Performance Management: It’s a Lot More Than Annual Appraisals

Peopleclick Authoria (201_). Performance Management: It’s a Lot More Than Annual Appraisals, 5p.

“I want to know what my people can do, not just what their ‘performance score’ is.”
– CEO, major telecommunications company

Annual performance appraisals have a place, to be sure. Without a consistent and measurable way to manage performance, organizations cannot fairly promote the right people, tie pay to performance or incent people to perform in a constructive way.

Focusing only on PA is missing out on a major opportunity to develop, assess, motivate and promote talent.

While there are tools to automate performance reviews and ease the administrative burden, efficiency by itself is not the end game. Making the rating process more efficient is helpful, but by itself has little impact on the business. Successful performance management goes beyond automation and efficient appraisals to employee engagement and retention.

True performance management is not the typical once-yearly “obligation,” to be completed with as little hassleas possible, but a constant and daily driver of business value.

Performance management

  • At a basic level, it means understanding your people, and knowing who can step up to the plate when a business need arises.
  • It comes down to knowing the skills, competencies and aspirations of your employees; developing and retaining them; and aligning their efforts with the needs of the organization – all year long.

While human resources organizations should help define and steward the process, performance management is not an HR issue.

The most effective model is one in which HR and line managers partner in designing and implementing performance management processes and goals, while business managers take ownership for successfully executing the processes – and driving performance excellence.

Beyond Performance Appraisals

The appraisal must be part of the process, but it is not the entire process.

To deliver business value, appraisals must be linked to other performance management activities, including employee development plans and formal coaching programs to nurture and cultivate talent.

Performance management requires an alignment between employee goals and corporate goals.

According to a 2008 study by Bersin & Associates, this systematic approach to performance management is rare :

  • Formal coaching programs 25%
  • Consistent development plans 35%
  • Training tied to development goals 39%
  • Aligning individual employee goals with corporate-level goals 42%
  • Setting employee goals 57%
  • Annual performance appraisals 80%

What to Look For in a Performance Management Solution

They should streamline administrative processes to manage performance assessments more efficiently and more securely.

Seven core requirements

  1. Provide management visibility into the entire talent pool across the enterprise
  2. Build the foundation for succession planning and career development
  3. Engage and motivate employees, and understand their aspirations
  4. Share employee skills and interests that go beyond the appraisal review
  5. Make talent management an ongoing process, not an annual obligation
  6. Drive decisions on compensation
  7. Inform recruiting efforts by identifying the characteristics of high performers

Required capabilities

  • Talent profiles: make all relevant information on employees – performance ratings, competencies, skills, compensation, etc. – readily accessible and searchable for managers and HR professionals. In addition to resumes and ratings, talent profiles also capture rich, unstructured information to paint a more complete picture of the employee’s skills, experience, and aspirations. Information in the talent profile is derived from the HRIS, managers, and, most importantly, from the employees themselves.
  • Manager and employee journals: Automated journaling provides an ongoing process for capturing an employee’s achievements, goals, and areas for improvement throughout the year. Satisfactory completion of an assigned task, difficulty with a particular assignment or above-and-beyond performance should be captured in quick journal entries to assist in managing employees day-to-day, and referred to later when preparing quarterly or annual assessments.
  • Competencies and job profiles: Performance management systems should offer an automated way to match employee competencies and job profiles. Managers and HR professionals should see all information related to each job within the organization, including up-to-date job descriptions, competencies required for success and the pipeline of candidates ready to move into a job.
  • Analytics: Managers and HR professionals should be able to generate reports on key performance metrics to gain critical insight into business and employee trends. For example, they should be able to identify which high performers are flight risks, or whether compensation has been allocated appropriately to reward performance.
  • Easy interface: To ensure its consistent use, the system design must be easy to use for employees and managers and accessible anywhere. Dashboards and dynamic, actionable organizational charts should provide easy access to all relevant information about employees, candidates and jobs.
  • Links to other talent-management functions: Performance management must be tied to talent acquisition, development and succession planning, and compensation.


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