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an employer and employee discussing employee performance

Performance management is a system that can help an employer monitor and evaluate an employee’s work.  It often includes employee evaluations, feedback, and goal-setting at work. A strong performance management process sets expectations about performance reviews and encourages open discussion between managers and employees. Enhancing your company's performance management process can yield a multitude of payoffs, such as increased employee retention, increased productivity, and higher employee satisfaction.

What is performance management?

Managing performance involves stating goals with clarity and directing employees in a manner that helps to achieve these goals. In the work environment, employees must understand what is expected of them and how they are contributing to the overall success of the company. Employees also expect to receive meaningful feedback about their work in an equitable format. To this end, companies should provide managers with the tools and training needed to set goals, offer feedback, and deliver a performance review in a professional manner.

The importance of performance reviews

Employees who do not regularly receive feedback may feel as though they're left adrift in the middle of the ocean. They may assume they're doing a good job, only to be surprised when they realize their manager does not share this sentiment. Communication through performance reviews can help to emphasize an employee's strongest skills while also identifying areas of needed improvement or opportunities for growth. As such, a performance appraisal serves many purposes:

  • Highlights an employee's success, growth, and development
  • Helps employees identify challenges or obstacles to achieving goals
  • Allows workers to express their desires for growth or change
  • Provides a setting for a meaningful conversation when administering feedback or recognition
  • Encourages employee engagement
  • Helps employees to understand how to maximize their productivity at work

Tips for improved performance management for employees

If you'd like to enhance the process surrounding employee appraisals, start by adding structure and aiming for consistency. Each company's performance management program should be fully supported by executive management. To achieve the greatest level of success, the program should be implemented at all levels of the company. Those conducting employee evaluations should be trained on how to write an effective performance review and given the tools needed to conduct the evaluation and maintain the record of the evaluation when it is complete.


Employers should ensure that the employee evaluation process is fair and administered in an equitable fashion. Managers should not let their personal biases affect their evaluation of the employee when writing performance reviews. Concrete examples help to support ratings. Evaluators should avoid vague descriptions like "a good leader" and instead describe actual situations where an employee demonstrated leadership.

Clear criteria

Employee performance should be evaluated based on set standards. Managers should be direct about why an employee was rated at a certain level, even when their job performance is in need of improvement. To be successful, the employee must have a solid understanding of expectations moving forward. Improvement plans, if warranted, should also include set criteria that an employee should meet to move forward in their career.

Open communication

The overall tone of a performance review meeting should be constructive and open. A performance review, regardless of its frequency, is always more challenging when an improvement is needed. All performance review meetings should not be a one-sided conversation and employees should be invited to bring up their own concerns. To promote trust, consider providing the employee with a copy of their review prior to the meeting. This may provide them the opportunity to review the feedback and be prepared for the performance review meeting.

Employee Self-evaluation

Encouraging self-evaluation can further engage employees in the performance management process. Ask employees how they feel about their performance and have them describe any obstacles they believe are standing in the way of their success. Involve them in the goal-setting process and allow them to provide input based on their future career aspirations.

Performance management planning

Managers should cycle through a performance review process that is transferable as employees transition in and out of job roles. An outline or checklist of the tasks to complete and required documentation can help keep those responsible for performance reviews on track.

Set initial goals

Work with the employee to set realistic goals that support career development. Many employers find it helpful to base goals around the SMART (Specific, Measurable, Achievable, Relevant, and Timely) framework. Managers should also define their expectations and give employees an idea of how they will be evaluated based on their goals.

Ongoing communication

In between formal performance evaluations, a manager should sit down with their employees and check their progress. Aim for a balance where you're not micromanaging employees, but you're still providing meaningful feedback that shows you're aware of their efforts. Staying in touch gives the employee reassurance that you're open to communication outside of the formal performance review and can help managers deliver feedback on a timely basis.

Performance review

The formal performance review process should be documented to provide consistency throughout the organization. Ideally, an employee self-evaluation will be completed, along with a manager's review. Both employee and manager should come to the meeting prepared, which may include the employee reviewing the written evaluation if it is provided before the meeting. Within the meeting, the manager should touch on how the employee has performed with respect to their job responsibilities, where challenges have arisen, outstanding accomplishments, and any potential needed improvement. Both parties should actively listen and ask questions to avoid confusion.

Process improvement

At the conclusion of the performance review, the manager and employee should set new goals and identify any areas needing improvement. If employee goals are not met, the manager may suggest specific action items, such as company training or external education that can help  the employee to achieve the goals. There may also be a discussion on the performance review process. Both manager and employee may contribute feedback to determine if the evaluation was useful and served its purpose.

How to simplify the performance management process

If your current process could benefit from streamlining, consider the potential of an employee performance management system. Automating the process allows for standardization of reviews, which can link employee objectives directly to company goals. The system can also capture data needed to enhance analytics supporting targeted retention strategies. Management training and tools provided can help put a consistent appraisal process into place company-wide.


Communicating with employees about performance objectives helps everyone stay on track and drive toward success. Encouraging ongoing feedback throughout the year, as part of a structured annual review process, can help employees to be recognized for their successes and receive support if needed to perform their jobs at the highest level.

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