Performance Management: A Complete Guide

This chapter provides a solid foundation on performance management. Organizations often approach performance management without first having a firm grasp on what it entails. After learning about performance management principles and recent trends in this chapter, you’ll be better equipped to handle subsequent chapters that dive deeper into the subject.

4 FAQs about performance management

1. What is performance management?

“At its roots, performance management is simply a process of evaluating employee performance,” says Mark Kluger, founding partner at the management-side employment law firm Kluger Healey.

When an organization implements and executes performance management correctly, it’s primarily an educational tool to help improve employees’ work habits, train them to better contribute to organizational goals, and more consistently deliver on managerial expectations.

From a legal perspective, Kluger adds that performance management can provide a less burdensome exit strategy or “termination path” for employees who aren’t contributing to the organization as expected. This measure is critical for post-termination litigation.

“If an employee brings a suit against the company, I look at what efforts were made to help the employee improve or conform to expectations before letting them go,” Kluger explains. “The findings can assist in gauging whether termination was appropriate and valid. This is key because, in court, the jury will be judging the fairness of the termination.”

What will the jury consider? Kluger shares a few key questions they’ll want to know the answers to:

• Did the organization properly communicate expectations to the employee?
• Did the organization properly train the employee?
• Did the organization give the employee an opportunity to improve?

“Having a clear paper trail that answers these and other questions can lighten the burden of proof for a fair termination,” says Kluger.

2. How does performance management differ from a performance appraisal?

The key difference between performance management and a performance appraisal is the duration: The former is a process, while the latter is a one-off event. Organizations typically perform appraisals annually, typically at the end of the year around the holidays.

“Notably, this traditional approach to the appraisal is problematic,” Kluger explains. “You get a skewed view of performance because most managers only think about recent employee behavior and accomplishments — so the assessment doesn’t reflect all 12 months. Also, appraisals alone don’t allow managers to provide adequate, timely feedback for employees to improve in a meaningful way.”

That’s where performance management — an ongoing series of assessments and feedback on a smaller scale — comes in. “Performance management focuses on more frequent, less formal check-ins from managers so employees are consistently kept on course to meet management expectations,” says Kluger.

3. What are the key performance management principles?

Kluger notes several principles leaders should keep in mind regarding performance management:

• Education. “Think of performance management as an education process,” says Kluger. The goal is to help employees reach their potential within the company through education and training. In turn, they can better contribute to broader organizational goals.
• Communication. It’s essential to keep the lines of communication open between managers and employees. Equally important is for managers to clearly communicate the education and skills employees need to succeed, along with management expectations. “Managers often assume employees know what’s expected of them, and that’s simply not the case. Err on the side of overcommunication,” Kluger explains.
• Consistency. “Performance management only works when managers fully understand and consistently follow the process,” says Kluger. This means providing direct feedback to employees regularly, following up on whether employees are meeting expectations, and continually ensuring alignment with individual and organizational goals.
• Documentation. Keeping a written record of employee performance is also par for the course. “Not only does this provide reference for formal appraisals but it also gives credence to employment counters for unfair termination claims,” Kluger explains.

4. What are some recent performance management trends?

“Millennials and members of Generation Z have pushed performance management to be a more feedback-driven process,” says Kluger. Whereas performance management once had a more appraisal-focused approach in being infrequent and formal, it now focuses on ongoing, regular assessment and input. “Younger generations demanded timely feedback,” Kluger says, “and smart companies realized the positive impact of providing it.”

As with most business functions today, the use of data has become increasingly more prevalent in performance management. The type of data a company uses often depends on the employee role being assessed.

For example, total sales and closing rates are typical data points for assessing the performance of salespeople. Conversely, organizations can use more general data points, such as attendance, across a variety of roles.

“Data can be a useful objective measure of performance; however, be careful with data around soft skills like communication,” Kluger warns. “It can be subjective to determine whether someone is communicating effectively.”

“Self-evaluation has become popular in many organizations,” says Kluger. Managers allow employees to evaluate their performance, then review it before an appraisal. This helps connect employees to the process, but it can also present a challenge.

“If a self-evaluation and the manager’s evaluation are significantly different, it may create a rift and make it difficult to get the employee on board with expected performance. But if managers are consistently communicating and providing feedback, it’s unlikely this situation will occur,” Kluger says.

Now that you understand what performance management is, let’s move on to why it’s so important.

Performance management isn’t something you can implement overnight — nor will you see the impact immediately. It takes an investment of time and energy with performance management from everyone in the organization. While this may make the idea of moving forward less palatable, you’ll find it much more achievable once you read the information in this chapter.

The importance of performance management

“The importance of performance management lies in the ability to help the organization meet its goals,” says Nanette Miner, Ed.D., a leadership development strategist and founder of The Training Doctor.

What Miner alludes to is a concept you’ll see throughout this guide: Strategic goals created at the executive level cascade down to departments, then to teams, and finally, to individual employees. At each level, the organization breaks down goals into smaller objectives that support the broader goal.

Employee objectives — while operating at a much smaller scale — push their higher-level counterparts toward completion. Since performance management focuses on helping employees reach their individual objectives, the natural byproduct is that the organization more readily reaches its goals.

Goal attainment alone is enough to make the practice worthwhile, but there are several other benefits of performance management. We walk through these below.

5 benefits of performance management

1. Increased employee engagement

Employee engagement has been a hot topic for years, and that’s because it’s a human resources factor with plenty of upsides. For one, engaged employees are happier at work. Beyond that, organizations with engaged employees report less absenteeism and a sizable 21 percent higher profitability.

“Performance management increases employee engagement by getting managers more involved in their employees’ progress toward set goals,” Miner explains. For example, consider a salesperson (Jacob) and his manager (Lisa). At Jacob’s last performance appraisal, Lisa discussed his performance and set a reasonable goal of $10,000 in sales per month for the next quarter.

At the end of the first month, Jacob only made $7,000 in sales. If Jacob and Lisa worked for an organization that didn’t practice performance management, Lisa might have checked in at the end of the first month after noticing Jacob didn’t hit his goal. This would be too late to put him on track for success in the next month.

However, they do prescribe to the performance management process, and Lisa was checking in with Jacob weekly to see what roadblocks were holding him back from reaching his sales goal. They identified ways he could overcome these roadblocks going forward. The result: By week two of the following month, Jacob was already well on track to surpass the $10,000 goal.

2. Increased employee productivity

Feedback is an important part of performance management. When managers provide feedback throughout the year — instead of only once or twice during formal appraisals — and employees can discuss their needs, employees feel like they have a voice and can make improvements. In turn, not only do they become better at their job, but they also tend to be more dedicated to their work. Ultimately, employees are more productive.

3. Less rework

Considering the preceding point, feedback also plays a role in mitigating rework, which can be costly in terms of time and labor costs. Instead of waiting for an employee to finish an important task and hoping they did it right, performance management encourages the manager to check in during a task and, if necessary, do some course correction with the employee to ensure the task is done right the first time.

4. Easier management

“When done correctly, performance management actually makes a manager’s job easier,” says Miner. This contrasts with some managers who say participating in the performance management process adds extra responsibilities to their workload.

Granted, performance management may technically add more to a manager’s plate; however, the payoff is not having to face delayed timelines and budget overruns stemming from rework (as noted in the preceding point) and needing to put out fewer metaphorical fires.

“Your employees know what’s expected of them because you’re checking in regularly,” Miner explains. “And if they aren’t meeting expectations, you have a basis for constructive conversation where you can easily address gaps and identify a more aligned path forward.”

5. Smoother disciplinary and dismissal proceedings

As noted in the previous chapter, performance management also serves as an evidence-producing process for any litigation that may arise after the termination of an employee. Still, even before reaching that point, the process helps managers identify employees who they may need to terminate because of an inability to perform as expected.

“Performance management can help you pinpoint employees who are consistently overperforming or underperforming,” Miner explains. “For the latter, a dismissal may be the right move if you’ve done all you can to help them improve.”

Up until now, we’ve noted how performance management is a process but haven’t walked through the steps. Don’t worry — we remedy this in the next chapter.

It’s important to understand the cyclical nature of performance management — it restarts every performance period. The exact length of the period differs between organizations, but many companies stick to a traditional yearlong period — aligning with either their fiscal year or a calendar year.

“The performance management cycle is also one that evolves as the company goes through changes and adjusts its strategic goals,” says Cecilia Vermeulen, a human resources consultant. “So it’s necessary to continually align employee objectives to keep up with that evolution — within reason.”

What are the phases of the performance management cycle? We walk through each one below.

5 phases of the performance management cycle

1. Planning

Organizations develop their strategic goals at the top, and they then cascade down the organizational hierarchy. After the executive team sets the goals, each department collaboratively develops its own objectives to support these goals. Managers then work with their teams and individual employees to set respective objectives that further support their higher-level counterparts.

So if one strategic goal is to be the top manufacturer of a certain product in the market within five years, each department needs to determine the part it plays in achieving that goal.

“For example, HR may need to bring in talent with knowledge and skills not currently within the organization,” Vermeulen explains. “IT may need to implement new solutions. Then, managers will work with their subordinates to set team and individual objectives accordingly.”

2. Monitoring

Once the organization sets objectives at lower levels, managers monitor employee performance throughout the year. They observe employees’ actions, behaviors, work output, decisions, etc., while checking in and providing feedback to ensure continued alignment with said objectives.

Irial O’Farrell, an executive coach and accredited master in change management and leadership at Evolution Consulting, says you should schedule brief, informal chats periodically to review objectives and make sure the employee is on track for success. “Discuss blocks that are preventing the employee from reaching their peak performance and identify ways they can remove those blocks.”

In addition to these chats, O’Farrell recommends providing feedback whenever relevant — and this feedback should be timely, constructive, and within the context of a specific situation.

“This ensures the employee continually stays on track to reach the objectives you’ve set. For example, say your employee just finished a presentation. Let them know shortly afterward what they did well and what they can improve on for next time,” says O’Farrell.

3. Training and development

At the individual level, employees should work with their managers to pursue personal training and development objectives that will not only help them progress within the company but also help them better contribute to the organization.

For example, O’Farrell notes that personal objectives may include gaining a new skill or learning how to use new software. This is sometimes called “deepening the bench,” a sports reference that alludes to the overall capabilities a team (or organization) can pull from to compete successfully against opponents. These objectives may not tie directly to a strategic goal, but they enable an employee to offer more value to the organization.

Vermeulen adds that it’s essential you provide employees with the necessary resources and support to meet their objectives.

“This could be a formalized training program delivered by in-house personnel, coaching from a senior member of the organization, online courses or webinars, and so on,” she says. “Whatever the medium or resource, just be sure employees have appropriate access and you follow up with them accordingly.”

4. Reviewing

Next up is the formal review, or performance appraisal, that most organizations perform once or twice per year.

O’Farrell says the frequency of appraisals may differ between industries. For example, the banking industry is more traditional and tends to move at a slower pace, so it typically sticks with the standard annual review. However, companies in faster-paced industries — such as technology and media — may opt for semiannual or even quarterly reviews.

“Regardless of the frequency, the performance appraisal should be an easy task if you’ve been monitoring and giving feedback effectively throughout the year,” O’Farrell explains. “Otherwise, it may be an uncomfortable conversation.”

O’Farrell says that if you neglect to frequently check in and provide needed feedback, don’t blame the employee during the appraisal. Instead of focusing on the employee not meeting objectives, discuss what led to the misalignment and introduce solutions for the employee to focus on during the next performance period.

“Also, consider what the employee did that contributed to their personal growth or the organization,” O’Farrell recommends.

5. Rewarding

To ensure you’re continually motivating employees to achieve their objectives, it’s important to have a reward component as part of the performance management cycle. “Naturally, the reward — whether monetary or non-monetary — should be linked to their performance throughout the period,” says Vermeulen.

Now that you understand the performance management cycle, let’s dig into how you can create one of your own.

While the performance management cycle provides a solid blueprint to follow, the actual process will look different for every organization. Elements like organizational hierarchy, company culture, workforce size, leadership approach, and supporting solutions all play a part in shaping an organization’s performance management process.

The last example — supporting software — is what we focus on in this chapter. Keep reading to see how you can develop your own performance management process with help from Jotform, an easy-to-use form builder.

How to create your own performance management process with Jotform

1. Planning

The process starts at the top with strategic goals that cascade down throughout various levels of the organization. To create those goals, executives have to come together to share ideas. The same type of collaborative goal setting occurs down the line with managers and their departments, teams, and employees.

At each of these idea-sharing junctures, you can use Jotform to collect and store ideas so you have a centralized location to refer back to them.

Try one of our planner templates available for Jotform Tables. You can use Tables to view templates in multiple formats: as a detailed list or spreadsheet, as a card, or as a calendar. The calendar view is particularly useful if you have due dates tied to your ideas and meeting action items.

2. Monitoring

Once goals are set at every level, you need to monitor them throughout the performance period. This means keeping tabs on their actions and overall performance throughout the year.

Jotform comes in handy here as well. For example, you can use our employee task list template to create, assign, and monitor tasks for teams and individuals.

Say you assigned one of your employees an important task that will take several weeks to complete. You can easily update the task’s progress as you check in with the employee — from “waiting” to “in progress” to “complete.” Remember the calendar view if you’d prefer a more visual style.

Another option is to further segment tasks by phase, which would be beneficial for a lengthy task like the one assigned to the employee mentioned above. You can use the template to keep track of tasks for all your employees. Review it at any time to see everyone’s progress.

For additional granularity in your monitoring, you can try our employee timesheet template. Whether you want to use it regularly (such as for a weekly timesheet) or for specific projects, the template is flexible enough to suit your needs for different types of time tracking.

3. Training and development

Setting personal training and development objectives with employees can not only advance their career paths but also help them better contribute to the organization with more knowledge and enhanced skill sets.

Once you’ve set these objectives, you need to track them. Jotform has several templates tailored specifically for this purpose:

• The employee training information form has the manager’s perspective in mind. At a high level, it enables you to keep track of which training programs or modules each employee has completed. Simply customize the form to list the specific training programs you want to track for the employee. Feel free to update the multiple-choice options to allow greater flexibility in status reporting.
• The employee training checklist template is geared toward a trainer due to its more detailed approach to tracking training progress. Since it’s a table template, it affords you additional views and reporting features. Standard items include employee name, training status, evaluator name, several training placeholders, and evaluation date — all customizable elements.
• The training request approval process template allows you to build a workflow around training requests. For example, if employees want to take certain training courses, you can develop a workflow that makes it easy for them to request approval from appropriate parties.

4. Reviewing

Though you should monitor employee progress and provide feedback throughout the performance period, formal reviews are still important.

Jotform has a few templates you can use during the review phase:

• Employee evaluation forms provide several customizable options to use during appraisals. There’s even a self-evaluation template available for employees if you prescribe to that component of the performance management process.
• Feedback forms can capture feedback you give to employees during and after their performance review, as well as the feedback employees share about themselves and you as a manager.
• The performance appraisal approval process template enables you to automate the approval part of the performance review, which is convenient when you have more than one manager who needs to provide approval.

5. Rewarding

Jotform can also support the final phase of the performance management process. Once you determine the type of reward each employee will receive, you can keep track of the designated rewards in one of Jotform’s table templates.

Now that you have a foundation for developing your performance management process, let’s explore features you should look for in a performance management system.

Technology is vital to supporting a modern performance management process. The right tools can make the difference between a clunky, burdensome process and a seamless one that actually keeps performance on track.

But what’s the right solution for performance management? How do you know which software will effectively support your process? Below are several key features that can help you determine if a performance management system may be a good fit for your organization.

6 features your performance management system needs

1. Goal tracking

We’ve mentioned performance management goals multiple times throughout this guide — and for good reason. Goal setting lays the foundation for the performance management process. How else will you be able to recognize whether employees, teams, and departments are performing well?

Once you’ve set goals, you need to track them. Jotform can help you do both. Start with one of over 600 tracking forms. Simply pick a form and customize it to suit your needs. For example, you may customize a form for every level of your organization — strategic, department, team, and the individual employee.

2. Transparency

One of the keys to an effective performance management process is having a transparent view of all the aspects involved. This requires collecting, reviewing, and reporting information.

Whether logging feedback, assigning tasks, or tracking training, you can use Jotform Tables. Tables allows you to take a transparent approach to performance management. It not only enables you to collect information but also view the information in a variety of ways — spreadsheet, card, report, and calendar.

3. Automation

Performance management automation is a valuable component to seek in a solution. Every manager appreciates saving time, and automation is a key method of accomplishing that goal. For example, instead of manually performing simple tasks that include approvals, you can have the system automatically push information along to the next relevant party and ask for their input and sign-off.

Jotform enables performance management automation with its approval templates. You can easily build an approval flow that includes appropriate parties and documents so no one is left guessing about the next steps. Start with, for example, a template for performance appraisals and customize it to fit how your organization conducts such reviews.

4. Rating options

Rating systems are standard components of most performance management processes. Managers typically score or rate an employee as part of their performance appraisal. It’s important that the performance management system you choose provides the ability to assign ratings.

You can add performance management rating and scoring to any Jotform template. Simply select a form, such as the performance appraisal one noted above, and customize it to include the rating field.

5. Feedback options

Giving feedback to employees is important. They need to know how they’re doing and what to change if they aren’t meeting expectations. Logging feedback from an informal check-in or a formal appraisal is crucial to the long-term success of the employee and the performance management process.

Jotform’s feedback templates offer a perfect method of collecting and reporting feedback, regardless of how, when, or where you give it. You can always refer back to the centralized database of feedback you’ve collected.

6. Cloud-based platform

With a cloud-based performance management platform, you don’t have to worry about keeping your software up to date, dealing with data storage, or tying up IT personnel with setup and maintenance. Jotform is completely in the cloud, so choosing it as your performance management system will net you all of these benefits.

Meet your performance management guides

Cecilia Vermeulen

Cecilia Vermeulen is a human resources consultant. She has worked in the HR world for over 13 years and is a certified HR professional through the Institute of People Management. Vermeulen has worked at several large corporations and small and medium-sized companies.

Irial O’Farrell

Irial O’Farrell is an expert in performance management and development and author of SMART Objective Setting for Managers. She is endlessly curious about what unlocks organizational and individual performance. O’Farrell is also an experienced executive coach, accredited master in change management, and leadership consultant at Evolution Consulting.

Mark Kluger

Mark Kluger is an employment lawyer and the founding partner of the management-side employment law firm Kluger Healey. He regularly advises clients and conducts webinars on performance management.

Nanette Miner

Nanette Miner, Ed.D., is a leadership development strategist who helps small and mid-sized companies develop their future leaders from within. She founded her firm, The Training Doctor, over 30 years ago. Miner is also a zoo aficionado who spends her free time either at the beach or riding her Harley.