In their guide to managing human resources, University of Berkley educators offer this definition of performance management:

“Performance management is an ongoing process of communication between a supervisor and an employee that occurs throughout the year, in support of accomplishing the strategic objectives of the organization. The communication process includes clarifying expectations, setting objectives, identifying goals, providing feedback, and reviewing results.”

Many important concepts are embedded in that definition.

Communicating throughout the Year

Performance management requires more than a yearly performance review. According to one survey, 95% of employees are not only unhappy about performance reviews in general but emphatic that the reviews either interfere with their productivity or have no relevance to their work.

Instead, leaders should be checking in with their team whenever they see a drop or rise in performance to either correct or praise it on the spot. This is the difference between old-fashioned feedback and modern feedback that stresses coaching and active listening.

Supporting Strategic Objectives

Strategic objectives involve the long-time goals of a company from customer and employee retention to financial growth and operational efficiency. Unfortunately, repeated research has shown that neither employees nor their managers have a clear understanding of strategic objectives, let alone bothering to discuss it. They cannot meet objectives they do not understand or find value in feedback that seems totally unrelated to their daily work life.

The more employees are involved and invested in both long-term strategic development and short-term goal setting, the more likely they are to understand the company’s objectives, meet them, and find value in leadership. Once again, communication be ongoing and clear (without jargon), and goals should be broken up into attainable action items.

Reviewing Results

The way to know if your performance management is working is to measure results. Key Performance Indicators may include revenue per client (RPC), client retention rate (CRR), profit margin (PM), or any other metrics associated with the company’s overall ability to meet objectives. Alternative scales to KPIs are readily available.

However, in measuring results, as in most things, the bias of the observer will influence the results. As a simple example, if a company measures the number of sales without considering their profitability or the client’s satisfaction, performance will be skewed toward quantity versus quality. In the same way, measuring a team member’s performance on their contribution during meetings may lead a manager to overlook the team member with the highest productivity in favor of the one with the motor mouth.

The closer performance management aligns with the long-term strategies and short-term goals, the more meaningful the measurement of results.

Improving Performance

The University of Berkley definition of performance management overlooks the critical question of what to do if performance stagnates or drops. It also fails to recognize that continually demanding and expecting the highest level of performance despite all impediments is the short road to burnout and team dysfunction.

The positive ways to improve team performance include:

• Training 
• Improving resources, processes, and tools
• Coaching and mentoring
• Acknowledging good work at the time
• Communicating goals frequently and clearly, including what will happen if goals are not met
• Reviewing metrics, because the fault may lie in your measurements and not in your team.