7 components your performance management system must have

If you’ve found yourself here looking at the components of a performance management system, either the one you’re currently using doesn’t suit you, or perhaps you don’t yet have direct experience with performance management software.

Selecting the solution that is right for you and your team is no small task. Ideally, you need something quick and easy to pick up, that integrates seamlessly into your workflow, and most importantly of all: something that is effective, efficient and worth the investment both in terms of time and money.

A lot of companies search for a performance management platform in order to automate their annual review process. However, if you are only using your solution to save time during annual reviews, you are really missing out on all the opportunities available today. There are so many more wonderful features performance management solutions offer, that can have a myriad of benefits for you and your employees. From facilitating alignment around company goals, to enabling more Manager-Employee conversations throughout the year, to encouraging people to take ownership of their own professional development.

To help you get a better understanding of what you should be looking for, we’ve taken the work out of researching the various features and components your performance management software should have. Let’s dive in!

1. Manager Reviews

A manager review is a process whereby an employee is asked to assess the performance of their managers, identifying potential coaching opportunities. This provides managers with the opportunity to receive constructive feedback from their employees about the core skills and competencies needed to lead a team effectively.

As HR, manager evaluations can also be used to identify areas that coincide with the organizational goals and objectives, and can help you identify which managers need more development support in their role.

2. 360 Performance Reviews

Gathering 360-degree feedback is probably the most valuable feature of most performance management solutions. It’s a method by which employees are given the opportunity to receive (and give) constructive performance feedback from their peers, managers and direct reports, created a well-rounded view of their performance as opposed to only receiving top-down feedback.

This helps employees get a better understanding of their key strengths, but also of opportunities for development and where they may need more coaching. When giving 360-degree feedback, people typically look at skills and competencies describing the employee's performance. To make this even more useful, people can be asked to complete a self-assessment for a further comparison.

3. Engagement Surveys

Conducting engagement surveys is an effective way to gain insight into what matters most to your employees. As the name suggests, the primary reason for carrying out engagement surveys is to uncover if your employees are engaged or disengaged, and to provide inspiration for how to improve this.

There is no ‘right’ way to measure employee engagement, but some commonly assessed factors are: career advancement, recognition, pay & benefits, training & development opportunities, leadership, work environment, etc. Aside from measuring engagement and providing you with valuable insights, it has the added benefit of giving employees an opportunity to voice their concerns, and comment on what is being done well within the company. These results in-turn highlight areas for improvement and development.

4. Social Recognition

Social Recognition or simply ‘recognition’, is the process of providing employees with the tools to create meaningful relationships with each other. Such tools include feedback apps that empower employees and encourage them to celebrate the small successes and behaviours they experience each day with each other.

Collaboration tools have increased in popularity over the past few years, and it’s hardly a surprise. Any tool that simplifies dialogue and facilitates the sharing of feedback between employees should only be encouraged – especially when they can integrate directly into other tools you already use, such as slack.

5. Goal Setting

Goal-setting at work is hugely important. Research indicates that setting specific and challenging goals leads to higher performance than when none are set, which is why it’s such a crucial component of performance management platform.

The bottom line is, when people set goals, they achieve more. But goal-setting isn’t just for individuals; team goals inspire teams to do their very best, and help their colleagues in the pursuit of their goals as individuals and as a team. Do you have goal setting in place already? If not, SMART goals and OKRs are two very popular ways to implement goals across a whole organization.

Your new performance management system should be flexible enough to support the goal format that you are using as a company. It should be simple and easy to use, so you can facilitate alignment around company goals so everyone know what they should be working on, and feel more connected to the mission. This helps you lay the foundations for shared success and a better employee experience.

6. Goal Alignment

Once teams and individuals have got into the habit of setting goals, it’s important to keep everyone aligned towards your collective goals, or company-wide objectives. This is where a goal alignment feature of a performance management becomes most important. Your performance management system should facilitate the setting, tracking and completion of individual, team, and organizational goals. This allows people to have an overview of how each set of goals ladders up into the next one, and ensure greater clarity and alignment.

7. Succession Planning

While employee engagement, benefits, and the happiness of employees can all help with your retention rates, nowadays very few people get and keep the same job for their entire working lives. Therefore, employee mobility is an issue that companies are faced with and must confront.

Succession planning ensures that, as employees inevitably move on to their next challenge, the talents and skills that made them a good fit for your company are transferred onto other employees, as replacements.

Coaching and skill development should therefore be encouraged through your new performance management system.

Time to begin

Now you have a list of the 7 main components your performance management system must have in order to be comprehensive, and give you the performance management support you need. Obviously there are different needs for each organization, but this is a great place to start.

If you're looking for more inspiration on how to plan and prepare your performance management processes, you should download our Guide to Modern Performance Management, below.

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