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Performance Management — Why It’s Important to Rethink Your Strategy

Many companies either fail to choose the right software or don't implement it correctly...

Pavithra Dennis
Engineer, digital marketer, and technical writer
March 9, 2022
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Performance management, if done effectively, can go a long way in helping employees and employers meet their strategic objectives. It's also an excellent way for businesses to identify potential problems early on and make adjustments to ensure smooth sailing.

Today, businesses that have pulled ahead of their competitors and made a mark in their respective industries attribute a significant part of their success to getting performance management right. From Silicon Valley to New York, over one-third of companies are ditching the traditional appraisal/annual performance review process, replacing it with frequent and informal check-ins. Adobe, GE, Dell, PwC, Microsoft, and IBM are some of the early adopters of this approach.

But why? 

In an ideal world, a company creates a range of metrics and targets, from its top-level strategic goals down to the daily activities of its workforce. Managers and Team Leads use best performance management systems (PMS) to monitor these targets and engage with their respective teams regularly to discuss progress and roadblocks. Good performance is rewarded, while underperformance triggers conversations to address the problem.

However, in many organizations, this system is either slow, shaky, or simply broken. The result? They're likely not operating as efficiently as they could.

So what's the challenge? 

A sound PMS has the ability to engage team members, boost productivity, and help businesses stay ahead of the curve. However, many companies either fail to choose the right software or don't implement it in a way that has the most impact.

Some common mistakes to avoid include:

1. Poor integration:

If your employees have to sign into a whole new system (apart from the handful they already use) to update their KPIs and progress, they're probably not going to. 

When buying performance management software, always look for one that can be integrated with email, Slack, Zoom, and all the other tools your employees use daily. 

This cuts down on the effort needed to use these solutions, which, in turn, will drastically increase your chances of high engagement. 

2. Too much too soon: 

Very few organizations can go from 0 to 100 in the span of a few weeks. If your company hasn't implemented a performance management system before, expecting your employees to master it from the get-go isn't realistic. 

Instead, execute a phased roll-out over the course of two to three months. Start by picking a core module of the solution you're buying, that overlaps with what you're already doing. For instance, if you do 1:1s, use this software to better organize and facilitate those interactions. 

Once your employees get comfortable with it, you can roll out the next module.

3. Tracking the wrong metrics:

Sometimes, it isn't the performance management tool that's ineffective; it's the wrong metrics that are being tracked. 

The right set of metrics for any business depends on a host of factors, ranging from the industry, size of the organization, location, the scope of its activities, growth characteristics, etc. 

One effective way to ensure that you're tracking the metrics with the most impact is to encourage your employees to set their own targets. Doing this allows them to have a greater sense of ownership, increases engagement, and boosts their commitment to achieving them. At the same time, it's also essential to encourage them to be thoughtful about the objectives they're setting. 

4. Too much focus on accountability

One of the reasons why performance management systems fail is because sometimes, businesses view it as a tool to help them determine employee compensation and nothing more. 

Rather than only tying compensation to an individual's OKRs, focus on the big picture. Are employees learning enough? If a team isn't able to accomplish their goals repeatedly, is there something you're not seeing? How can you use the PMS to help individuals improve their performance and develop skills for future roles? These are far more important questions that need to be addressed. 

At the end of the day, it's important to remember that a meaningful forced change to people’s behavior will not result in success, but a measured one will.

Read Also:

OKR vs. KPI : How They Differ and Interact

Continuous Performance Management in 2021 and Beyond

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Pavithra Dennis

Pavithra is a Telecommunications Engineer with 6-plus years of experience in marketing and content creation. She has written long and short-form content for various B2B and B2C brands in the tech, lifestyle, and healthcare spaces. When she's not working, you can find her lost in an enticing thriller book, practicing her Kathak dance moves, or whipping up a storm in the kitchen.

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