Performance Management: Expectations vs Reality

The employee quitting situation is serious for startups. You know how personnel hiring and related costs build up over time, leading to poor business performance. And it’s not easy to recruit talent at all.

In the US alone, about 4.25 million workers quit in January 2022 compared to 3.3 million last January.

Although many factors affect employee retention, career, work-life balance, and job-related aspects are three major drivers of this turnover.

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Employees value performance management (or simply performance review) a lot. But it is equally important to the management as it helps to retain talented professionals.

Now let’s clear the air around performance management in the workplace.

Expectations vs Reality

Performance management is not some standard set of procedures you follow; it has to be the practices that actually enhance your team’s performance.

Expectations are assumptions. Beliefs that are not based on truth.

Realities are based on experience and evidence.

Expectations: Yearly performance reviews are useful

Reality: Continuous performance management is impactful

92% of the workers prefer continuous feedback over annual reviews.

Much can change in a year, especially for a startup: customer behavior, funding, team members, competition, economy, and many other factors that influence team performance.

You can’t evaluate employee performance correctly in a year. You will not get any useful insights. And with teams becoming more interconnected and actively collaborating, an annual review cannot estimate employees’ contributions.

Continuous performance management is about setting the right goals for each team member and frequently reviewing their performance in relation to the progress of their efforts.

Successful teams have shown that they can actively collaborate and engage in continuous feedback with their co-workers and leaders once their team is aligned. This is not just a system anymore; it’s part of their work culture.

Additionally, continuous performance management supports employee engagement and makes employee recognition more fair and transparent.

Takeaway – Continuous performance management enables your team to focus on the most important business goals. Thus, lifting business performance, growth, and revenue.

Expectation: Performance management is the responsibility of the management alone.

Reality: It is the responsibility of the whole team.

It’s not about micromanaging anymore. Employees today are more aware of their rights and responsibilities. Micromanaging hurts productivity.

Good management enables team members to accomplish professional and organizational goals. Leaders should make the workers more responsible and show them the way when they appear to misalign with the team.

An effective performance evaluation happens when not just the leaders but employees and coworkers participate in it. For example, in small and aligned sales and marketing teams, it’s imperative that they actively collaborate.

You cannot measure individual performance here unless you use performance management software. Some software track individual employees’ progress in relation to the goals or, specifically, OKRs (Objectives and key results).

Everyone’s OKRs and the related progress are transparent. Leaders and team members can give and request feedback, comment, monitor, cross-collaborate, and rate their performance.

Overall, it’s a pretty transparent performance review system.

Takeaway – High-performing organizations involve in agile collaboration and transparent performance management systems. Hence, it’s not possible to review performance without getting feedback from other team members.

Expectation: Annual bonuses, festival presents, etc., are good for performance management.

Reality: Appraisals based on continuous performance management boost productivity.

While monetary rewards make employees feel good, they will not make them perform well if the performance reviews are unfair or employees don’t engage.

Rewards and recognition also come in other forms: growth opportunities, transparent review systems, more paid leave, etc. You must recognize every employee who sincerely contributes to the organization’s goals.

37% of the personnel said that a better individual recognition system at workplace would inspire them to perform better.

A better performance management system looks more lively than annual appraisals. It’s closely related to the team efforts, active participation, and ongoing feedback.

For example, the 360-degree feedback appraisal system. It collects feedback from co-workers, managers, self, customers (if applicable), and appraising managers.

Takeaway – A transparent and fair appraisal program based on employees’ performance enables them to perform better.

Expectation: Performance management software is enough.

Reality: It is also a mindset and part of the work culture.

Employee recognition is about acknowledging the serious efforts of the personnel.

Good performance management always pays well to the company. Investing in a good performance management system is quite meaningful, but there is more to it.

See how good performance management becomes part of the work culture:

• Employees align themselves with the most important company goals and OKRs.
• A good team alignment triggers active collaboration that involves constant two-way communication.
• Team members learn from each other: not just work-related skills but also the soft-skills.
• Employees engage more with the team when everyone knows they are reviewed with a fair and transparent recognition system.
• An engaged team inspires and promotes healthy competition among team members.

Takeaway – Take measures to promote a fair and inspiring culture of recognition.

Performance management is not something you do once in a while. It is part of the work culture and continuous in nature. Otherwise, it does not impact your business.

It’s not difficult to understand. It’s about valuing people who work for your business. And this should be one of the most important priorities for any business.

Many successful companies have used effective performance management practices and seen positive growth. One of the biggest common things among them is the continuous performance review.

Need more assistance in establishing an effective performance management system in your organization? Reach out to us today!