Benefits of a Performance Management System
A good performance management system works towards the improvement of the overall organizational performance by managing the performances of teams and individuals for ensuring the achievement of the overall organizational ambitions and goals. An effective performance management system can play a very crucial role in managing the performance in an organization by:
- Ensuring that the employees understand the importance of their contributions to the organizational goals and objectives.
- Ensuring each employee understands what is expected from them and equally ascertaining whether the employees possess the required skills and support for fulfilling such expectations.
- Ensuring proper aligning or linking of objectives and facilitating effective communication throughout the organization.
- Facilitating a cordial and a harmonious relationship between an individual employee and the line manager based on trust and empowerment.
Performance management practices can have a positive influence on the job satisfaction and employee loyalty by:
- Regularly providing open and transparent job feedbacks to the employees.
- Establishing a clear linkage between performance and compensation
- Providing ample learning and development opportunities by representing the employees in leadership development programmes, etc.
- Evaluating performance and distributing incentives and rewards on a fair and equated basis.
- Establishing clear performance objectives by facilitating an open communication and a joint dialogue.
- Recognizing and rewarding good performance in an organization.
- Providing maximum opportunities for career growth.
Importance of Effective Performance Management
- Set goals: Explain to your team what excellent performance is.
Most employees will Endeavour to do their very best in their work, however some employees need more encouragement and motivation. Therefore, role competencies and expectations need to be clearly delineated. If employees know what is expected of them, and what it is that constitutes excellent performance, then it becomes easier for managers and their reports to be on the same page. This does not happen by accident though; there must be a clear and concerted effort by management to articulate the company’s strategic direction and objectives.
- Develop accountable people: Engage your employees.
While the aforementioned goal setting step is very important, it is not enough in order to ensure your employees are happy, motivated and engaged. It is important for every company to understand their employee’s mind-set and level of engagement. Employee engagement can be measured in a number of ways; monthly or quarterly engagement surveys are a convenient and easy way to record engagement and happiness within the company.
Everyone knows happy people do more, and better work. But here’s the proof: A recent study by economists at the University of Warwick found that happiness resulted in a 12% increase in productivity, while unhappy workers proved 10% less productive. The research team admonished; “We find that human happiness has large and positive causal effects on productivity. Positive emotions appear to invigorate human beings”. Google too provided evidence in support of the research with their efforts to boost employee support resulting in a 37% spike in employee satisfaction, and Google’s $ productivity per employee rates are through the roof with the average Google employee generating $1.2 million in revenue each year.
- Managers who lead: Develop leadership and coaching skills.
Why have managers at all? Why not just have a horizontal organisational structure? I’ll tell you why; managers who lead, coach and encourage their teams get more out of their teams. Every company should take time to develop their managers. A good manager will hold regular coaching and mentoring sessions with the members of their team in order to impart useful skills to their employees.
- Organisational transparency: Encourage performance improvement.
The goal of performance management should be to boost productivity and engagement within a company. Everything about the performance management procedure should then reflect this goal. Thus, the organization should be as transparent about its processes as possible. Nobody wants a ‘bureaucratic nightmare’.
The performance management should be simple, straightforward, and should add value to each party involved in the performance management process. If your performance management is sub-par; it just becomes an inefficient and expensive exercise in time wasting. If your current performance management system is not working how you would like it to, why not read up on the different methods of performance management.
- Give credit where it’s due: Incentivise accomplishment.
“You must give credit where credit is due”: sure, it’s an old saying; but it has particular resonance within the world of work today. “The number-one reason most Americans leave their jobs is that they don’t feel appreciated. In fact, 65% of people surveyed said they got no recognition for good work last year”.
This lack of recognition is hardly surprising as research indicates that only 14% of employers provide managers with the necessary tools to provide adequate recognition and guidance. This point in itself is noteworthy as the high degree of employee mobility indicates that there is no direct relationship between achievement and financial compensation. Therefore, while financial compensation is certainly an important factor in any benefits package, employee recognition has proven time and time again to be a much better predictor of engagement and employee retention.