The Benefits of Performance Management for Employees

A well-defined performance management process that’s built on consistent, constructive feedback helps your business retain and develop world-class employee talent. Together with goal setting, frequent feedback lets employees know they are valued, which increases their commitment and performance.


How Performance Management Works

Performance management is a powerful tool that improves employee engagement through ongoing and open communication. It’s effective because it:

  • Identifies and defines expectations.
  • Aligns each employee’s daily tasks with your key business objectives.
  • Determines goals and where to focus skill development.
  • Includes both accomplishments and areas needing improvement.
  • Routinely reviews results.

Performance management works so well because it is a broader and more exhaustive process than traditional yearly appraisals, which tend to focus on areas that an employee needs to improve. When employees only hear where they’ve “failed,” the frustration and resultant lack of enthusiasm is understandable.


Benefits of Performance Management for Employees

Large corporations like Amazon, Deloitte, and Google have all replaced their annual reviews with a performance management approach and SMBs are smart to join them. Aligned goal-setting and performance management not only saves time and money, it also appeals to Millennials, who prefer and are accustomed to receiving real-time useful feedback.

Your employees are the key to your company’s success. When managers and employees communicate regularly and honestly, employees gain clarity on management’s goals and expectations. It also helps overcome two big challenges all companies face: retention rates and employee engagement. The benefits of performance management are wide-ranging.

  • Managers spend less time micro-managing employees.
  • Employees enjoy greater autonomy.
  • Misunderstandings are reduced and confusion is lessened.


The Sports Analogy

The business world is rife with sports analogies: a “slam dunk” campaign, a “full court press,” and even “under the wire.” Take the parallel one step further and imagine your business as a sports team. Would you let your players head out to the field or onto the court without some feedback on their recent performance? Would you wait a year to tell a tennis player how she might improve her swing, or a baseball player that he needs to work on his fielding skills?

Performance management focuses on year-round communication and goal-setting, making it easier to identify small issues that can be corrected before they become big problems. Better productivity and less crisis management let you focus on areas that affect your bottom line: discipline and salary actions, retention or termination decisions, and whether training is needed.

When employees understand that performance management is meant to help their work development and give them more control over their career advancement, they feel empowered and engaged. For your business, that translates to increased performance and a more robust bottom line.

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