How does performance management serve a developmental purpose?

In some ways, performance appraisals and evaluations have just become something that we either look forward to or dread, usually once a year. They have long been accepted as something that is done in business, but many people have no idea why. The importance of performance management goes beyond evaluations, raises, and promotions. It has the propensity to make or break an organization.

Below are some of the reasons that ongoing performance management is so important to every organization.

1. It Provides a Look into the Future

By consistently monitoring and managing workplace performance, leaders can see potential future problems. Like with any type of issue, early detection is key. The earlier problems are confronted the less effect that they will likely have.

For instance, if the company notices that a certain employee is not a team player, they can either move that employee to a position that does not require teamwork, provide training to that employee revolving around teamwork, or let that employee go before it becomes a problem. By acting before the potential problem becomes an actual problem, the organization can prevent unnecessary trouble.

2. Helps Create Development and Training Strategies

As mentioned above, the earlier a problem is detected, the better. One of these problems could be that employees do not know how to perform certain processes correctly. If this continues, the organization might fall apart due to oversight. However, with performance management, this would probably be detected. The organization could then create training programs to change the issue into an opportunity for improvement.

3. Provides Clarity in the Organization

It is a common problem that many employees are unsure of what exactly their role entails, what is expected of them, and who they are to report to. Through performance management, the company can make all of this very clear. A lack of understanding often leads to a lack of productivity. Therefore, by providing clarity for employees, the result will often be increased productivity and confidence.

4. Provides the Opportunity for Exchanging Feedback

A lack of communication in a relationship is grounds for trouble, and this includes working relationships. Quite often, management speaks to employees about their performance, but employees do not very often get a chance to voice concerns or frustrations. Effective performance management provides an avenue through which both the employer and the employee exchange feedback. In addition to gaining insight, employees often feel much more valued when they can voice their thoughts.

5. Increases Employee Retention

Performance management also encourages organizations to reward and recognize their employees. Lack of recognition is a big reason some employees leave a job and look for another. They want to be appreciated for their hard work. In addition to the clarity, the ability to share feedback, and the additional training when needed, rewards and recognition can play an important role in employee retention.

6. Boosts Employee Engagement

Performance management, when it truly involves employees, will boost employee engagement. When there is a disconnect between management and employees, it is almost as though employees are just going through the motions of the day. Their position becomes merely a job as opposed to a rewarding career. However, performance management has the capability of engaging employees fully and making them feel invested in the company. This leads to job satisfaction and employee loyalty, all of which increase productivity.

It is imperative that you and the other leaders in your organization acknowledge the importance of performance management. By avoiding it, you are setting yourself up for disaster. Meet with your human resources department and other leaders to put a performance management plan in place. You might consider asking employees for feedback on what they feel should be addressed. Though it may take some time to put together, investing your resources into developing an effective performance management strategy will be well worth the effort.

Performance appraisal is the assessment aspect of performance management. And, critically, that assessment involves not only evaluation but specific feedback—both positive and constructive. Although performance appraisals are often thought of as an annual process that serves as the basis for a performance action (for example, a raise or—at the other extreme—being put on a “PIP” or performance improvement plan) observation and feedback can and should be an ongoing process. As HR software provider ClearCompany notes “‘Players and underperformers alike need timely, specific, and helpful feedback to reach their full potential. Positive feedback helps build confidence, while constructive criticism clarifies expectations and allows people to learn from their mistakes.” Author Daniel Pink captures the developmental reality in his observation that “There’s no way to get better at something you only hear about once a year.”

Perspective Point

Feedback doesn’t need to be a major production; daily check-ins, weekly planning meetings and monthly 1-on-1s are all ways to incorporate feedback in the usual flow of work. This is not only a management best practice, it’s what most employees want. OfficeVibe’s State of Employee Engagement survey found that 96% of employees said that receiving feedback regularly is a good thing. Even more significantly, the survey found 82% of employees appreciate receiving feedback, regardless of whether it’s positive or negative.

Formal performance appraisals also serve an administrative function; specifically, documenting employee performance relative to established standards. Although documentation is particularly critical to support employee disciplinary action—for example, to avoid or defend against a charge of discrimination or retaliation—it is also essential for development. To be effective, feedback needs to be actionable. Praise or constructive feedback that is non-specific doesn’t reinforce or clarify desired behavior. Specific, timely feedback is a habit that yields both performance and motivation benefits. Perspective point: recognition doesn’t need to be tied to a financial or other reward to be effective. OfficeVibe’s survey indicated that 82% of employees prefer praise to a gift.

Practice Question

There are four elements that come together to result in a preferred behavior (see Figure 1 for an illustration):

What is the developmental purpose of a performance management process?

What is a developmental purpose of performance management quizlet?

What is the developmental purpose of performance evaluation?

How does performance management link to performance development?