How Performance Management Skills Will Set You Ahead of the Competition

Performance management is more than setting KPIs or yearly reviews. It is the art of translating strategy into action, of turning employee aspirations into realities.

Mastering performance management skills will differentiate a rudderless team from a laser-focused unit, a floundering project from a successful venture.

This article will explain:

• Why exactly is the performance management skillset so coveted.
• How performance management skills can be your secret weapon in the corporate arena.
• How can you harness them to outpace, outperform, and outshine.

📈 What are performance management skills?

Performance management skills refer to the competencies that managers, HR professionals, and employees need to effectively implement, participate in, and derive benefits from the performance management process. 

These skills encompass a range of abilities that facilitate goal setting, feedback delivery, performance evaluation, and the overall development of employees. This contrasts with performance measurement, which can be seen as a passive approach to performance: you gain insight into the team's achievements but don't necessarily do something with that insight. 

Performance management skills are one of the core competencies of managers. 

Performance management can't just focus on revenue – it also needs to include people, highlights Wouter van Doorm, HR leader with 20+ years of experience: ‍

"What I believe has changed in the last couple of years is that the frustration among employees and leaders has reached a tipping point, and the financial driver behind the [performance management] process has almost excluded its humanity."

🤹 13 Core performance management skills and competencies

Goal setting

Goal setting includes the ability to define clear, measurable, and achievable individual goals for employees.

Goal setting can be seen as the heartbeats directing the work toward results every day. Without goals, the work would lack direction and purpose. Employees would lose motivation, and you would lose money. The lifeblood of your organization – creation in exchange for financial compensation – would stop flowing.

Mastering goal setting is thus a key pillar of performance management. 

It is something alive that requires a profound understanding of the business objectives, resources, and people. It also demands the ability to be flexible and adjust the goals should the external circumstances change. For example, if you lose a major client, get additional funding, or new team members.

👀 To ensure you take the right approach to goal setting, check out our analysis on the difference between performance and developmental goals.

Giving feedback 

Effective feedback encompasses both positive and constructive feedback. 

Feedback is another cornerstone of performance management that can make or break teamwork, employee motivation, and retention. 

Skillfully delivered feedback brings clarity and motivation. It makes the employees aware of where to improve without making them feel disheartened. Instead, they'll believe in themselves and feel convinced that change is possible. They'll feel excited to exceed the goals this time. 

Of course, the impact of feedback depends on the employee's attitude and drive, too. But as a manager, you're responsible for delivering it as effectively as possible. 

💬 For more inspiration, check out our performance feedback examples with exact scripts you can use when giving feedback.  

✍🏼 You can also copy our 145 performance review phrases (for all levels of employee performance) to sound more experienced and competent in seconds.

Communication

Communication is the oxygen that brings life to performance management. 

If you're not effectively conveying expectations, concerns, and recognition, you're merely doing performance measurement, not performance management. 

Ideally, communication should happen continuously. Work chats and team meetings are examples of regular communication channels. During a performance assessment, mastering your communication skills is vital.

🙌 Our guide will teach you how to run successful performance review meetings. 

Coaching

Coaching is the most efficient way to guide employees to improve their performance and career growth. It is a partnership between the coach and the individual that focuses on unlocking potential and driving them to their own answers.

At its core, coaching is about helping individuals set achievable goals and providing the support, resources, and feedback they need to achieve them.

When integrated into performance management, coaching ensures that the process is more engaging and tailored to individual needs.

Rather than just evaluating and providing feedback, coaching empowers individuals to take ownership of their development. This sense of ownership can lead to higher motivation levels and better performance outcomes.

🧑🎓 Coaching is not a single skill but a whole family of skills. To learn more, check out our guide on coaching skills.

🏆 Check out our comprehensive coaching skills training that will turn a good leader into a great coach. It's your shortcut to enabling managers as coaches in your organization.

Analytical skills

So far, the points we've covered have been mainly about soft skills. However, excellent performance management also requires analyzing employee performance metrics and drawing actionable insights. 

Knowing the numbers and hard data helps you see where to improve team performance to hit targets. It gives clues about the actions needed to get performance back on track – such as hiring additional support or training your employees. 

📈 For more inspiration, check out our guide on measuring employee performance, including 9 key metrics you may want to use.

Conflict resolution

A critical competency of a manager is learning how to manage and resolve conflicts that may arise from performance reviews or feedback. 

Conflicts can leave a tight knot in the stomach of even the most experienced manager. This is because it can trigger past traumatic experiences unrelated to the work situation. 

With proper conflict-resolution skills, you can help your people learn and grow from conflict so that it ends up being a positive experience instead. And when your employees feel like they're growing, they perform better. 

Mastering points 2 and 3 above – giving feedback and communication – will positively impact your conflict-resolution skills. 

Motivating and encouraging others

Performance management, at its core, seeks to optimize individual performance in line with organizational goals. A pivotal component of this is the motivation and encouragement of employees.

To boost team performance, you must know how to inspire and encourage your team to achieve their best. This requires a deep understanding of human psychology because everyone gets inspired by different things and in their own way.

We all have different personality needs. While one employee may get inspired by getting an extra day off to spend with their kids, another will get more inspired by professional development opportunities and taking on more responsibility. 

This is why a great manager knows each team member and what makes them tick.

Decision-making

Excellent leadership skills require the ability to make fast yet informed decisions. Performance management-specific decision-making involves making choices about employee progress, promotions, or performance plans. 

Decision-making doesn't always have to be around tricky situations like laying someone off. It can also be a welcome decision to promote someone who has done a great job. 

📧 Check out our guide on how to write a promotion announcement email. 

Empathy

Great performance management is done with empathy or understanding the emotions and feelings of employees. This is especially important during tough reviews. 

Depending on someone's background and previous experience, it can be more or less challenging to receive constructive feedback. Some people tend to take it personally and get hurt. 

It can also be disheartening if an employee has worked hard for a promotion – only to see a colleague snag the position because they weren't up to par. 

These situations require empathy from the manager. 

And it's affecting performance management. In the second example, a lack of empathy can lead to the employee resigning. However, if they feel understood and encouraged by their manager, they may rise, improve, and maybe get another position that's an even better fit.

Active listening

Active listening ties back to the above paragraphs about communication, coaching, and empathy. It is a skill that powerfully communicates that you truly understand employee concerns, aspirations, and feedback. 

Naturally, active listening will make your team members feel seen and heard. Feeling acknowledged is the most essential factor behind employee motivation and satisfaction. And satisfied employees perform better. 

Active listening can be done by reflecting to the employee what they just said, but in slightly different words, to show that you listened and understood them.

For example: "From what I hear, you experience that your team lead repeatedly ignores your suggestions. Is this correct?" 

Reviewing (and measuring) employee performance 

A key part of performance management is to assess whether employees meet standards. This assessment is the foundation of performance reviews. 

Learning how to write performance reviews that are clear and concise is a critical performance management skill. 

You need to strike the right balance between constructive and positive feedback, be unbiased, and encourage growth. 

Rightly done, performance appraisals are a powerful way to boost performance management.

📝 Check out 40+ constructive feedback examples that highlight areas for improvement. 

Identifying potential

Identifying potential is the ability to spot employees with a lot to offer with their knowledge and skills. These employees can grow to become influential in the company. 

Successful performance management includes a succession plan. A succession plan is your insurance against suddenly losing top talent in vital roles. It lists employees with potential who are able and willing to substitute your current key positions should something happen. 

💡 Tip: You can use the 9-box grid for identifying high potential. 

Using AI to enhance employee performance

This may sound like science fiction, but companies that don't jump on the AI train will increasingly lag behind. 

AI can be one of your top performance management tools. This is because using AI in performance management will help you make better strategic decisions to boost performance. 

With AI, even managers relatively new to performance management can make empowered decisions that boost results. I

🦾 If you're curious to learn more, check out our guide to using AI in HR and our complimentary resource on companies who are already using AI in their HR processes.

🕵️‍♀️ The importance of performance management in organizational growth

Performance management is a critical factor behind organizational growth. Rightly done, it leads to higher-performance employees who are more satisfied and drive growth within the organization. 

When combined with talent management, excellent performance management leads to a reduced turnover rate. 

What are the common mistakes in performance management, and how can they be avoided? 

Managers not having proper training to give feedback

How feedback is received is not as much about the feedback per se – more about how it is communicated. 

If managers don't know how to give feedback, it can come off as insensitive or attacking and lead to lower employee morale. 

A solution is to organize training on how to deliver feedback. Zavvy offers this type of training for managers. 

Not communicating expectations 

"Common sense" looks different for everyone, so it's always best to over-communicate – especially for remote teams. This means communicating expectations clearly and precisely.

Setting goals that are too vague or optimistic

Goals should ideally follow the SMART rule – they need to be specific and measurable. An example of a vague goal is "sell more units." An example of a clear goal is "sell 100 units during the next 2 months". 

Similarly, goals that are too optimistic can have a damaging effect on performance. Employees risk getting burned out and losing confidence. 

Managers only focusing on numbers, and forgetting the people aspect 

Performance management relies on your people. Managers who forget to care about their employees and only focus on numbers will sooner or later see performance suffer. 

🔮 Want more? Delve into the latest performance management trends. And check out our guide to performance management system software.

⚒️ 3 Methods for developing your performance management skills

Mentorship

Due to their complex nature, performance management skills are best learned through real-world experience. 

Mentorship is an engaging employee development method for improving competencies such as performance management.

Mentorships provide leaders with personalized guidance from seasoned professionals who've faced similar challenges.

Through one-on-one interactions, leaders can: 

• Gain insights into effective performance management strategies. 
• Learn from their mentor's experiences. 
• Receive feedback on their approaches. 

This tailored advice, combined with the opportunity to reflect on real-world scenarios, accelerates a leader's capability to navigate complex performance management situations.

Communities of practice (CoP)

Communities of practice are groups of people who share a passion for something they do and collaborate over an extended period to improve and share their knowledge. 

When leaders join or form CoPs focused on performance management, they gain several advantages:

1. Leaders can tap into collective experiences, diverse perspectives, and tested strategies from peers facing similar challenges in performance management.
2. CoPs emphasize active participation and iterative learning, enabling leaders to stay updated with evolving best practices in performance management.
3. CoPs offer a safe space for leaders to discuss failures and challenges and seek feedback without fearing judgment, fostering candid discussions and genuine skill development.
4. Regular interactions with peers in the community help leaders expand their network, which can be invaluable for cross-organizational collaborations or seeking mentorship.

🤝 Are you already a part of Zavvy’s People Enablement community? Access a library of concrete examples from top companies and ask your peers’ for advice and insights.

Formal training (Workshops)

Formal training, especially workshops, offers structured learning experiences designed around proven performance management techniques. 

Through hands-on exercises, case studies, and group discussions, your leaders can delve deep into specific areas of performance management. This immersive environment encourages immediate application, practice, and feedback, ensuring that leaders understand theoretical concepts and gain the practical skills necessary for effective performance management.

Each workshop can focus on one skill so managers and HR professionals can choose the ones they need to develop.

🌱 You can include performance management skills in the your development plan for managers and HR professionals.

➡️ Grow your people's skills and performance with Zavvy

Having a centralized hub for the performance management process will save you a lot of administrative headaches. 

With Zavvy's leadership development software, you can schedule and streamline all the learning activities and individually adapt them to each leader looking to develop their performance management skills. 

No need to schedule a time when everyone can attend – each employee can take the training when it suits them.

Our learning development platform has a library of thousands of resources from different providers – including training on performance management skills.

For better performance management, use our performance review and our goal management software. Plus, the one-on-one meeting software allows you to run informal performance check-ins.

📅 Book a demo with us to see how you can save hours and dollars on performance management with Zavvy!