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3 key objectives of performance management

Jan 25, 2021| Reading time: 8min

BY ChartHop

In 2012, software company Adobe made international headlines for what it stopped doing: annual performance reviews.

Donna Morris, Adobe’s former senior vice president of human resources and employee experience, and her team deemed them “time consuming” and “negative,” and they’re not alone.

Up to 72% of companies conduct yearly reviews even though 87% of managers and employees say they’re ineffective.

Now, instead of those annual reviews, Adobe engages in continuous performance management, and the move has paid off. Morale improved, productivity grew, and employee retention increased.

Let’s take a look at three under-discussed, but incredibly important, objectives of performance management that’ll help your organization improve its performance management practices.

1. Measuring employee engagement

Taking the pulse of employee engagement at your organization is one of the key objectives of performance management.

Employee engagement is how invested a worker feels in the company and how motivated they are to help the company set goals and achieve them.

It’s essential to a successful business because employee engagement is tied to productivity, retention, and the bottom line. Engaged employees are 22% more productive, 22% more profitable, and have 41% lower absenteeism. They’re also twice as likely to be top performers. Disengaged employees, on the other hand, can cost companies up to $550 billion annually.

Regular check-ins like those Adobe conducts are effective not only at ensuring company goals are met but also at ensuring employees are happy, motivated, and engaged. Since overhauling its performance management process, the company has experienced a 30% drop in the number of employees who leave the company.

Adobe suggests doing quarterly check-ins at a minimum, but teams can conduct them as often as they’d like. The engineering team, for example, might do check-ins every six weeks.

Clearly, employee engagement is important. However, 85% of employees aren’t actually engaged, according to Gallup’s State of the Global Workplace.

How can you determine if your workforce is engaged? In addition to keeping its measurement in mind as one of the objectives of performance management, you can also use surveys to tap into how employees are feeling in a measurable way.

Example of ChartHop's eNPS survey

eNPS scores help you get a pulse check on employee engagement. (Source)

Using an Employee Net Promoter Score (eNPS) survey is an effective way to do this because it asks workers how likely they are to recommend their company on a scale of 0-10, giving you a clear understanding of how employees feel about the organization.

2. Understanding employee capacity

One of the objectives of performance management that’s often overlooked is that it gives managers the opportunity to get a clear picture of employee capacity or how much time a worker has to devote to certain projects.

Staying aware of employee capacity is essential to keep team members happy, engaged, and productive, as well as ensure that the company operates smoothly.

The truth is that 82% of employees say they’re overworked, but they often don’t know how to inform their manager of the problem. Team leaders can also suffer from burnout, especially when their span of control becomes too large and unmanageable. And overwork can result in serious consequences for workers, including the emotional exhaustion of burnout, as well as severe health problems.

Wide span of control

Having a large span of control can lead to manager burn out. (Source)

It can also negatively affect the entire organization. According to research by the Washington Center for Equitable Growth, overwork leads to lower productivity and profitability, reduced access to talent, reduction in women’s labor supply, and greater disparities in the gender pay gap.

Believe it or not, employees can also be underworked, resulting in lower employee engagement, a concept known as “boreout.” A French court recently upheld a “boreout” claim filed by an employee who was awarded more than $48,000.

An underworked employee may need more than simply additional tasks, though. They could also benefit from additional training and a career-development plan.

To manage employee bandwidth, it’s essential to have regular conversations between employees and managers. Adobe replaced its annual reviews with an ongoing process of “check-ins” so that supervisors can stay informed about how employees are faring and help managers allocate work more effectively.

3. Improving feedback loops

When it comes to performance management, it’s easy to focus on the feedback. But one of the critical objectives of performance management is that it involves two-way communication among team members at all levels of an organization.

However, just the occasional conversation or annual review isn’t enough.

In fact, 77% of human resources executives say performance reviews aren’t an accurate measure of employee performance. Why? Because an annual or even occasional review isn’t synonymous with continuous feedback.

When employees and supervisors continually communicate, it creates a culture of feedback that’s timely and actionable.

Most workers are aware that communication is key to a well-run organization; however, they say their own companies often fall short.

Eighty-nine percent of people believe that effective communication is extremely important, but eight out of ten people rate their own business’s communication as either average or poor

Communication Statistics 2020 Survey

Adobe solved this communications problem with its check-ins, ongoing dialogues between managers and employees that resulted in “dramatic efficiency gains, more effective performance management and higher employee engagement and retention,” according to Morris. During these check-ins, managers and employees discuss project progress, goal setting, development needs, and development opportunities.

These improved feedback loops have a positive impact on both managers and the employees they manage.

Nearly 70% of employees say they’d work harder if their efforts received recognition, and managers who receive consistent feedback on their strengths exhibit nearly 9% greater profitability.

Prioritize these objectives of performance management to protect your most valuable asset

Productivity and profitability are certainly important, but people are your company’s most valuable asset. That’s why it’s essential to keep employees front of mind when establishing performance management practices.

As discussed, the key objectives that performance management should focus on are measuring employee engagement, understanding employee capacity, and improving feedback loops. These are all people-first practices because, as human resources execs understand, you have to take care of your people so they can take care of the business.

With these goals in mind, your organization can establish a performance management system that works for both managers and employees.

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