What are the Benefits of Effective Performance Management?

The pandemic has severely disrupted face-to-face interaction in the office. As a result, more companies are embracing flexible work arrangements and implementing remote and hybrid work models.

Because of the recent changes to the current landscape, it’s more important than ever to emphasize the benefits of effective performance management. Some of the many advantages of such a system are boosting employee productivity and decreasing employee turnover.

We wanted to shed some light on how performance management could impact you and your organization, starting with the why.

Performance management is a crucial component of employee satisfaction. In basic terms, it opens up communication channels between employees and their managers.

Maintaining a work culture conducive to open dialogue fosters a healthier, more collaborative relationship between both parties. As a result, employees feel appreciated and that they contribute to the company’s success.

Performance management also provides an avenue for employee evaluation, a major concern in some workplaces. Consider how 90 percent of employees believe that annual performance reviews are inaccurate based on data from the Society for Human Resource Management. With a good performance management system in place, senior leaders can get a more accurate picture of how their employees are performing.

Now that we know what performance management is, let’s dive deeper into how they’re so important for every workplace.

Fostering free-flowing dialogue can help leaders and managers share what the company’s overarching goals and objectives are while aligning individual goals to company-wide strategies. Whether it’s about increasing market share or reducing the call-back time of customer inquiries, employees can get a firmer grasp of where the company is headed. And they can take more proactive steps in their current role to help the company get there.

Furthermore, it allows companies to track the attainment of organizational business goals from the bottom up, while allowing for support or focus in specific areas that might need it.

Effective performance management lets managers measure employee performance based on feedback and metrics. Carrying out the process means it’s easier to identify gaps and areas for improvement — but it also makes it easier to single out people who display individual talents.

An effective performance management system allows employees not only to track and measure their KPIs: it lets them find opportunities for other or more senior roles. After all, monitoring employee performance can encourage high-performing employees to work harder, and their managers to help groom them for professional growth. But for a performance management system to work, it needs to go full circle with a learning and development program (ideally, a learning management system) to maximize their future career opportunities.

Investing in top performers and ensuring they receive the proper training will bear fruit down the line. Honing these talents further fosters individual, team, and overall company growth. As we like to say, companies are only as good as the people who run them, so making your people better directly results in making your company better.

The flipside also applies to this situation. For example, if an employee is performing poorly, it’ll spotlight their needs. These cases allow managers to encourage their team members to grow by pointing out areas of improvement and pushing them to do better. In turn, this creates a healthy dialogue between managers and employees since the feedback is based on observable data. Just keep in mind that employee assessments should always be delivered constructively, and aim to improve the workforce towards the company’s goals. They shouldn’t be perceived as a bar to reach, “or else”.

Consider using Performance+ for comment coaching. This tool allows the person doing the assessment to use constructive, meaningful words or prompts that leave little room for misinterpretation. On top of that, it includes a library of courses that address the most common skills that can be assigned automatically and at scale, so employees can see how their appraisals are a direct path towards their growth.

Effective performance management shows that leaders take their company’s and employee’s needs seriously. Employees who feel appreciated at work tend to work hard and take ownership of their tasks, after all.

It also sends a clear message: the company cares about employee welfare and isn’t driven solely by financial targets. And there’s nothing better for an employee than working for an organization that truly cares for its people.

Performance management goes a long way in retaining employees. Especially in today’s working landscape, clarity of one’s works expectations goes a long way. Having shared goals brings teams together while allowing individuals to feel that they are a part of something greater.

Without a good performance management system in place, companies risk losing top talent. The ongoing mass resignation has made it clearer that organizations need to focus their efforts and prioritize employee engagement as a part of their employee experience.

The 3 main reasons for unwanted resignations from employees are a lack of clarity on work expectations, a lack of career growth, and disengagement. To add to that, 89% of the employees who don’t get regularized cite a lack of soft skills as one of their reasons.

A good performance management will address these issues by creating clarity of their objectives. Moreover, it’ll help employees see their ability to grow within the company. And the combination of both, along with the right tools supporting this process, will directly impact your company’s retention.

One of the factors that drive resignations is chronic understaffing. A lack of manpower leads to heavier workloads and more overtime. And if the pandemic is proof of anything, it’s that organizations should start taking burnout more seriously.

Using a performance management system helps ensure that the work is properly distributed among employees, and everyone feels empowered to work on projects. Staying on top of the situation makes it easier for team leaders to divide the tasks evenly until they can onboard a new team member.

Moreover, learning management brings performance management full circle. In fact, when you use Performance+, you can already assign learning courses based on the needs highlighted by your performance evaluations.

Performance management doesn’t just stop by assessing how well employees can manage their workload. It also encompasses how managers receive feedback from their team members. And whether positive or negative, the feedback provides an opportunity for growth and improvement through continuous iteration of team dynamics.

High employee turnover rates could originate from an unhealthy workplace culture or lack of oversight of senior leadership. That’s why a continuous feedback loop is essential. Performance+ can help teams get off on the right foot and obtain the data-driven insights they need, providing team feedback and meaningful appraisals more easily without burdening management. To measure the effectiveness of engagement and workplace culture, among others, Sprout also offers Pulse, an engagement monitoring tool to help with the feedback loop.

The benefits of an effective performance management system are relevant and more important than ever, as more teams work from home and prepare for a hybrid future. Making it work is built on the core pillars of support, continuous feedback, and collaboration.

Tracking and measuring employee performance can help you understand how everyone in your organization is performing. With Sprout’s holistic, all-in-one people platform, you can access performance management data in one place and focus on engaging your workforce.

Performance+ comes fully integrated with a learning management system packed with over 500 courses to get your company started.

To learn how Sprout can help your company grow, as we have helped many others, check out our comprehensive product suite, or visit our blog for more related reading.