Performance
7
min read
Managing employee performance is a key priority for every organization. With the rise of the knowledge economy, it has become quite evident that an organization’s human capital is one of its biggest assets. Invariably, leaders globally are identifying and experimenting with new ways to manage and improve employee performance.
For a long time, performance management has been equated with reviews and feedback. However, most organizations are now adopting a more comprehensive approach for managing employee performance.
If you believe that performance management goes beyond reviews, you are in for a knowledgeable read.
Based on years of industry research and experience of working with fast growing organizations, we have been able to identify that there are three major components which collectively contribute to managing employee performance.
In this article, we will take you through a deep understanding of each of the three components and how you can facilitate effective performance management.
Performance Goals
In the first element of managing employee performance, you need to be clear on what your team members are performing towards. This requires setting key goals on individual, team and organizational level. Setting goals effectively can enable you as well as your employees to gauge where the performance is expected to go, making performance management seamless.
However, performance goals must be set strategically and there must be an alignment between individual, team and organizational goals to ensure collective success. There are two facets to managing employee performance when it comes to performance goals, first is the types of goals and second how goal setting should take place.
Additional Resources:
We have a free guide on how to set and align goals effectively. Click here to download the PDF.
A) Types of Goals
Based on the intent, scope and impact, you may find three types of performance goals for your fast growing organization:
1. Role specific goals
Role specific goals for managing employee performance talk about major goals that align with the responsibilities mentioned in the job description. When you onboard any employee, you set a job description for the role you seek to get them for. The goals highlighted in this job description are primarily the role specific goals.
For instance, if you hire someone in the marketing team, the role would be to ensure better product reach and brand awareness. Essentially, this will become a goal, against which performance will be measured and improved, i.e. managed.
2. Project goals
The second type of goals which can help manage and monitor performance revolve around project goals. These goals are more specific in nature and are generally time bound.
They are meant to be achieved in a particular time frame (the time of the project) and change once the project is over. Managing employee performance here depends on how well and to what level these goals have been achieved.
3. Behavioral goals
The final type of goals for managing employee performance talk about behavioral goals. If you take a close look, you will realize that the first two types essentially talk about what has to be achieved.
This third type talks more about the behaviors and patterns that must be achieved while achieving the above two types of goals. Behavioral goals mostly have a longer life than role based and project goals.
B) Goal setting
Once you understand the type of goals and have a broad agreement on different aspects of the same, you should focus your energy towards actually setting the goals. Goal setting should generally be a collaborative and collective process where managers, leaders and employees all should have a voice.
Collaborative goal setting ensures that there is greater buy-in, commitment and ownership towards the goals which makes managing employee performance more effective.
In this regard, you need to streamline your efforts across two major aspects:
1. OKRs
OKRs or Objectives and Key Results is a goal setting approach that many fast growing organizations leverage to ensure that everyone in the team is on the same page and collectively works towards a collective vision. There are two facets at play here —
One, you need to set the objectives or the larger vision that you wish to achieve.
Two, you need to have a few key results that will help you measure and gauge whether or not you have been able to achieve your objectives or not.
Generally, you should have at least 2-3 key results associated with every objective to ensure holistic goal setting and performance management. Let’s take a quick example here:
Objective: Improve customer experience
Key result 1: Increase customer stickiness by 50%
Key result 2: Improve Net Promoter Score from 6 to 8
The example clearly illustrates that while the macro performance goal for employees is to improve customer experience, the milestones which will help determine the achievement of the goals, and are in turn sub goals include increasing customer stickiness and improving net promoter score.
Additional Resources:
We have a free 10 day Email course on OKRs to guide you through everything you need to know about setting, tracking and implementing OKRs in your organization. Click here to enroll now.
2. SMART Goals
Most fast growing organizations today are adopting the SMART goals framework to ensure the performance goals they set are effective.
Specific: Ensure that the goals you set are clear and to the point to avoid any ambiguity
Measurable: All your goals must be measurable and result oriented to gauge the level of achievement and performance
Attainable: Keep your goals aspirational but not out of reach to ensure motivation
Relevant: Your goals must align with the organizational vision and employee objectives as well
Time Bound: The goals must have timelines to mark a start and end date to streamline efforts
Irrespective of the goals you set and the way you set them, it is very important to:
- Document the goals and corresponding parameters
- Communicate the goals to the entire organization to ensure maximum visibility (Here’s how you can do it easily)
- Facilitate flexibility to adapt the goals to changing circumstances
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Performance Review
Setting of performance goals takes us to the next phase or component of managing employee performance which focuses on performance review.
Once the goals are set, it is important for you to constantly monitor the progress of your employee’s performance on the goals and determine their contribution to organizational success.
Here, it is very important to gauge employee pulse in real time. There are several reasons for this —
First, real time insights can help you track employee engagement and form a great base for performance review
Second, it will enable you to address any risks or challenges before they hinder performance levels massively
Based on the employee data collected through pulse survey and feedback received through regular team and 1:1 check-ins, you should focus on facilitating effective performance reviews. Performance reviews are a critical component of performance management.
Types of performance review
There are several types of performance review systems that rapidly growing organizations today leverage. Based on your organizational priorities, you can either pick one of them or leverage a combination of a few to ensure maximum effectiveness. Some of the common types of performance reviews include —
1. Ratings
Rating for managing employee performance generally focuses on adopting an objective approach towards performance reviews. It talks about grading employee performance on a scale, while taking different aspects into consideration.
The most commonly used one is the 5 point rating scale which starts from below average to excellent performance over 5 points. Depending on organizational comfort, either 1 or 5 are considered as excellent performance, while the other end of the spectrum denotes need for improvement.
Other rating scales include the 10 point scale, the Likert scale etc.
Benefits of Using a Rating Scale:
The importance of rating is that they form the basis for a fixed metric around which employee performance can be measured. It ensures that an objective and uniform approach is followed for all employees, which can be used as a basis for comparison of dedication, commitment and hard work.
On the simplest level, ratings can be on the achievement of a particular goal or objective, which makes the rating task specific. For instance, if an employee is able to achieve the task, with time in hand to go beyond the target, they surely deserve the highest rating.
However, there are a few other types of rating scales as well that will encourage you to look beyond target achievement into performance parameters that are critical for business success. The top two are mentioned below:
a) Graphic Rating Scales (GRS)
This particular rating scale has been used by many fast growing organizations to gauge the overall contribution of employees, and not just productivity. It seeks to rate employee performance on different characteristics which are instrumental for growth and success.
Under GRS, you may rate your employees on factors like punctuality, ownership, dependability, quality of work, collaborative potential, creativity, etc. These characteristics are essentially the guiding factors which enable employees to push their boundaries and achieve their goals.
b) Behaviorally Anchored Rating Scales
The next rating scale focuses primarily on employee behaviors. This tool generally has two components to it.
The first is a performance dimension that organizations seek to review or measure. Attached to it are a few anchors which are graded on a 5 point scale, the cumulative result of which indicates the level of performance.
For instance, you might take the behavioral dimension as ‘accountability’. Here, the anchors would be, ‘takes responsibility for actions’, ‘does not indulge in blame games’, etc. The rating on these anchors can help create a final rating for accountability for an employee.
2. Self-evaluation
The next type of performance review that many organizations rely on is self-evaluation. This generally entails giving your team members an opportunity to reflect on their own performance and share key insights. It will help you get a chance to hear their side of the story about their performance, actions, impact, etc.
Self-evaluation will enable you to understand how the employees perceive their contribution to the organization and whether or not it aligns with your view. Furthermore, engaging in self-evaluation will give your employees to identify areas of improvement on their own which later you can collectively streamline and work towards.
Self-evaluation is critical for managing employee performance as it encourages employees to gauge a true picture of their performance.
3. Rankings
Rankings primarily involve creating a stack of employees based on their performance in comparison to others. One of the top reasons organizations leverage rankings as a performance review tool is to get a comparative picture of everyone in the organization for decisions like appraisals, promotion, etc.
4. 360 degree review
A 360 degree review is very important for managing employee performance, especially for fast growing organizations. Today, employees no longer only work with their managers. In the hyperconnected and collaborative workplace, employees work with almost everyone in the organization. Therefore, a review only from the manager will paint an incomplete picture.
Thus, you need to ensure that employees in your organization undergo a 360 degree review where feedback is collected from everyone they have worked with. This will help you manage their performance on different attributes and factors, and not simply on achievement of target.
You may want to collect feedback from peers to understand their teamwork and collaboration potential. Feedback from subordinates can help you gauge mentorship and leadership abilities, etc.
5. Management by Objectives (MBO)
Finally, the last performance review type for the discussion here is Management by Objectives. This majorly revolves around the goals and objectives set in the beginning of the year, which become the base for review.
Here, performance is measured against the achievement of the set goals. Setting OKRs can really help in performance reviews with MBOs. It can help you gauge performance based on achievement of key results and collectively the objective.
To learn how SuperBeings can help you set and align the right goals, click here or book a free demo.
Pitfalls to avoid
Now that you have a clear understanding about the performance review components or ways you can follow, it is important to also be cognizant of the pitfalls you should avoid.
1. Biases
To begin with, performance reviews are vulnerable to human biases. There are several factors at play here.
First, if your line managers are not trained to evaluate performance and you are following a rating review format, there is likely to be similar ratings for all, high, low or average. This lack of differentiation will make managing employee performance difficult as you will have an incomplete understanding of true performance.
Second, reviews are vulnerable to the horns and halo effect. In the former, a particular negative aspect of the employee tends to cloud all other performance indicators and the employee gets an overall lower ranking than they deserve. In the latter, the opposite happens. A particular positive aspect of performance guides the entire review leading to a better rating than deserved.
Third, the notion of personal bias and favoritism comes in. As humans, we are all vulnerable to having favorites. However, when this manifests itself in performance evaluation, a few favorites of the manager might receive better reviews as personal feelings dominate this objective process.
This is where using an employee performance review software becomes crucial. Check out this quick 5 minute guide to understand what kind of performance review software your company needs.
2. Limited data
The second major pitfall that fast growing organizations are vulnerable to is limited data for reviews. Due to limited bandwidth, you may be unable to gather all important information about employee performance from the employee themselves as well as all others who have worked with them.
This limited data might not contain components instrumental to gauging overall performance effectiveness. Invariably, when you don’t have a complete picture of the performance, managing the same will be difficult.
This is why most organizations use AI based tools to gather and analyze employee performance data. Here’s how you can choose one for yourself too.
3. Recency effect
Finally, the last performance review pitfall that you should avoid is the recency effect. In the absence of a continuous approach, organizations fall prey to evaluating only the latest performance and do not get a comprehensive picture of the entire year.
The major focus is on the latest events, which may not reflect the true performance caliber of the employee, hence compromising the effectiveness of your managing employee performance journey. Using employee performance snapshots throughout the year can be a great way to eliminate recency bias.
Performance Improvement
The third and the final component of managing employee performance revolves around performance improvement. Once you have reviewed the performance of your employees, your focus and energy should move towards improving the same to facilitate individual, team and organizational development.
Performance improvement is not just about identifying weaknesses and areas of development, but involves actually creating an action plan at all levels to bridge performance gaps. That’s what performance management is all about. We have identified a few practices that businesses can leverage to facilitate performance improvement for their employees.
1. Reward high performance
You should focus on creating a culture of recognition and appreciation. Here rewarding high and good performance will be instrumental. Even if you have limited budgets, a paid day off, a voucher or social recognition are ways to reward your employees. There are two ways rewarding performance begets performance improvement.
First, it will motivate top performers to keep up the good work when they believe their commitment is being valued and appreciated.
Second, it will incentivize others to also go the extra mile to be a recipient of the rewards and recognition.
2. Create performance improvement plans
Creating performance improvement plans is extremely important for managing employee performance. This generally involves identifying key development areas and aligning them with learning opportunities to ensure performance improvement. However, a crucial element here is conducting meaningful 1:1 conversations.
Check out this list of top 50 1:1 meeting questions to prepare for your next conversation.
Managers should ensure that they have a real time insight into every aspect of employee performance to preempt any risks or challenges. Based on this data, they must focus on having streamlined and impactful conversations with their employees to address any gaps that exist.
This will in a way be a parallel approach to coaching employees, without making any big investments. If you feel your managers need support for the same, you might want to explore platforms that can help you provide AI driven guided conversation template recommendations to help with the right statements and resources.
It would be useful to create performance improvement plans for each employee and document it effectively. In addition to basic details about the employee, capturing performance goals, reviews and feedback, resources, etc. can be instrumental in gauging trends and performance improvement data over time.
3. Provide resources and support
Based on the performance improvement plan, you need to ensure that your employees are able to access the required resources and get adequate support for improving performance. This is very important for managing employee performance.
It entails identifying the training required or investing in other resources that employees consider important for the learning curves. In addition to technical training, investing in mentoring and coaching programs, providing opportunities to innovate and grow are also important.
4. Build manager competencies
While providing resources and support for employee development is important, it is equally critical to ensure your managers are competent to manage employee performance. This involves equipping them with key leadership competencies and resources that can help them lead better.
You can rely on employee management tools to understand what key competencies are most sought after by the employees for performance improvement and encourage your managers to build the same. Leveraging heatmaps provided by third party platforms on the top competencies can be a good starting point.
Simultaneously, you need to ensure that your managers know how to handle 1:1 conversations and eliminate any biases mentioned above to ensure fair reviews and performance management.
Getting Ready for Managing Employee Performance
Managing employee performance can be an overwhelming process especially for fast growing organizations that might have limited capital and human resources. Here, you can collaborate with a platform like SuperBeings to manage the performance of your growing team effectively. Following are some quick points you can benefit from:
- Set OKRs in the most effective manner and give visibility to the whole organization
- Capture employee pulse with continuous pulse surveys to get real time insights on employee sentiments
- Gather 360 degree feedback on diverse aspects of employee performance to get a comprehensive picture
- Drive employee performance with effective 1:1 conversations based on AI driven guided templates
- Collect all essential data about your organization culture and performance with analytics to get real time heatmaps and recommendations
With SuperBeings, you can build a culture of continuous performance management and employee engagement. Book a demo for more details today!
