How to Set Leaders Up for Success with a Performance Management Framework
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Performance management is tricky to make impactful for all, particularly as organisations get larger and larger.
If you’re having trouble with performance management, you’re not alone. Traditional performance management has acted more as a report card of past performance than an actual means to achieving strategic objectives.
Dwelling on the past with no tangible plan to learn from is pointless. Instead, organisations should lean into performance management frameworks that focus on progression for the business and its workforce.
Without further ado, let’s jump into how you can make a performance management framework to set your business up for success.
What is a performance management framework?
A performance management framework is a structured approach to managing and improving performance of individuals, teams, and businesses. It encompasses processes and activities that focus on setting performance goals, aligning employees with organisational goals, and supporting employee development to improve performance.
The importance of performance management frameworks
At its core, performance management is about enabling the workforce to drive business performance and success. The only problem is that traditional performance management (and the performance management systems it tends to use) don’t really enable that at all.
For starters, 1 in 3 North American employers say that their employees feel performance evaluation is rated unfairly. Less than half of employers agreed their managers were actually good at evaluating the performance of their direct reports.
On top of that, annual performance reviews are still just that: Annual. Employees only get feedback once a year, during which time bad performance might have become a business issue. Even then, “bad” performance might actually just be an example of recency bias or poorly designed development plans.
The only way to ensure that performance management is effective and without bias is by getting leadership and management buy-in. If leaders aren’t convinced in the importance of performance management, employees won’t be either. And if managers don’t see its importance, they aren’t going to put much effort into the performance management process, making annual reviews even more inaccurate.
Something needs to change. A strong performance management framework, paired with an effective performance management system can help you here. Or you can use a performance learning management system (PLMS), which links learning and performance and drives better business outcomes through strategic goal setting and development. When we talk about “better outcomes” we mean:
- Better employee performance. With clear objectives, employees are better equipped to meet performance expectations, improve productivity, and produce greater quality of work.
- Increased employee engagement and retention. 94% of employees say they would stay with their company longer if it invested in their development. Strong performance management processes bridge the gap between annual reviews and development plans, making employees more likely to stay.
- Greater alignment between individual and company goals. Performance goals set in the performance management process are derived from business capabilities, so employees are always working towards strategic goals.
- More effective succession planning. Your performance data reveals your top talent and high-potential employees. Not only does this help with recognising and rewarding high performance, but you can use this information to identify which employees are next in line for a promotion or leadership role when it comes to succession planning.
- Efficient resourcing and decision-making. A performance appraisal generates valuable insights about employee performance, including their strengths and areas for improvement. You can use this to create effective development plans, allocate resources, and make informed talent management decisions that drive business success.
How do you create an effective performance management framework?
A good performance management framework is a progressive performance management system. Where traditional performance management uses the annual review to look at the past, a progressive performance management framework looks to the future.
There are three key elements of a progressive performance management framework:
- Regular and continuous feedback
- Flexible and business-aligned goals
- Driven by future outcomes.
Regular and continuous feedback
Imagine this: You’ve been working on the customer support team, and customers are happy with your help. But in your annual review, your manager tells you that you’ve been doing and saying the wrong things all along.
Frustrating, right? You’ve spent a whole year doing the wrong thing and no one told you otherwise, and customers have come to expect your brand of customer support. If someone had only mentioned the mistake earlier, you could have implemented corrective action.
This is why regular feedback—by linking performance with learning and development—is so crucial. It enables managers to provide feedback in the moment, so mistakes can be corrected in the moment. You can assign a coach or mentor to employees to create this feedback loop, or just have more regular check-ins (such as weekly one-on-ones) to distil feedback and enable career development for employees.
This isn’t to say that holding formal check-ins on an annual or quarterly basis should be removed entirely, but frequent feedback is the only way to ensure employee development is moving at the pace you need, rather than being a footnote in the employee life cycle.
Flexible, business-aligned goals
Progressive performance management is all about enabling incremental changes in employee behaviour to drive organisational transformation. The business environment is always undergoing changes in technology, processes, and standards, and organisational goals (as well as organisational capabilities) need to change in answer.
Performance expectations for employees will have to be changed to reflect these changes as well. In traditional performance management, goals are rigid, but progressive performance management focuses on goals aligned with current employee and business needs.
When you set goals, it’s best to follow a SMART approach—that is, ensure that they’re specific, measurable, achievable, relevant, and time-bound.
- Goals are specific in that they’re clearly defined. Defined goals don’t leave anyone confused on desired outcomes.
- When we say goals should be measurable, we mean having clear success metrics. These are your key performance indicators (KPIs) which will help you track how you’re progressing towards your goal or whether you’re meandering off the path.
- Achievable goals are, well, self-explanatory. There’s no point in goal setting if there are no realistic pathways to achieve them.
- Goals need to be relevant to business and role-based capabilities to ensure employees are optimising their value. If your goal isn’t relevant, then you’re just wasting time and resources.
- Your goals need to be time-bound with a deadline for completion, otherwise performance improvement will stagnate and learning will no longer be relevant to the learner.
Goals should be collaborative between managers and employees. Progressive performance management looks at individual performance—i.e. the focus is on an individual employee’s performance and development in order to achieve goals. Employees and managers work together to create goals and pathways to performance improvement.
Future-driven
This is what puts the “progressive” in progressive performance management. In traditional performance management frameworks, performance reviews act like your school report in that they just rate your past performance. A progressive performance management framework looks to the future by identifying areas for improvement and providing learning opportunities to employees.
In fact, the driving principle of an effective performance management framework is to meet organisational goals through the continuous improvement of the workforce.
The best way to make sure you’re tracking towards continuous improvement is to do a capability gap analysis. The idea is to find the gap between where your capabilities are now and where your capabilities need to be in order to deliver desired outcomes in the future.
In individual employees, capability is measured in terms of competence, a levelled scale indicating how a capability is performed. In an ideal world, all employees will perform the capabilities necessary to carry out their jobs at a high level of competence. Where employees have a lower level of competence is where development opportunities arise.
Let’s go back to our customer service example. In this case, your manager has probably marked you with a low level of competence for communication, like “needs development”. So, your development plan should include tailored training to improve your communication capability until your competence improves.
This is a lot easier when you have the right tools and performance management software to facilitate employee development. A PLMS links learning and performance together in a single system, delivering tailored learning content to address gaps in employee performance.
The pitfalls of not having a performance management framework
Not having a performance management framework won’t just prevent performance improvement, it also wastes time and resources that your business can’t afford to waste.
Your business’s different departments won’t be working in tandem towards your business’s overall strategy—instead, they’ll try to meet their own goals, and that means your workforce is acting without direction and can’t drive organisational improvement.
It doesn’t help that you’ll also lose the ability to identify strengths, weaknesses, and areas for development in individual employee performance. At the business level, you end up with capability gaps that snowball into wider business problems. At the employee level, you get frustrated employees who aren’t receiving any learning and career development opportunities. Employees want those opportunities for improving performance, and without them, employee turnover increases.
It’s a bit of a vicious cycle, here. When talent leaves the company, that talent needs to be replaced. But recruitment is a lengthy process, so in the meantime your remaining employees will be picking up the slack, taking time away from their own work and potentially building resentment in your company culture. That, in turn, leads to even more employee turnover and lost productivity.
In other words: Performance management frameworks are the backbone of a healthy, sustainable workplace and talent pipeline. Without one, your business is essentially dead in the water, unable to facilitate continuous improvement or meet company goals.
Key takeaways
It’s essential to create an effective performance management framework in order to build an agile workforce. Traditional performance management has failed to bridge the gap between performance reviews and tangible development plans, which is why organisations should be using a progressive performance management framework instead.
If you want to create an effective performance management system, then you just need to include three key elements:
- Regular and continuous feedback
- Flexible and business-aligned goals
- Driven by future outcomes.