In performance management, most specialised companies will offer you qualitative expertise and let you know exactly what to do to implement a better performance management system.
But no matter who the source for these recommendations is, there are six critical factors that will help any business add value to such a change.
There are three factors tend that earn a performance management system the "fairness & accuracy label":
1. The system helps employees build their skills and competencies.
2. The system is applied consistently across the company (e.g., managers set goals with employees, there is a shared picture of the criteria used to evaluate performance, etc.).
3. The rating scale enables managers to accurately differentiate levels of performance during the annual reviews.
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Then there are three factors that will have a strong impact on the perception of the general business value
These will help employees believe the performance management
system is worth the time invested:
4. It helps to build a high-performance culture.
5. It provides useful data that is used for succession planning.
6. It provides useful data that drives leadership development initiatives.
The regular pillars in performance management
refer to goal setting, coaching, development planning, and performance evaluation.
While these aspects are essential, companies also need to understand the importance of skill training and also change focus from the unique one year evaluation.
Companies need their managers to be able to conduct effective performance evaluations. Moreover, the ongoing coaching and feedback are equally important, but too many companies don't seem to follow the link between the skills training and the follow-up.
In fact, one study reveals that 26% of the companies with the best performance management
systems experienced turnover of less than 5%, compared with only 9% of the companies with the worst performance management
They explain the phenomenon saying that if companies ignore some skills, the management will have to endure the consequences. The focus should be on identifying and recognising top performers while at the same time help those who aren't meeting the expectations to improve their performance.