By Richard Smith, HR Expert, Wolters Kluwer

Performance management is a much wider concept than merely tackling poor performance. Done right it aligns the whole of an organisation to shared corporate goals, and equips those within the business to achieve them through effective management, training and development.

By managing performance a business is much more likely to have a productive, cohesive and organised workforce; that are engaged with their work and employer and are highly motivated to achieve the goals they share.

Performance management in practice
Line managers play a key role in performance management as they are often the employer’s direct line to individual employees and teams. Therefore they should be well trained with the right skills to do this effectively.

Appraisals — these are often structured and commonly held on an annual basis. They give the line manager and employee the chance to assess what has been achieved and what they hope will happen next. A good appraisal will comprise the following:
• Measurement (of previous performance)
• Feedback (based on the above measurements)
• Positive reinforcement (what has gone well)
• Exchange of views (does the employee agree with their manager’s assessment)
• Agreement on the way forward (ie objectives for the next year)

Any objectives should be specific, achievable and above all measurable. They reinforce the desired company outcomes, and focus the employee. They also identify where the employee can develop — do they need additional training? Are they looking to take any professional qualifications that could develop them in their role, or towards a promotion? This is an opportunity for an employee to feel valued, and for the employer to mould them in a desired way.

A drawback of using appraisals to encourage good performance is that they can degenerate into box ticking exercises, which neither side take seriously. Managers should be trained on their importance, and employees encouraged to fully participate, by making them relevant and applicable.

Appraisal meetings should not be used to tackle poor performance; instead they should be dealt with as and when they arise. Poor performance issues are always better dealt with as part of a distinct capability process.

It is not always wise to link too closely discussions about development and performance-related rewards. If an appraisal is used to discuss what development the employee needs, and the final score translates to a benefit, it is unlikely an employee will be as honest as they should be, especially where they are being measured on their individual success. Consequently, an employer may benefit from separating these things, having an independent discussion regarding pay, at another time of the year.

Linking pay and benefits purely to good performance can be dangerous. If the standards are not explicit, or if the employee isn’t in control of achieving a ‘good’ score, the employee may become disengaged and demotivated. If specifically linked to targets, it might encourage unethical behaviours and the cutting of corners to be hit. A strong moral culture and clear communication of the pay structure should help combat these negatives.

Key to it all is to be flexible. Get to know employees and how they respond, and promote an ethos of development to encourage the company, and the people within it, to continually grow and improve.