Performance management is a process, not a one-time event reflecting on the previous year’s past accomplishments or woes. Traditionally, performance management was known as annual performance appraisals, where employees meet with their manager to hear what went well or did not go well. Employees would look forward to this one-time event in hopes of a pay increase. Managers would dread it because they may have felt like it was an administrative burden. In recent years, performance management has evolved to a continuous feedback process consisting of ongoing two-way conversations between the manager and the employee. 

Performance management is defined as the ongoing communication and feedback between a manager and his or her employee regarding the employee’s job performance outcome to achieve organizational objectives. This process aims to ensure that defined activities and outputs meet an organization’s goals effectively and efficiently, manage performance, and align employees’ jobs with the organization’s strategic and operational goals. Many studies show a direct correlation between using performance management programs to achieve greater organizational success. 

Performance management is important for a variety of reasons:

  • It enhances collaboration and teamwork by connecting all employees toward a common goal. We can get so caught up in our daily routine that we forget about our purpose within our organization. Clearly defining organizational goals, departmental goals, and individual employee goals and how they are interrelated improves employee engagement because everyone understands how they directly contribute to the organization’s success. 
  • Employees feel valued and motivated to perform at their best, thus boosting morale and performance and reducing employee turnover. Happy employees are productive employees, and reward and recognition opportunities are motivational drivers. 
  • Increased communication and relationship development between managers and employees provide a regular opportunity to engage interactively so that both can give feedback. Having ongoing conversations about employee and organizational strengths and weaknesses allow for continuous improvement opportunities for both. Employees can express concern about training needs to develop and grow in his or her role, which also allows for company growth opportunities in building new skill sets. 
  • Performance management offers efficient problem solving by engaging in real-time communication between managers and employees. It allows for immediate corrective action if needed, and positive change can be implemented much sooner. 
  • It enables continuous job growth and succession planning opportunities to support workforce planning. Establishing a consistent performance management process allows an organization to consistently ensure the right employee is selected for a promotion. Additionally, having regular conversations with employees can identify workload increases or decreases to staff to align with organizational needs adequately.  

Overall, a successful, engaging performance management program is a win-win for all employees and organizations. Engaging in continuous conversations helps build successful and trusting relationships between leadership and employees to help each other drive results. Developing a successful performance management program is essential for any organization to achieve success.