10 Tips for Performance Management Success

Small and mid-sized companies have traditionally only assessed their health based on monthly and quarterly reporting. With the more recent desire for “finger-tip” information, innovative technologies now offer management an up-to-the-minute snapshot of their company’s operating performance. But what do you do with all that data once you have it? How can you make it actionable?

Technology can assist in capturing business data and providing transparency; however, the main issues lie in understanding how to use the data and tools to manage the company and improve performance.

Before employing technology tracking capabilities, business leaders should complete the initial “blocking and tackling” of performance management (aka the basics). This is accomplished through defining the firm’s objective, each department’s purpose and the positional roles and responsibilities.

Once the definitions are understood, the true skill to performance management is establishing key metrics and achieving goals through continuously improving the business (people, process and technology).

There are many benefits to implementing a performance management environment. Not only can it enhance transparency and, in turn, accountability, but it also provides business owners and managers with access to valuable data. Sharing this information can help business owners and managers in identifying trends and best practices. The objective could be to optimize productivity, improve quality and service levels, or increase employee motivation – all ultimately leading to increased profits.

Here are 10 tips for designing an effective performance management system:

1. Involve stakeholders from key departments throughout the whole process.
2. Identify a few mutually exclusive metrics that cover the operations and impact the firm’s objectives.
3. Determine a unit of measure for each metric that can be quantified and captured by the firm.
4. Create a realistic and attainable goal for each metric; a good starting place could be historical performance, performance of a star employee and/or industry benchmarks.
5. Observe and measure employee performance against the goal.
6. Identify the road blocks that could prevent the employee or department from reaching the desired goal.
7. Use the results to design training and development opportunities.
8. Recognize and reinforce strong performance.
9. Continuously monitor performance and provide employee feedback in real-time.
10. Update and communicate goals, performance results and trainings.

Well-designed performance management techniques can not only optimize the company’s overall performance, but could also improve the job satisfaction, retention and professional development of your employees. However, it’s important for management to remember that the objective of a performance management system should not be to make everyone happy; it should be to motivate, inform and improve your employees and overall business processes.

With the benefits that performance management has to offer, can your company afford not to properly set up and track the appropriate metrics? Contact us for assistance with designing and implementing a performance management system that can help your company achieve its objectives.