What Does Good Performance Management Look Like? And What Can It Do?

Performance management is often confused with annual performance reviews and is sometimes treated like a one-and-done process. But the two are very different. Unlike the traditional once-a-year performance review, performance management should be an ongoing process. While a lot has changed in the last few years to bring performance management into the spotlight as a corporate priority, it still has a long way to go.

In my experience working with enterprises to build their people strategies, from talent attraction to talent development, we all need to make an effort to build performance management around three core areas:

When we talk about “performance management”, we mean the process of setting expectations, assessing progress, and providing ongoing coaching and feedback to employees. Its most important feature is that it’s continuous. Whether that’s weekly or monthly one-to-one meetings between the employee and line manager, it should be a conversation based on:

Performance management is both beneficial to the organization, and the individual. It shows employees that they are valued, long-term investments who can contribute in meaningful ways to the company.

Without it, employees may lack direction, feel disconnected from broader company goals, and become disengaged from a future with their employer — a recipe for low productivity and high turnover.

At the organizational level, it can help with informed decision making. By regularly evaluating employee performance, managers can:

But it’s not just about why we need performance management, what’s important is that we need good performance management.

According to Gallup, only 20% of employees currently agree that their performance is managed in a way that motivates them to do outstanding work. The same study also revealed that employees whose managers involve them in goal setting are 3.6 times more likely than other employees to be engaged.

When done right, it offers a wide range of benefits to both employees and organizations, including:

Having worked in Human Resources and Recruitment Process Outsourcing for over 20 years, I’ve built performance management processes from the ground up for a range of businesses and industries. I’ve seen how the technology has changed, how attitudes have changed, and how an employee-centric approach can help businesses succeed.

These are my best-practice tips to create a process that will benefit both your employees and the business:

The first step in the performance management process is to adopt the right systems to track and monitor goals, updates, and performance. Good ones can help keep a log of the ongoing adjustments made, help employees stay organized, and keep both employees and managers accountable with real-time performance metrics.

Goal setting is an important step in the process. It needs to be founded on clear communication of company goals, departmental goals, and team goals. Then the manager and employee can work out how they can individually contribute to them.

There should be an open discussion about the employees’ individual goals. The areas they want to develop, skills or technologies they’d like to explore. Managers need to understand the employee’s long-term career aspirations and what they want to achieve in their role. Then they can then agree appropriate SMART (Specific, Measurable, Achievable, Relevant, Time-bound) goals.

According to Harvard Business School, 72% of employees believe their performance would improve with more feedback from managers, but only 5% believe they get the feedback they need.

It can be hard to give feedback, especially criticism. But managers need to provide continuous feedback, recognizing achievements and addressing issues as they arise. This allows employees to know what they’re doing right and where they need to adapt quickly to keep their goals, projects, and development on track.

Performance management should be a collaborative process. Employees should have the opportunity to discuss their challenges, seek guidance, and share their career aspirations with their managers.

Creating an open dialogue helps build trust and ensures that performance management is not just a top-down process. Managers can even improve their leadership skills throughout the process!

Recognizing achievements—whether through public acknowledgment, bonuses, or promotions—reinforces the importance of good performance. It also reinforces the overall value of your performance evaluation and people strategy, evidencing your commitment to your employees’ achievements.

Additionally, employees who receive regular recognition for their progress are more likely to recommend their employer, produce great work, and stay with a company for longer.

A good performance management system isn’t just about improving individual performance—it’s about creating a culture of continuous improvement that drives long-term success for both parties.

For HR teams looking to implement or improve their performance management process, seeking advice from specialists will help. Book a call with Pierpoint’s talent advisory experts today.