How to Manage Employee Performance and Strengthen Your Company

Managing employee performance isn't just about quarterly reviews or dreaded feedback sessions. It's about understanding, guiding, and harnessing.

We've all been there: The frustrations of seeing talented employees not reaching their potential or the heartbreak of watching a star player lose their spark. Sometimes, it's not them; it's the system. Sometimes, it's not the system; it's how we navigate it.

This article will discuss: 

• the best ways to manage employee performance; 
• how this is a critical people management skill; 
• some examples of employee performance management from industry-leading companies like Netflix and Adobe. 

🔎 What does it mean to manage employee performance?

Managing employee performance refers to the ongoing process by which supervisors and managers ensure that employees' work meets or exceeds organizational standards.

This process involves: 

• Setting clear expectations. 
• Providing regular feedback. 
• Assessing results. 
• Implementing development strategies to maximize an employee's potential and contribution to the organization.

"Good management consists in showing average people how to do the work of superior people." John D. Rockefeller.

Effectively managing staff performance can positively affect your entire workforce, making it an essential skill for managers. Companies that don't manage employee performance can suffer from many inefficiencies. At the same time, poor performance management can also have a negative effect.

Too often, managers get so caught up in key performance indicators and spreadsheets that they lose sight of the individuals producing those numbers. 

Beyond simple performance measurement, an effective manager is responsible for improving employee performance by focusing on the individuals whose hard work propels the company forward.

It is crucial to understand the difference between performance appraisals and performance management. Measuring performance is an important step in the process. Still, if that data isn't used to make business decisions and reinforce your team, it won't have much impact.

➡️ Explore nine performance management trends and learn about the use of AI in performance management programs.

🪜 How do you manage employee performance: 6 Critical steps

While every company may have a slightly different system for managing employee performance, most effectual strategies include these six steps in some way, shape, or form.

Set clear goals

For employees to perform well, they need a clear and complete understanding of their roles and expectations. If an employee's individual goals aren't aligned with company goals, their perceived performance may suffer. This is generally the fault of management and poor communication.

Managing an employee's performance without everyone being on the same page is like asking them to take a multiple-choice quiz without the questions.

They might be able to infer much about what they should do from their job description, but they will always be flying blind to some degree.

The first step to a high-performance workforce is setting clear goals, so employees know what is expected of them and can find the best method for success.

🎯 Check out our guide on setting effective employee performance goals. 

Share constructive feedback

Once you have given employees a finish line to work toward, it is time to step into a support role. One of your managers' most potent and essential skills is providing regular feedback. 

From a performance standpoint, feedback is a way to provide guidance and boost an employee's engagement. But be warned, negative feedback can have a detrimental effect on manager and employee performance.

Mastering the art of constructive feedback allows managers to mold employees' talents to better perform their duties and more effectively contribute to overall business objectives.

Conduct regular performance reviews

In addition to real-time feedback, regular performance reviews provide predictable guidance and a backstop to ensure nothing, or no one, slips through the cracks.

A solid strategy is to schedule performance reviews in conjunction with employee performance goal milestones (such as the halfway point) to easily track progress and provide extra support if needed. 

Performance reviews offer employees and management the data they need to track progress or identify trends in performance.

➡️ Learn how to implement a company-wide performance management system and how to choose the right performance management tools for your operation.

Define development opportunities

Too often, employees fall into a rut where they are just trying to get through the day. They come to work, keep their head down, and do what they have to do. This leads to an unfulfilled and unengaged workforce. 

Believe it or not, most employees want to learn and want to engage at work. But when stepping out of their lane presents more problems than opportunities, they have no incentive to do so. 

As part of their real-time feedback and regular performance development reviews, watch for development opportunities and encourage your team to do the same.

Telling an employee you think they would be an excellent fit for an upcoming training seminar not only allows them to learn (which provides value to them and the company) but lets them know you are thinking of them as an essential member of the team, not just a replaceable cog in the wheel.

➡️ Learn how to help employees set development goals and steal our development plan template to get started ASAP.

‍Offer coaching

Beyond external developmental opportunities, managers in a position to coach should always seize the chance to do so. 

One of the most important skills of a good manager is delegating. A manager who takes every opportunity to pass on their skills to their team will be much more capable of delegating to them in the future. 

In effect, this takes some of the burden off of managers and makes their teams more efficient. Plus, employees learn valuable skills that will help them and the company.

The trademark of a top-tier manager is how well their team performs, not how well they perform as an individual. 

For a manager to have maximum impact, their primary focus should be improving their team, of which coaching is the most direct method.

💡 Learn how to conduct effective coaching skills training for managers (and how not to do it).

Recognize progress and accomplishments

Morale isn't prioritized as highly as it should be in the modern business world. Happy employees are more productive, so why aren't more companies focused on making their staff happy?

While there is certainly a limit to this phenomenon, at a point of diminishing returns, there are small acts that can greatly improve an employee's morale, happiness, and job satisfaction.

A painfully simple example is recognizing effort and success.

Top performers deserve to be recognized for their hard work and contribution to the company. Likewise, any opportunity to praise an employee for their effort, improvement, or accomplishments can be a slam dunk for morale.

Everyone wants to be good at their job, so a little positive reinforcement can go a long way!

🏆 Explore 42 meaningful employee recognition ideas.

😟 3 Common challenges in managing staff performance

Managing employee performance sounds obvious and easy on paper. Still, the truth is it can be a challenging and time-consuming process. However, there is little doubt that a robust and effective employee performance management system is worth the investment. 

Here are some nigh-universal hurdles companies have to overcome when it comes to employee performance.

Not setting clear objectives

Employees could perform well in many cases, but unclear directives have them operating in the dark. 

For example, imagine an accountant calculating a monthly sales report for every salesperson in the company. Unbeknownst to them, the company's owner only looks at the total sales for all employees on the report. Because of that disconnect, the accountant is wasting time every month that could be spent on more pressing matters.

Miscommunications like this one plague companies by wasting work hours. Not only that, but they often lead to burnout as employees are overloaded with excess work or frustrated by unclear performance expectations. They often feel they have to work harder when, in reality, they are simply not being managed efficiently. This can have a significant impact on both performance and morale. 

Not defining career progression

For many ambitious employees, coming to work daily to earn a paycheck isn't sufficient to stay motivated and content.

Hard-working employees are often striving for raises and promotions. But they will lose momentum if they don't feel they are making any progress.

While handing out raises and promotions is always great for morale, it is only sometimes feasible from a business standpoint. Another option is having transparent career tracks with qualifications, prerequisites, and even pay schedules. 

Many companies like playing their cards close to the vest, discouraging employees from discussing pay or writing employment contracts. These practices are generally not in the best interest of employees.

Instead, transparent pay and career progression models promote fairness and encourage employees to strive for long-term career goals while understanding what they need to earn the desired job title.

Not sharing timely feedback

Many companies still haven't broken the tradition of the annual performance review. Yearly insight into one's performance is not enough to expect meaningful change.

While providing more frequent feedback does demand more time than a yearly review, the payoff is worth it.

Providing immediate positive feedback on a job well done inspires employees to keep up the good work. On the other hand, timely negative feedback can prevent mistakes from happening again, rather than having to deal with an entire year of errors.

The good news is modern companies use modern solutions like 360-degree feedback software to streamline and crowdsource the feedback employees are hungry for. Timely feedback can have a significant impact on employee engagement, which can have a significant impact on performance across the board. 

🆕 What are the latest techniques and ideas on how to best manage employee performance?

The world of people operations is entering a new era as modern businesses begin to look inward, rather than outward, for growth. The current market for talent is intensely competitive, meaning it is often more cost-effective for companies to empower their existing staff than trying to hire new talent. 

Here are some examples of how industry-leading companies like Netflix and Spotify manage employee performance: 

Recurring performance check-ins at Adobe

In 2012, Adobe upgraded from traditional annual reviews to their new "check-in" system. These less formal exchanges are compared to pit stops in a race, giving employees the support and guidance they need throughout the year to perform their best. 

The process starts with managers laying out expectations and employees developing plans to meet those expectations (using SMART goals).

Throughout the year, managers provide feedback about their progress, overall performance, and additional opportunities for personal growth. By focusing so strongly on the individual, Adobe has built a crack team of highly skilled and motivated employees who receive constant support and well-earned bonuses.

🅰️ Read more about the benefits of the Adobe method and how to implement it in your company.

360-Degree feedback at Netflix

Modeled after the coaching style of Scotty Bowman, the head coach with the highest number of wins in NHL history, Netflix puts a major focus on individual and team performance.

Netflix's meteoric rise left little room for poor performers, relying on 360-degree feedback to determine who might be holding the team back.

"I want people to receive feedback not just from their direct managers but from anyone who has feedback to provide." Reed Hastings, Netflix's CEO.

This plays into the "team" concept and ensures steady, year-round feedback to maintain the developmental momentum of employees.

🎥 Learn more about the cutthroat performance management methods that keep Netflix on top of the market. 

Development talks at Spotify

Spotify has epitomized fun and progressive company culture by completely tossing out traditional business structure models to build a fresh new concept from scratch. Instead of teams and departments, you will find employees organized into flexible squads, chapters, and guilds.

Squads and individuals are reviewed regularly to find opportunities for improved performance and solutions to prevent mistakes from reoccurring. 

In addition to these frequent performance checks, employees are given the reins to conduct two development talks each year.

The focus of these 1:1 meetings is personal growth and professional development while staying aligned with company needs. This strategy gives employees the support they need to improve, strengthening the company in the long run. 

🎧 Explore more about employee performance reviews at Spotify and their unique company structure. 

💬 Check our collection 17 one-on-one meeting templates. We can guarantee there is something useful for you.

📈 Why is it important to manage employees' performance?

We've all heard the idiom, "If you aren't measuring it, you aren't managing it." Too many companies fail to put forth even the effort to measure employee performance in an objective, data-driven way, instead relying on supervisors' subjective, often inaccurate, opinions.

Effective performance management takes objective data and improves upon it. Think of it like turning a B student into an A student, but in a professional setting (or as Mr. Rockefeller put it, "showing average people how to do the work of superior people."). Managing and improving employee performance can have a massive impact on a company's success. 

Studies consistently show that performance management provides a wide variety of benefits. 

But be warned: poor management can be detrimental to employee performance.

Here are some stats to consider when it comes to employee performance management:

• 74% of workers stated that lack of employee development opportunities is hindering their potential.
• 89% of human resources pros agree that ongoing peer feedback and check-ins are vital to success.
• 55% of workers don't believe annual reviews improve their performance.
• 80% of employees felt that learning new skills would make them more engaged.
• Only one-third of employees in the U.S. report being engaged at work.
• Internal mobility improves employee retention by almost 20%.

With proper performance management being such a key component of employee satisfaction and engagement, it is shocking to see companies not prioritizing learning and ongoing feedback as core responsibilities for managers. 

Something as simple as feedback training for managers can significantly impact employee performance. 

Bored employees are unengaged, less productive, and as much as twice as likely to quit. Something as simple as offering learning opportunities can simultaneously boost engagement, upskill your workforce, and strengthen the company overall.

🔗 Learn how to link learning and performance management and synergize success. 

➡️ Dive deeper into performance management challenges and how to overcome them.

➡️ Manage and grow your people's performance with Zavvy

Zavvy is a people enablement platform that provides people managers with the tools to efficiently measure, manage, and improve employee performance. 

Whether you need employee development software to set goals and track progress, 360-degree performance review software, or an LXP to provide learning opportunities, Zavvy's got your back!

Managing the performance of an entire workforce is a tall order, but with the right tools, you don't have to do it alone. 

Bring your organization into the with Zavvy's AI-powered suite of HR software. With it, you can deliver top-tier employee support more efficiently than ever before.

📅 Contact us today to schedule a free demo of these features and more!

❓ FAQs

How can organizations use job performance information to manage employee performance? 

Measuring employee performance with hard data, such as a skills matrix, provides actionable information for decision-making. It reduces bias and highlights which employees excel and who do not make the grade. From there, management can reward top performers, support those with potential, and possibly let go of chronic underperformers. 

What is HR's role in managing employee performance? 

Depending on the organization of the company, human resources may take on a direct or indirect role when it comes to employee performance management. Direct examples include conducting performance reviews, coaching, or planning training. Frequently, HR delegates these duties to direct managers, providing indirect support such as training managers to give better feedback, measuring and analyzing employee performance to report to managers, and administrating employee management software.

How can a balanced scorecard help manage employee performance? 

A quarter of the traditional balanced scorecard model is "Learning and growth," which is closely tied to employee performance. Variants of the employee scorecard focus on the individual, breaking down different aspects of performance into different sectors. Such a model can be helpful as it shows where an employee's strengths and weaknesses lie, allowing management to focus their support accordingly.Picture this: A well-oiled machine, humming in perfect harmony, each part fulfilling its purpose flawlessly. That's the dream. But here's the reality check: no company, no matter how big or small, runs effortlessly without deliberate attention to performance management.