the front line and ensuring that they actually deliver. Performance management processes are vital for helping them to make that happen, giving line managers a mechanism to set out the standards required, encourage greater productivity and boost skills through appropriate training. Done properly, and this process should help your line managers to be well-informed about the people they’re in charge of – although it might take training for your employees to be able to carefully execute.

Evidence-based decision making

The knowledge gained by line managers in this process should go some way to helping businesses to be able to make informed decisions that are backed up by data. From pay rises and promotions to decisions on recruitment and restructuring, it’s important to collect and use performance data. Not only this, but if a disciplinary matter should emerge, it’s important to have a clear record of how an employee was treated and what support they received.

Performance management processes, therefore, provide vital data, give a mechanism for line managers to work effectively, offer employees motivation and increase the quality of communication through an organisation. By appreciating this, businesses can take them seriously and use them to drive productivity and efficiency.