How To Establish Effective Performance Management Processes

Companies typically use performance management processes as a tool for reviewing goals and determining if specific objectives have been met. They’re not all the same and in fact, different companies have different processes with very specific reasons why. For example, multinational global companies may need to have complex programs in place because the information must transfer over to different cultures and countries. In some cases, the process may be user friendly, easy to understand but not very personalized. Other companies forego the formal process, choosing to have a more relaxed, informal method because it’s a good fit with the overall culture of the organization. Despite the style of the process, there are two very specific elements that every performance management process needs to be effective: continuous communication and action.

Continuous Communication

One of the most important elements of every performance management process, regardless of size, is that it has to be communicated effectively and continuously. In other words, the process must always be focused on the future and on the development and growth of the employee, not just the company. All of the goals or measurements that are used in the process need to directly tie the employee’s objectives to the company’s strategy in order to be effective.

For instance, a company sets objectives for an employee expecting that he or she will achieve them over the course of the year. They have an annual performance review to see if the specific objectives have been met and how successful the employee has been at achieving them over the year. For that to work, that employee needs to know how the work he is doing is actually going to affect the company, his department and him personally. It’s critical for there to be tie in; otherwise, the document and process is meaningless.


A performance management process, regardless of if it’s conducted on a semi-annual, quarterly or annual time frame, cannot be stuck up on a shelf off the beaten path. Rather, it must be an organic, relevant and actionable document that is being reviewed on a fairly regular basis. Even if it is revisited informally, employees must be able to see the progress as it takes shape. The action takes place as specific objectives: steps in the process of achieving larger goals.

If an employee has expressed an interest in getting a certain resource or a particular type of training for example, and the manager takes that information, files it away and never looks at it, employee engagement levels plummets. On the other hand, if management doesn’t see any action coming from the employee towards achieving objectives as described in the plan, then he doesn’t see any value from the process. It must be a living document for it to be effective, with mutually dependent participation.

So, to reiterate, even though performance management comes in a variety of different shapes and sizes, depending on the specific organizational needs and perhaps even culture, they all must have two critical elements to be successful: continuous communication and action. By creating that tie in for employees by making it meaningful and making certain the document is leading to action- both from management and the employee- the performance management process can be a very useful and effective tool.

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