What is Performance Management?
Performance Management is the process that provides ensuring an organization or a firm to achieve its goals effectively and efficiently.
What is Individual Performance Management in an Organization?
The concept of individual performance started to take shape for companies and individuals at the beginning of the 1900s, and after the world wars, it gained weight in public companies and became wide-spread in our country. While individual performance evaluation was shaped by the perception “How should we measure the performance of our employees as company managers and bosses?”, in the new version: “What is the point where the company wants to go? What is the performance level of our current employees and what level should we raise? " It started to take shape depending on its strategies.
In other words, performance management is the process where a manager or supervisor meets or discusses with an employee to support organizational and personal development goals. Often, performance management includes an evaluation process that requires annual employee reviews and regular communication to check progress towards strategic goals and performance improvement.
Performance management should be a critical focal point for your organization, as it can affect financial performance, productivity, employee retention, and corporate culture. Some of the other benefits of performance management include greater efficiency, accountability, and employee satisfaction. It is also a useful way to identify skill gaps, reflect on good management techniques, and provide data for development planning.
An effective performance management process connects strategic goals with individual goals, motivating employees to feel committed to business goals and to continuous improvement. For example, if one of your main business goals is to reduce time-consuming intensive work, this is something you can discuss with your executive team during the evaluation process.
The definition of performance management is the process where a manager or supervisor meets or discusses with an employee to support organizational and personal development goals. Often performance management includes an evaluation process that includes annual employee reviews and regular communication to check progress towards strategic goals and performance improvement.
When discussing performance management, many people immediately consider the annual performance appraisal process. However, performance appraisal is only one component of what is considered performance management. One of the best definitions of performance management is given by Michael Armstrong in the Handbook of Performance Management, which carefully and simply outlines the Armstrong performance management cycle:
“Performance management is an improvement method that enables the development of people's knowledge, skills, and abilities after planning performance, reviewing and evaluating the progress with the determination of individual and team goals compatible with the strategic goals of the organization. "
As organizations grow, managers and teams need a standardized performance management process to set goals and measure individual performance. At best, performance management systems should align with your corporate culture and strategy, assist in talent management and serve as a performance assessment tool for managers, employees, and teams.
A poorly implemented performance management system can be meaningless, disrupt team motivation, slow down decision making, It can hinder career growth and prevent you from doing important jobs that would otherwise help you meet your key initiatives and success factors. The best performance management systems support employee development, provide constructive feedback, effectively measure key results, and provide transparency at every level of the company.
The performance appraisal process should be easy to use while keeping teams and individual employees accountable for achieving their goals. The review process should also include clear goal-setting tools and monitoring methods, such as those found in performance management software, to measure results.
Individual Performance Management Trends
We encounter a wide variety of factors in the new world; the new generation, crises, digitalization, etc. The trends set by the world order begin to show changes with the Y generation gaining weight in the business world as much as possible and the Z generation slowly entering the business life. A different generation is coming and this brings with different working methods and different visions.
The new generation, accustomed to ready-made, more impatient, and full of knowledge, will not wait for a year to see performance results. Your company should be prepared for this. For example; We are going through a pandemic period that has accelerated the "work from home" trend that has been going on for years.
This trend will become more common now and in the future. Managing them will provide the desired effect to the company. Accordingly, the frequency of performance management and evaluation becomes important.
We can list the problematic points of companies that have been observed for years as follows;
- Independent work of departments.
- Down to inform about the company's strategy, the failure to provide bi-directional communication
- Company and department managers not knowing exactly where they want the company to be in 5-10 years.
Elimination of these problems and ensuring their compatibility with each other will be among the trends of the near future, and data visualization, transparency, easy access, management of business via mobile or software will become more important. To list the trends;
- Performance programs include everything from feedback loops and engagement surveys to performance reviews. As technology and career continue to evolve, new techniques are introduced to ensure efficiency.
- Accordingly, the frequency of feedback is increased. Employees have demonstrated that they are higher performers when working with top businesses in an environment where they can check in more regularly. Frequent feedback not only helps your employees improve their performance, but also makes them more willing to continue doing so.
- Performance coaching is another trend that is gaining in popularity. Something as simple as a name change from "assessment" to "coaching" provides a broad scope from dealing with "focal points" to finding ways to increase productivity.
- Although annual performance reviews do not see enough value, the need for inspiration and motivational performance is critical for sustainable improvements. Trends found a clear positive correlation between higher motivation levels and timely feedback.
- For this reason, many companies choose to increase the frequency of performance reviews, gather their employees under one roof, and provide regular control.
- Artificial Intelligence (AI) and algorithms also come into the picture to make performance review data more meaningful. While artificial intelligence may seem impersonal and counter-intuitive, technology allows you to learn more about your employees as an employer.
- A robust algorithm can tell you a lot about employees' work habits without being intrusive or breaching privacy. It will also improve the quality of performance data and collection efficiency.
- For example, there are more than 200,000 robots working in warehouses on Amazon. A McKinsey Global Institute study predicts that 70% of businesses will adopt at least one form of AI technology by 2030. This will mean significant changes in everything from international affairs to cybersecurity. Therefore, it is important to start applying AI technology in strategic ways.
- Automation will take priority in management tasks as the workplace evolves into the digital world. The number of executives can be significantly reduced as companies opt for digital exchanges for roles that were previously considered managerial roles. This digital trend can prove the same for departments that manage databases and finance-related businesses. Many HR roles and processes have already started using their technology counterparts.
- Teams should also expect a big change in demographic trends. As the nation's largest adult generation, Generation Z enters the workforce, companies need to adapt to expected generational differences, according to the Pew Research Center Census Bureau.
- Soon, the Z generation will be the largest percentage of the workforce in Turkey - so there will be more Z generation in leadership positions. This also means changes in physical areas such as experimental offices and collaborative floor plans, greater emphasis on a healthy work-life balance, and the inclusion of flexible working hours and workplace health initiatives.
Performance Appraisal System
Why do organizations need a performance management system?
"I am already the manager, the boss of this company, I can distinguish between good and bad, there are already 10 people, I know people." The logic of the company that says, cannot get very efficient results in this period because words fly and text remain.
There is a person in your company and he is performing more than expected. But your employee on the other side only does the tasks assigned to him, maybe he meets the expectations, maybe he does not. In this case, if you equate your good employee and your open-minded employee, this will have two main effects;
- First, if you, as a company, keep the bad inside for long without improving, it will have a negative return to you.
- Second, the good employee gets the idea that "I always perform well but I make no difference from the others" and leaves the company. The point is that when your well-performing employees leave your company, it costs much more to replace them with someone at the same level of competence than to retain them. Therefore, your employees who are good at your company by not making an individual performance assessment are affected both by themselves and your company.
If there is no record of the performance of your employees in your corporate memory, if it is only in the minds of your managers and those managers leave the company, the performance cannot be sustainable.
Another perception is that “employees with low performance will be fired when they are noticed”. In fact, on the contrary, you can use the situation to take advantage of the perceived shortcomings and improve by helping those people heal themselves. It is very important for your company managers to impose this perception on your employees.
"For the success of total quality management, the presence of "quality awareness" from top management to subordinate employees is essential. "
Armand V. Feigenbaum
Individual performance management processes are integrated with various processes. First of all, “Company managers, bosses, human resources managers, etc. Why should employees need performance monitoring? " If you say, your company has strategic goals and you need to follow the performance of your employees and adapt them to your strategies as you work with people accordingly. Things you can do for this;
- Creating training plans.
- To make career planning for your employees you want to develop.
- To include your high performing employees in talent management programs.
- To prevent a possible crisis by activating backup mechanisms for your employees who are at risk of leaving or working in critical positions.
Simply approaching intuitively will not produce professional results for both your company and your employee. Therefore, you should demonstrate fair management in your company, ensure justice, implement individual performance management processes in order to show traceability and access to strategies.
Only in this way can you manage healthy operations and your company outputs show a difference in quality depending on your employees. In this way, you can improve the services you provide to your customers.
What are the challenges of the Individual Performance Management System?
What kind of message should you give your employees before starting an Individual Performance Management project in your company?
One of the most important points that companies should pay attention to is to explain this process to their employees in a healthy way and to prevent the fear of their employees. Psychologically, people get nervous when they are told by their managers that their performance will be measured, either in a tone of voice or in any sentence. That's why the way your company managers share this process with your employees is an important moment.
You should act sensitively and avoid tension without using the cold communication model that may disturb the other party. Because this process is linked to many elements of business management such as strategic planning, training management, career management, and backup management.
The individual performance management system should be managed in a way that everyone is transparent, fair, sustainable, as independent as possible from human beings, and can penetrate into all employees.
When they see that performance evaluation is not a management process that comes out as an idea and is implemented immediately, the importance of announcing its phases and this process with a sensitive plan, companies can understand that even an employee is not absorbed. Therefore, you need to design a structure that is as simple as possible, simple, fair, transparent, that will work in reaching the strategies of your company and implement it with good change management.
Guide to Performance Appraisals for Human Resources
A plan must be prepared where the human resources department produces and manages this work and has an annual calendar.
- Then, based on this plan, the process begins to take shape with a handshake with your managers and employees sitting together and talking about their goals and development areas this year.
- It is ensured that the continuity of the process is formed by coming together in determined periods and measuring the situation in these goals and competence development.
- Later, one of the most important points is the feedback and your managers start to use the coaching mechanisms actively.
- While the term continues, the contribution of the works carried out during the year towards the determined goals is examined.
- Finally, with digitalization, you should gather your employees under one roof and ensure their traceability and detection of problems.
How will we use performance appraisal results when we get them?
7 Benefits of the Performance Appraisal
Your employees always know where they are
Research shows that less than half of employees are successful when they know where they stand in relation to their performance. But how can you expect your employees to perform at their best if they don't know where they stand? Real-time feedback will provide them with the guidance they need to continuously improve and achieve your company's goals.
Timely and Actionable Feedback
Once a year, giving feedback almost guarantees that it will be vague and largely irrelevant at the moment your staff hears it. Employees need feedback right after a situation in order to perform at their best. Responding in a timely manner, be it encouragement or coaching, helps improve engagement levels and growth.
Continuous Improvement Opportunities
Imagine a sports coach waiting until the end of the season to provide feedback to his team. The idea is ridiculous, right? Leading your team is no different. In our fast-moving business world, there should be a consistent flow of feedback throughout the year so your employees can have a chance to develop consistently.
Saving a year of criticism is bad for morale and often hurts engagement and productivity. Fortunately, sustainable performance management shifts your perception from past mistakes to future opportunities. Thanks to the performance evaluation system, you make new plans about how you can maintain your success by communicating for a year rather than the end of the year judgment. Feedback focuses on minor adjustments rather than overwhelming route corrections, which leads to better results.
Your Employees Improve the Ability to Close Skill Gaps
According to Deloitte's Human Capital Trends, managers see skill shortages as one of the most critical obstacles to the implementation of business strategies. They must identify and close skill gaps internally, as they cannot always recruit needed skills.
Your employees evolve towards completing their deficiencies and improving themselves by discovering skill gaps in individual evaluations, or they revise their competencies by inspiring the skill they see in another colleague and try to add a new competence to themselves.
You Create More Meaningful Interactions Inside the Company
Every leader knows how stressful it is to go through the administrative work that comes with annual reviews. The extra paperwork and planning, which should be the whole focus of this exercise, can make it difficult to focus on a comprehensive conversation. However, when feedback is collected and exchanged throughout the year, the review phase is shorter and more efficient than expected.
On a regular basis, your managers stay on track throughout the process and take care of your employees more closely. In this way, all the paperwork and reporting work becomes an easy job to do by getting rid of that stressful situation. This allows your managers to focus their attention on helping your employees grow and work towards their goals.
Your Corporate Values Come Alive
Every company creates a set of values that they hope will create a type of culture that encourages participation and performance. The "continuous feedback" you make in the performance evaluation process allows you to realize these values in a way that reflects your company culture, instead of the ambiguous ideals of your company.
Modern Performance Appraisal Methods
How should competencies and measurable targets be proportioned when making individual performance evaluations?
Companies often ask, "Is there a single solution to our problem?" It raises the question, but it is not possible to have a single recipe for this job because there should be studies on paper, whether they are performance evaluations or organizational design. A change in the performance system can affect people's lives. Thus, the way the company does business must be understood very well.
Commonly used by companies;
Measurable goals (KPI)
Measurable goals are the part that feeds from the strategic plan. Setting goals; It reveals the interaction between managers and employees as partners for the benefit of the company and within the framework of elements that support the development of the employee, and it is a kind of desired performance type. In addition to being a phenomenon that sheds light on strategic planning and study designs, it supports the development and self-confidence of the individual. Boundaries are always clear, but real success is achieved when the boundaries are pushed.
Goal setting is more important for teams because everyone has a shortcoming and an advantage in teamwork. One employee can learn and teach a lot from another. It has been observed many times in individual performance evaluations that the collaborative work of the teams towards a goal increases the potential to very high levels. As a result, the company and the employee continue to gain success by mutually feeding each other, starting to consider rewarding systems, development plans, and one step ahead.
Another benefit of measurable targets is that they provide an analysis of the current conditions of the competitive environment as they bring along improvement. In this way, technology enters into companies and companies determine their place in today's competition. With the advent of technology, all units can easily access data and thus, they minimize time loss.
Employees see their own performances and also have the opportunity to examine the performance of another colleague, which often brings with it determination and turns into a sweet competition within the company. As a result, the winner becomes the company and employee. Even if the goal is not achieved as a result of the goal setting, the experiences and knowledge learned in that way are used unconsciously to achieve many successes.
In summary, measurable goals both provide clear data in terms of individual performance evaluation and provide access to many other achievements even if the set goals are not achieved.
The concept of competence is the knowledge, skills, and characteristics that are used in many functions of human resources, from recruitment, training, and development, performance evaluation, career management to remuneration, and that person must have in order to be successful.
The main purpose of the competencies is to ensure that employees behave in line with the company's goals and expectations. Competency models ensure positive employee outcomes by ensuring that company goals and performance criteria are more transparent and creating harmony between HR practices. Other most obvious benefits of competencies are as follows;
- Ensure success
- To create a strong network
- True and sustainable decision making
- Providing development on the basis of individual and company
Competencies; There are generally 3 types of competency groups in companies;
Competencies that every employee (regardless of level) should have in the company.
- Success and Effort
- Business Ethics
- Honesty and reliability
- The propensity to Development and Change
- Information Sharing
- Taking Responsibility
- Self-Criticism Ability
- Quality Orientation
- Identifying / Solving Problems
- Comply With Rules
- Calmness and Calmness
- Effective Verbal Communication Ability
- Stress Resistance
Competencies that should be found in managers.
- Analytical Thinking
- Conflict Management
- Creating a Research Environment
- Solving Individual Problems
- Solving Unit Problems
- Ensuring Compliance
- Ensuring Current Business Control
- Managing Change
- Effective Communication and Persuasion
- Effective Decision Making
- Job Prioritization
- Conceptual Thinking
- Creating Service Value and Paying Attention to Service
- Rules and Regulations
- Performance Measurement
- Performance Evaluation
- Planning and Organizing
- Report Interpretation
- Common Sense
- Strategic Management
- Process Management
- Meeting Management and Representation Ability
- Document Management
Competencies need to be changed on the basis of the department.
- Analytical Approach
- Using Information System
- Crisis Management
- Archive Management
- Information Technologies and Security Management
- General Accounting
- Control and Control
- Financial Analysis Information
- Report Preparation
- Systematic Business Plan Preparation
- Process Analysis
- Strategic Plan
- Technical Reporting
Leadership is movement, not position.
Donald H. McGannon
There is no formula for how many shares your employee should take from the quantitative goals and competencies in performance evaluation. It is necessary to apply the performance system by reviewing your company according to the dynamics, titles, and organizational structure of your company. As a general logic, we can say that; As you move up the organizational hierarchy, numerical KPIs (numerical targets), turnover, profitability, etc. become a little more important.
When we go down to the bottom, we can say that developing a little more competencies outweighs. To look at it from another angle; each link of the chain does not have to be equal, but the links must be interlocked for a chain. The tasks and results of each department are different, but they all agree on a common ground; company earnings.
There are many steps to success, and waiting for all of these steps from a single person would be a strategic and stressful mistake. By defining a separate task for each department, the internal works are provided with natural circulation. Some employees never communicate with higher units, while others report every day. But there is something forgotten, the room; You do not communicate only by talking or writing. Since communication is an interaction, you will be in contact with the upper unit with any work you do.
The perception of the employees that “I am not the addressee anyway” will bring failure and may cause problems for the wrong people. Hence, employees should understand this framework well and be more responsible in line with company goals. In this way, during an individual performance evaluation, the employee at the farthest point of the chain can receive appreciation from the manager at the top of the chain, and the desire for success can be nurtured with the rewarding system.
In what period should the outputs of individual performance management evaluation be taken?
Individual performance management outputs depend on your company's institutionalization, maturity level, geographic spread, size, family business and may vary. If your company does not do this process at all, it is necessary to carry out the control called performance evaluation once a year and half-year evaluation during the year.
In the past, it could be said that it would be better if it was done once a year, but now it is not enough to make a difference in today's business life, competition, retain your competent employees and reach your goals while talking about instant performance evaluation trends. At worst, when the June-July halves, a half-year evaluation should be made, such as “where are we at the points we set at the beginning of the year, how is the performance of my employees, how is my performance, what is the level of competence”. Of course, this can be done on a quarterly basis in some companies.
In companies that have internalized this culture and ensured sustainability, and fed by a slightly newer generation, there can be instant performance evaluation. Putting a long time between performance evaluations can increase the error rates of your employees as well as trigger the instinct to postpone existing work. "I have a lot more to evaluate, I will collect it by then." Although his thought brings relief to your employee at some point, it causes his current potential to be reduced at some point and to be unable to train what he can do. Instead, the employee said, "I have an end-of-month evaluation, I can't let go." It establishes a more successful and performance-oriented working system for both your employee and your company.
Through comprehensive evaluations at the end of each month seem challenging, you can keep them in the record thanks to the reports and take them into account in half-year evaluations or quarterly evaluations. Especially if you are new to the performance evaluation system, it is of great importance for your employees to get used to this new system not to keep the evaluation intervals long. If there is an existing innovation, it is the best method in terms of integrity to be refreshed with constant reminders and adopted by your employees.
Evaluation systems should do more than turn a job description into a series of rote tasks in which an employee's performance is evaluated only through an annual performance review. While annual reviews are useful, a solid approach to your employee's assessment with regular 360-degree feedback has a positive impact on performance, success, and outcome.
Your continued feedback through regular meetings will help you track progress against larger performance targets. For example, for a sales team member aiming to increase their sales by a certain percentage each quarter, a monthly catch to review progress helps you identify issues and resolve them faster than waiting for an annual employee review.
In summary, in the performance evaluation process, you make plans by setting measurable goals and stay in touch with your staff by monitoring performance. You then compare the goals and performances to evaluate them and provide feedback. In this way, according to the data obtained as a result of the evaluation, you ensure the satisfaction of your employees by putting into effect reward systems such as promotion, premium, transfer, and training, and you ensure that your company grows exponentially by keeping your success.
Within the framework of these processes, you can usually make evaluations twice a year, but you should keep fresh innovations and successes by following the developments every month. Achievement awareness, which is the biggest source of motivation for an employee, is made to be felt by your managers every month thanks to the feedbacks of your employees and you can improve them exponentially up to half-year evaluation. In this way, you instinctively instill a sense of goal and a desire for success in all your departments and employees.