- Maria Cafer
Performance Reviews or Performance Management?
They may sound similar, but they’re actually completely different methods to measure and reward employees. If you don’t work in HR you may not know the difference between the two, so let me explain the differences and what I believe is a more useful method for your business.
Performance Management is an on-going process of communication between a supervisor and an employee that occurs throughout the year in support of accomplishing the strategic objectives of the organisation. This includes clarifying expectations, setting objectives, identifying goals, providing feedback and reviewing results.
Performance Review is (an annual) formal assessment where a manager evaluates an employee’s work performance, identifies strengths and weaknesses, offers feedback and sets goals for future performance.
Performance Management is a process that benefits the business, increases employee engagement and roots out any issues. The meetings aren’t always linked to end-of-year pay rises/bonuses; they don’t require as much time or paperwork when you’re busy; and achievements with good behaviour are acknowledged and reinforced regularly.
Performance Reviews are conducted annually and are important as a formal and documented measurement. They are useful in providing on going documentation, clarifying expectations and initiating feedback. However they can be overwhelming and stressful for employees and managers, time consuming to plan and complete and are often conducted because ‘everyone’ does it rather than for constructive reasons.
If you consider this year alone, are your 2019 Performance Reviews applicable after Covid 19’s impact on the world? As we’ve all witnessed first-hand, business can change quickly so reviews should be reactive to external influences. Stand-alone Performance Reviews certainly have their value, but successful businesses incorporate these within a Performance Management framework.
Why implement Performance Management in your business? Because it will achieve higher performance levels and increased employee engagement: Companies with higher-than-average levels of employee engagement saw 27% higher profits and 38% above-average productivity.
Performance Management is an ongoing conversation and improvement cycle that touches every employee in the business. Owners/company directors/GMs set the strategies and goals for the year; these are communicated to the business and then developed into targets/goals for each department/individual. When setting targets and/or goals for your employees you will need to provide clear objectives. The best way to achieve this is by using a framework such as SMART Goal Objectives.
SMART Goals and Objectives provide a clear and objective framework for setting and managing goals. This can help you avoid setting vague and unclear goals that you don’t understand how to achieve.
SMART stands for Specific, Measurable, Achievable, Relevant and Time-Bound:
1. Specific: Set tangible goals/tasks that have clear outcomes.
2. Measurable: Track progress ensuring all components of the goal/task have been achieved.
3. Achievable: Be realistic about the employee’s workload and how much time can be spent on this task. If the task is unachievable then the employee may become demoralised or unmotivated.
4. Relevant: Ensure the task or goal is relevant to the candidate and their responsibilities in the organisation.
5. Time-Bound – Set timeframes to achieve these goals/tasks otherwise they could just drag on without resolution. By providing a review date this also encourages employees to complete them.
EXAMPLE: Sandy will be a fully licensed, competent and capable forklift driver, for the warehouse team by December 2021.
For effective Performance Management, you should conduct at least two formal reviews that are clearly documented (within a 12 month period) and include additional informal reviews/general catch-ups throughout the year. It’s a great way to keep communication clear, open and fluid between management and employees as well as setting clear expectations about the business delivery for the year. Your staff will be more engaged because they understand and appreciate that the business is developing their skills and knowledge. Therefore, their productivity increases; you retain your employees and grow their skillset which benefits everyone. Performance Management is also a great way to determine succession planning and develop your superstars.
Whether you want to implement Performance Management or Performance Reviews you do need some form of ‘employee measurement’ to assist with your reward/pay review recognition because good behaviour and hard work should always be rewarded!
And remember, not everyone is financially driven so look for alternative rewards to pay raises.
Demonstrate to your employees how much you value them with a consistent, fair and robust Performance Management procedure. This is your opportunity to get to know your employees better, develop their passions/strengths and retain your staff in an uncertain market.
If you’re not sure what to do then get in touch with me and I’ll help you implement a Performance Management (or Performance Review) process for your business.
Here at the Human Factor we love helping our clients get it right. If you require further guidance, advice or the best process for your business then reach out now:
Maria Cafer
HR Consulting Tauranga
The Human Factor
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