Skip to Content
Manager and employee having a performance review

10 ways to improve the performance management process

The performance review, as most people know it, is a dinosaur that doesn’t serve people, managers, or the organisation particularly well. Most of us can recall a time when we received a glowing employee evaluation but no boost in compensation or a lukewarm performance appraisal that resulted in a promotion.

 

In addition, the performance management process is often time-consuming, with managers rummaging through old e-mails to inform the evaluation. And if you’ve ever worked at a startup, a young, eager CEO might have instituted extensive 360-degree employee reviews, which required everyone to spend days developing in-depth evaluations of people up, down, and across the organisation. Meanwhile, some startups use no employee evaluations or performance assessments at all.

 

 

Regardless of the approach, the COVID-19 pandemic left people and managers without direct interaction for months, making it hard to imagine any kind of effective system for performance reviews in the current business landscape. That’s why it’s time to put conventional thinking in the rearview mirror.

What is the performance management process?

The performance management process consists of a series of stages where managers and employees manage goals, monitor performance, and assess outcomes. Traditional performance management systems follow a typical cadence of quarterly, bi-annually, or annual reviews. A continuous performance management model is about using performance technology to set and track goals in an open and efficient way in real time and to support ongoing coaching, feedback, and alignment as priorities shift over time.

 

The process is ongoing. Once complete, existing and new employee goals are identified and the cycle begins again. 

Diagram of the stages in a continuous performance management process.

Diagram of the stages in a continuous performance management process.

Rethinking the performance management process: Start with goals

Performance assessments can be of great value to everyone since a robust and integrated system can increase employee engagement and therefore improve business processes and outcomes. It’s just a matter of rethinking performance management not as an atrophied muscle to flex once every six months, but one that can be exercised all the time and, ultimately, make everyone in the organisation stronger. That starts not with rethinking performance reviews, but with the entire concept of performance goals.

 

Goals should cascade down from the top and be visible to everyone. In other words, a manager might have a set of goals and each direct report will have a set of objectives that ladder into each of the manager’s goals. In a system of continuous performance management, when a person completes a goal it’s simply checked off in the system, so colleagues and the manager know that that piece of the goal puzzle is complete. Cascading goals can be updated or adjusted depending on a change in strategy or response to disruption. And, best of all, come review time there’s quick and full visibility in terms of who accomplished what and when. In other words, improving performance management shouldn’t be so much about reinventing the process of reviewing, but the process of setting and accomplishing goals.

Help ensure employee and team goals are aligned with overall company objectives to maximise organisational success.

Typical steps in the performance management process

  1. Goal setting: It’s about more than hitting milestones. Goals empower people to collaboratively set individual and team objectives in the context of the evolving business. 
  2. Feedback and coaching: Hitting targets is one thing, but it’s also how we achieve goals that’s key. That’s why business leaders should implement practices people can use to seek feedback on how they performed and what they can do better.
  3. Performance evaluation: Managers and their teams must be equipped to assess employees’ performance fairly, as well as how they contributed toward business priorities. This then informs the next set of goals.

10 tips to improve the performance management process

Of course, evolving performance-review thinking isn’t accomplished overnight. Here are 10 straightforward tips for how to improve the performance management process.  

  1. Start slow, ideally with a single department. Try a new system driven by cascading goals with one department or business function, such as IT or finance, rather than roll out the new assessment process to everyone simultaneously. With that one function, note the key learnings and adjust the new performance management system as needed before rolling it out to other departments. By the time the entire company uses the new system, it should be working well.
  2. Use technology, particularly for cascading goals. It should be easy to keep track of who’s responsible for what. That doesn’t mean using a Google spreadsheet. Use a simple, intuitive performance tool that offers broad visibility and easy access for everyone so that completing or modifying a goal takes mere seconds. Ideally, you’ve also started with a department where one or more midyear changes in objectives are likely, so this will give you the chance to test out the technology in a fluid, real-world situation. 
  3. Apply what you learn with continuous performance management to end-of-year reviews. If you’re going to use a system of continuous performance management, make sure you leverage its power in the time and place where it truly counts – at end-of-year review time. Use the system to inform and report employee evaluations, and compare the experience with the review process the year before. How was it better and what were the deficiencies? 
  4. Keep it simple. Start with standard goal templates and then edit them to fit each department. Many companies are looking for the same types of positive feedback, such as being a good team player, good communicator, or effective project manager. Modern performance management tools can provide goal templates that are already 80% complete, which makes the process easier for everyone to adjust to and continue to use on a daily basis.  
  5. Listen to your people. Find out how everyone feels about the new system, from entry-level employees all the way up to the executive level. Does continuous performance management help people do their jobs better? Also look at the business. Does it perform better with people more in touch with their goals on a rolling basis? Is retention stronger? Implement HR metrics that tell the story of how the new system is performing.
  6. Use technology to gain insights and identify issues early. Distracting or irrelevant topics written or said during the performance management process aren’t helpful and can create liability for the company. Implementing a legal scan feature will enable the performance review system to flag certain words loaded in by the manager, particularly problematic terminology that could lead to incomplete reviews or legal disputes down the line.
  7. Start thinking ahead in terms of your broader ecosystem. Don’t just think about which departments or functions you’re rolling out a supercharged performance management process to next. Think about how you’re going to augment the performance management system with other cloud-based applications to create a better overall experience, such as incorporating learning and skilling solutions. This will allow you to make an improved performance management process integral to a broader HR strategy that provides both a better view of the organisation and a better experience for people.   
  8. Train managers and employees alike to develop buy-in. Managers are the gatekeepers of the new process. If they don’t buy into it and explain its value, employees won’t buy into it either when the new system rolls out across the enterprise. Both managers and their people must be able to incorporate the new system into their daily routines easily, as well as believe in the value it will bring. That’s why executive sponsorship is critical as well. 
  9. Let the new process drive rewards and recognition. An effective performance assessment system should leave no ambiguity in terms of how performance is linked to compensation or recognition. And over time, HR should check if it’s being consistent with who is rewarded in which ways and how often. The process must be fair for people to embrace it.
  10. Always look for improvement. The performance review is never going to be perfect, so look at the data and talk to people about what worked well for them and what didn’t, then make adjustments accordingly. The more you work at improving the process, the more motivated and engaged people are likely to become with both the system and their work. 

Evolved thinking and embracing a new, effective, agile process requires a system that can support it. The alternative of using outdated, ineffective, and inefficient systems – or doing nothing – isn’t a viable option either. Companies that can tie a better performance management system to better business results will quickly separate themselves from those who chose complacency over the status quo.

Explore performance management software 

Improve employee performance through ongoing coaching and feedback.

Performance management FAQs

Performance management is the process of a manager and direct report aligning on a set of goals, as well as how the employee should be measured against those targets. As such, it’s critical that a person’s goals be SMART (specific, measurable, achievable, realistic, and timely) and that the manager and employee meet regularly – quarterly, every six months, or annually – to determine how effective the person has been at reaching the agreed-upon goals. It's also important that, when goals have not been met, both the manager and employee agree on what changes need to be made to improve performance.

 

Along with regular meetings and agreements on goal setting and adjustments, employees and managers should review and agree on specific tactics that should be taken in order to achieve each goal. It helps when goals clearly ladder up to larger corporate objectives so people understand what they’re working toward and why.

 

Perhaps the most important element of the performance management process is the review, at which time an employee is assessed against their goals. It’s critical that brief assessments occur at regular times throughout the year, with a full employee review taking place after 12 months’ time. Along with a measurable assessment, other factors should come into consideration as well, such as agility, creativity, and collegiality.

 

Another key element of the performance management process is to set new objectives for the future after the year-end review is complete. As with the previous year’s goals, the new set of objectives should be SMART. 

Technology is essential to the performance management process in three key ways: transparency, efficiency, and equity. It’s also scalable and flexible over the long term. That is, as the organisation’s broader objectives evolve over time, a technology-based performance management process can evolve with it. Technology also allows for malleability, meaning that the framework for performance management in the IT and marketing divisions might be the same, but the metrics and types of goals assessed might be different. A technology-based performance management process allows organisations to meet the needs of individuals and functions alike, all while maintaining those key elements of transparency, efficiency, and equity along the way.

  • Transparency: When the performance management process is supported by technology, it’s clear to all stakeholders – from the individual up to the CEO – who is responsible for achieving which goals and by when. This not only eliminates ambiguity but also protects the organisation against liability since what’s being assessed is clearly defined for all to see. 
  • Efficiency: With technology powering the process, performance management runs more smoothly and quickly. Administrative hiccups are eliminated and assessments occur in a timely, thorough fashion. Moreover, managers needn’t dig through their e-mails for information to complete the process. All the performance-management inputs are saved in one place for easy access and quick reference. Companies can also leverage technologies like automation and machine learning to support compliance and minimise repetitive aspects of the performance management process. 
  • Equity: When technology powers the performance management process, it is far more likely to be fair. In other words, different people in different places performing similar roles will be assessed in the same manner and according to the same sets of metrics. The more equitable the performance management process is, the more the organisation feels like a meritocracy – and the kind of place where people can enjoy long careers.

A performance management system tracks the performance of employees in a manner that is consistent and measurable. The system relies on a combination of technologies and methodologies to ensure people across the organisation are aligned with – and contributing to – the strategic objectives of the business.

A continuous framework to performance management is about using performance technology to set and track goals in an open and efficient way in real time and to support ongoing coaching, feedback, and alignment as priorities shift over time. Learn more about this performance management strategy.

SAP Insights Newsletter

Subscribe today

Gain key insights by subscribing to our newsletter.

Further reading

Back to top