How To Develop The Perfect Performance Management System

Performance management is a buzz word that is commonly thrown around businesses, but few organizations understand what it really means, and even fewer execute it well. Performance management requires a true commitment to unlocking the potential of each of your employees and taking the time to understand what motivates them on an individual level. A company that utilizes performance management to its full potential understands that its employees are its most valuable asset and treats them with the proper respect while ensuring that work gets done on or ahead of schedule.

Performance management is, however, a two-way street. While it’s important to hold employees accountable, employees must also understand what they’re accountable for. Businesses, on the other hand, must understand that not all employees and positions are created equal. The metrics that would measure a secretary’s performance wouldn’t necessarily be the same as the CEO’s, which wouldn’t be the same as the janitor’s. The perfect performance management system takes all of this information into account and considers both productivity and the people behind that production.

Setting Parameters

You can create the best performance management system in the world, but if managers don’t buy into it, the system is a failure. It’s imperative to get management on board right away and the best way to do that is to let them help create the guidelines for your system. Since nobody knows what employees do better than their managers, they should provide the best metrics to measure performance in that position. This accomplishes two goals – it ensures total buy-in from managers and it creates a system that actually measures employees as opposed to guessing what makes them valuable.

The Time Bind

Communicating with employees about their performance can be a catch-22 at times. Give them infrequent feedback, and they don’t know how they’re doing or where they can improve. Talk to them too much, though, and they don’t have the necessary time to perform to their potential. Many companies have annual performance reviews, which may be too infrequent depending on the size of your company. If you want regular reviews without wasting a ton of time, consider taking a page out of your school days – give numerical grades every quarter and encourage employees to schedule a meeting if there’s a problem. Save the big formal conversation for the end of the year. And don’t forget to encourage regular communication between employees and their managers.

Consistency and Transparency

Sticking with the school theme, you’ll recall that what constituted an A for one teacher wasn’t what got you an A in another class. Just the same, managers have different ideas as to how to score their employees. It’s best to eliminate this problem by clearly defining what level of performance corresponds to each numerical grade. Along with numerical feedback should be an explanation of how the manager arrived at that grade. This gives employees the assurance that they’re being graded fairly; it also makes managers aware of criteria they’ve overlooked and potential inconsistencies in their grading.

Use the Data

Many companies give their employees a half-hearted evaluation every year, then proceed to do nothing with the data they’ve compiled. There are limitless uses for the data you gather through evaluations, no matter how often they’re done. If you’re grading on the proper metrics, these uses should jump out at you, but that’s not always the case. Think about what you’d most like to know about your company, then find a way to measure it. For example, if you want to promote from within, you can look at how your employees rate in terms of ambition, potential and desire to improve. If you desire technical proficiency, check your evaluations to make sure people feel they’re getting the proper training and have the necessary tools. Get creative, and don’t be afraid to change your measurement system if you don’t have what you’re looking for.

The perfect performance measurement system is one that combines your mission statement and core competencies with a genuine interest in getting the most out of your employees. It’s undoubtedly an investment of time and money, but it’s one that will pay for itself over time. You’ll be able to maximize the abilities of the employees you currently have and attract the best employees from other companies. As morale and productivity increase, your company will reach new heights and you’ll achieve your goals sooner rather than later.