What is performance management?
The goal of performance management is to improve employees’ performance in order to increase the effectiveness of companies.
If managers focus on helping employees grow and making sure company goals match up with team and individual goals, they can create an workplace that is good for both employees and employers.
A performance management system is created within an organization to help improve employee productivity. This system measures an employee’s work output and provides feedback to help the individual improve their performance.
Performance management is the process of setting goals for employees and giving them feedback to help them improve their work. This includes tracking progress and providing coaching and development opportunities.
Employee performance management is a more effective way to review employee performance than other methods, such as yearly performance appraisals.
The Human Resources department uses performance management as a system for hiring, developing and keeping employees, as well as for reviewing their performance.
Performance appraisals are increasingly understood to be ineffective in engaging employees, failing to consistently set and meet company objectives, and resulting in a weak understanding of employee performance.
Why is performance management important?
It is important to understand what your employees are doing, how they are doing it, and why they are doing it in any organization, no matter the size.
When managers don’t have a system to help them understand their employees’ roles, strengths, weaknesses, and provide feedback, it’s harder for them to lead effectively.
Organizations that are smart pair their performance management with an incentive management process. The systems are similar in many ways, such as defining roles and setting goals, and both work well when used together. Incentive management is also important for performance management.
It focuses on three areas to ensure every project produces a business benefit:
- Linking your projects to your strategy. Taking the time to identify the project’s specific benefits before you start lays the foundation for everything else going forward. Many projects will link naturally to your strategy; others, however, may be executives’ pet projects that won’t move the company forward. These projects should be avoided. It’s important to note here that you’ll inevitably have some projects that fall outside the scope of your strategy. For example, a project that focuses on gaining a required safety accreditation, but the majority of your project portfolio should align directly with your strategy.
- Tracking the performance of your projects over time. Projects are executed by carrying out a variety of tasks, across departments and all organizational levels. It’s crucial to not only stay on top of the traditional components of time, scope, and budget, but also to manage whether project activities are actually producing the results you intend. Many organizations use strategy software to ensure they’re always making progress toward goals.
- Reviewing your project completions for improvements. When a project is complete it’s imperative to review whether project goals were achieved, as well as which tasks went well and which could be improved.
Project performance management is a way to use your projects to achieve your overall strategy.
The purpose and goals of performance management
The goal of performance management is to have a system that both managers and employees can understand and follow. This will lead to better work and more productivity.
- This system shows employees the pathway to success, allows for the measuring of performance coupled with feedback and offers training and development opportunities.
- Performance management allows management to understand what their employees are doing and track progress on company objectives while providing consistent feedback.
There are five main objectives of performance management:
- Develop clear role definitions, expectations and goals
- Increase employee engagement
- Develop managerial leadership and coaching skills
- Boost productivity through improved performance
- Develop a performance reward program that incentivizes accomplishment
This performance management system outlines a development plan for employees to improve their skills and increase their productivity. By accomplishing these goals, employees are rewarded with additional responsibilities and higher wages. If performance management objectives are not met, it will negatively affect other areas.
The benefits of performance management
Performance management can help employees improve their work and productivity, while also helping managers identify areas where employees need improvement. Additionally, performance management can help a company identify areas where it needs to improve its operations. If a company’s employees can successfully engage customers in a way that makes customers want to keep coming back, the company will be even more successful.
- Having well-defined roles and performance standards makes hiring an easier process, as candidates know what is expected of them, and HR can more easily understand if a candidate is a right fit for the role.
- Those well-defined roles and standards make training easier, as trainers know exactly which areas need to be covered, and which information is nonessential.
- Consistent developing and revisiting of goals ensure that the organization keeps up with changing market forces easily, and reacts quickly as a whole, regardless of the size of the organization.
- Clear expectations and roles set employees up for achieving goals from the start, providing a springboard to success.
- Employees who feel that their company is invested in their success stay with their companies, increasing employee retention.
- Consistent feedback and coaching from managers lead directly to increased engagement from employees while developing the ability to provide good coaching and feedback leads to more skilled managers.
- As employees become more skilled, they can move up through the company, creating a leadership pipeline.
- Productivity will increase thanks to increased engagement, clear goals and upskilling of employees.
- Employees remain incentivized to perform long-term, as they are properly rewarded for their hard work.
6 stages of project performance management
Even if a project meets its deadlines and budget, that does not mean it is successful. The success of a project can be determined by whether or not it meets specific criteria and if it aligns with a strategic business goal. There are six steps you can follow to keep projects on track strategically:
1. Understand the business case
Most organizations have more projects than they can handle. Too often, projects are proposed not for the good of the organization but to benefit a particular department. This often leads to tension and conflict between departments. An example of this would be if an IT department decided to buy and implement a software solution because it looked cool and had fun features, rather than because it would help them to achieve a business goal.
Before investing resources in a project, it is important to question its value. A well defined business case is necessary for every project in order to determine what the project is trying to achieve and why it is important. You should also be thinking about possible alternatives to your proposed project and ways to increase the value it creates.
Creating a template for your business plan will make it easier to complete future projects. The template should include goals, costs, timing, and how the project will improve results. Review this document often throughout the execution phase.
2. Define project goals
When setting goals, you should be specific about what you expect the project to achieve. This will help you better understand what you need to do to complete the project successfully. Be realistic about what the project will really support. Some organizations only allow projects to link to a maximum of two or three goals in order to keep them focused. Municipal organizations often require departments to show how investing in a project will drive long-term results by linking the project to the organization’s current key performance indicators. This ensures that all projects that receive funding are directly connected to the strategy and easy to see.
3. Establish data points to measure results
There’s a lot written about the “triple constraints” of project management: time, scope, and cost:
- How are you doing within the deadlines of each milestone?
- What is the percentage of completion (at any given time)?
- Are you within your budgeted expenses for this point in the project?
- Will the project address all the components you intended?
- How well has the project progressed?
You should include these data points in your performance management process and be able to track them easily. There will be other measures that will change depending on what your project is trying to improve. For example, your organization may have a long-term strategic vision to reduce its ecological footprint.
A similar project would be to set up a system that monitors water usage for your organization in order to reduce water consumption. This project would also have a data point specifically for water usage. The Save Our Water campaign is a result of the dedication of many people to promote the importance of water conservation. The campaign is expected to result in a saving of 4.5 billion gallons of water a year. Since this would be an improvement, it would impact a data point that is already part of the organizational strategy.
It is important to keep track of all your data, not just project-related data. You need to be able to change your data points quickly if a new technology affects your organization or project.
4. Assign milestones, action items, and deadlines
A project manager is responsible for ensuring that all the tasks associated with a project are completed in a timely manner. However, different people may be responsible for different tasks associated with the project. Though there are different approaches to project management, both the agile approach and the waterfall approach require that the mini-steps within the project are managed effectively.
5. Set up meetings to check progress
Never assume projects will run smoothly. Regular meetings are a good way to check on progress and optimize your project portfolio. The challenge your project is facing may require a change in the scope, timing, or cost of the project, which could affect all the other milestones. Your organization may be experiencing budget cuts or some other business uncertainty that could still cause a change or delay to the project’s execution, even if it is unrelated to the project.
Its important to also create management reports to show progress. Your report should have the following information: the project’s start and end dates, how much of the project is complete, how much has been spent on the project so far, and any key steps or milestones in the project. The easiest way to show information is through a Gantt chart.
Project managers should meet with team members frequently to discuss the project and ensure that it is on track. Meetings can be daily or weekly, depending on the project. Larger organizational meetings tend to take place either once a month or once every three months, during which time various projects are discussed in relation to the organization’s strategy.
6. Do a final project report/assessment
At the end of every project, it is important to do a wrap-up in order to signal that you have moved from project implementation to “business as usual”. A software implementation project could go on forever if you take into account that there will always be new software releases and new features to add. The project team needs to have a clear understanding of when to stop the project and transition the management of the software to the sales and marketing teams. This will ensure that the project is completed successfully and on time.
When a project comes to an end, it can be useful to create a summary of the project as well as an after-action review. The AAR is essentially made up of two parts:
- Part I covers the project goals and changes in time, scope, and budget. This information should drive a discussion about what went well and could be improved.
- Part II covers the information that came out of the discussion. What decisions did you make and how will that influence future projects? Do we need to alter our initial business plan template? Do we need another check-in point? Should we change how we manage our contingency budget for projects?
A discussion with leadership team members and department representatives who benefited from the project implementation should be held.
THE PROBLEM: YOUR BUSINESS ISN’T GROWING AS FAST AS IT SHOULD!
Your sales have stagnated or decreased, and you can’t figure out why. Discover what’s holding you back from achieving predictable sales growth in your business.
If you want to grow your business, you need a proven plan and framework. That’s what you get with the 2X Your Sales Discovery Session.
Want to learn about a formula for Predictable Growth that will put your business on a 90-day path to 2X Your Sales?