Effective performance management helps entrepreneurs achieve their goals and unlock the full potential of their employees. The performance management process specifies three steps: agreeing on goals, assessing performance, and creating incentives.
According to this understanding, the results of activities and work processes can only be described as success or result in the narrower sense if they align with the company's target system.
Performance matches by potential. The potential of the company and its employees is the necessary prerequisite for performance. The task of management is to ensure, by aligning the employees and their performance and designing the processes, that a high level of performance is achieved based on the required potential, which in turn leads to correspondingly many and good results.
The importance of performance measurement lies in determining the necessary vital figures to monitor and control the effectiveness of the implemented performance management measures so that managers and employees can control and make adjustments.
Frequency of performance appraisals
No company can be successful without the performance of all employees at their workplace. In a sense, performance and behavior are the “engine” of an organization. The employees use their skills and abilities to achieve their own goals and those of the company.
The formal performance appraisal management instrument shows how an employee’s performance and behavior are suitable for achieving the agreed goals. Because the direct manager usually carries out the performance appraisal, it is vital for leadership through feedback. Some companies are already using advanced methods of performance appraisal, such as 360-degree feedback. With this method, employees, especially managers, are needed by their superiors, subordinates, colleagues, or customers.
As part of the performance assessment, whether a previously set goal has been achieved. The assessing person observes the behavior, actions, and work of an employee, evaluates this using a grid, and checks whether the employee has completed the set goals. The assessor then regularly conducts a conversation with the employee in which the performance, behavior, and assessment are communicated and discussed.
Performance management comprises the following three management tasks:
1. Managers ensure the target-oriented alignment of the service provision. The performance processes have at supporting the corporate goals and corporate strategies (effectiveness).
2. Managers ensure the optimal use of potential.
The increase in the amount of service per unit of time occurs by optimizing service provision processes (efficiency).
To support this sub-task of management, performance measurement focuses on determining process efficiency quantitative and qualitative parameters.
3. Managers ensure that potential is created and increased:
The expansion of competencies oriented towards current and future tasks, i.e., the goals of the company,
Deepening skills through experience and routine,
Appropriate selection of personnel as well as
We are creating the necessary framework conditions.
Variable remuneration systems support and accompany managers in their tasks. Variable remuneration systems can dynamize this upward spiral, which leads to enormous improvements in competitiveness, profitability, and shareholder value.
Review a company's performance
The performance assessment can take place annually or quarterly. Despite its many advantages, many employees fear it and see it as a nuisance. So it is not surprising that a survey by the Institute for Conflict Management and Leadership Communication showed that only 45% of all employees rate the feedback from their superiors as appropriate. However, employees can also do something to ensure a proper performance assessment. And not only perform but also prepare specifically for the evaluation because every employee appraisal includes the written evaluation and a conversation with the superior.
Employees can prepare for the performance appraisal interview with a checklist. These include, for example:
Evidence of performance for the time since the last assessment
A look at the performance results since the last employee evaluation from your perspective
References, for example, from colleagues.
A list with specific goals until the next assessment as well as overarching career goals
Own ideas and suggestions
Points for which there is a need for improvement on the part of the employee, including specific suggestions
Wishes for upcoming projects and tasks
Every six months performance
Rules for performance appraisal The following rules are essential in all performance reviews:
Expectations express, and goals are mutually agreed upon.
Norms and standards are known.
The assessment is based on examples and facts that are as specific as possible.
Besides, performance interviews spread over the year offer the opportunity to react to necessary changes in good time. This strengthens your competitiveness in the market, gives your employees the certainty that they are actively contributing to the business’s success, and allows you to deploy the staff precisely where their strengths are best used according to talent, suitability, and ability. It also promotes performance assessments that are understandable for both sides at the end of the financial year.
The performance appraisal is based on several relevant aspects:
An important motive is to promote the exchange between managers and employees. The manager clarifies his expectations and the relevance of a particular service. The employee has the opportunity to address difficulties in fulfilling the requirements. Particularly in the event of possible assessment discrepancies, there is an opportunity to discuss the requirements.
In addition to assessing past performance, suitability for future tasks - also needs to be discussed.
Ultimately, the individual employee performance determines the overall performance of the organization. Therefore, the commission's assessments and improvement measures are decisive for the continuous increase of overall company success. It contributes to increasing the company's success is summarized under the term performance management.
Some companies also use performance appraisal to identify their “high performers” or talents for their talent management program as a personnel development tool. Employees with an above-average assessment can, for example, include in a talent pool that is used for succession planning for management positions. Individual development plans, special training courses, or mentoring programs are also conceivable.
Common mistakes in performance appraisal
Well-thought-out poorly done could be the conclusion. But what doesn't work with the usual methods? Why does it often impair the motivating effect of the performance appraisal?
As experience from daily business shows, it is mainly due to four mistakes:
Performance reviews are often too rare.
Performance reviews are often not transparent.
Performance reviews are not individual enough.
Managers are often poorly prepared.
Employees, managers, and HR managers want a uniform and transparent performance appraisal process. But if you have a certain number of employees, planning, implementing, and measuring the performance appraisal’s success is difficult. The Brainy HR software relieves the administrative burden and offers good user-friendliness and applicability thanks to its intuitive and straightforward operation. The performance review form is available online anytime, anywhere. For HR managers, it is transparent who has a task and what results have been achieved.
Good preparation and post-processing ensure clarity and a good atmosphere in the team. It is not for nothing that employee appraisals are described as one of the most critical management tools.
Of course, things can go wrong even with optimal preparation. It would help if you always kept that in mind. The crux of the matter is that two people meet here who generally look at the conversation from different perspectives. So it is essential to try to understand the other person's position and go into the conversation as indifferently as possible.
The most important thing is to convey to the other person that you are serious about the conversation. This feeling can best be described through adequate preparation.
If you take the tips to heart and critically examine your communication style for sources of error, you are on the right track. After all, employee appraisals are the basis for a successful and trusting cooperation.
Sometimes you will not be able to avoid difficult critical discussions either. That is why employee appraisals must always be conducted in a factual, friendly, and result-oriented manner.