Business Solutions Center
Human Resources



Performance Management

Performance Management

Performance management is a partnership between you and your employees. The desired outcome of this partnership is to jointly achieve success for your business and your employees.

The best analogy to use when explaining this rather esoteric assertion can be found in something most of us are acquainted with at one level or another: sports, and the relationship between coaches and players.

Coaching is an ongoing process that takes time and commitment to the team and each of the players. Each player must believe that they can successfully fulfill their assigned roles and that the team can win – can be successful – and it is the coach's challenge to instill this confidence and belief in players and the team.

The benefit of this kind of commitment to employee performance management is that it can also impact your business results – in other words, help you “win the game.” In fact, studies have demonstrated that effective performance management impacts business results in the following areas:

  • Company performance
  • Customer satisfaction
  • Employee engagement
  • Employee retention

Of the 12 Gallup research factors identified that motivate employees, more than half can be directly achieved through performance management:

  • To know what’s expected
  • To have the opportunity to do what one does best every day
  • To receive recognition and praise
  • To have someone encourage development
  • To have coworkers who are committed to quality work
  • To talk about their progress and receive feedback
  • To have opportunities to learn and grow

As you can see, investment in performance management can truly pay off both for your employees and for your business.

Performance Management Defined

Performance management is a business strategy that should be an everyday part of your company’s culture. This day-to-day process includes setting goals and objectives, observing performance, giving and receiving ongoing coaching and feedback, and encouraging your employees’ talents. In addition to the formal stages you might typically think of when you think of this process — performance planning and mid-year and year-end evaluations — effective performance management includes managers and employees having ongoing conversations throughout the year.

Performance Management Success Factors

Performance management is successful when employees:

  • Understand and are committed to doing what it takes to improve business results
  • Are empowered to identify and take action to improve their performance and that of the company
  • Are engaged — knowing the work they are doing is beneficial to the company’s success and their own

Example Performance Management Guiding Principles

  • Performance management helps your business produce results, positions employees for success, and helps foster an environment of engagement and trust.
  • Clear understanding of performance expectations through regular discussions helps employees feel empowered and committed to the company’s success.
  • Both “what” and “how” matter when it comes to achieving and assessing performance results.
  • Getting multiple points of view on an employee’s performance can give a broader perspective on their performance and better position them for success.
  • Performance feedback should recognize employee accomplishments and focus on how to improve future results and individual capabilities.
  • When an employee demonstrates truly differentiating performance, appropriate rewards can be given.

Performance Management Process: Performance Planning

As a business owner, you know that you want to make a meaningful difference. Your employees do too, and having a clear performance management strategy can help ensure that they do. It does this by connecting individual efforts to the company’s goals. When an employee can see how his or her work helps move the company forward, it can give the employee intrinsic motivation to give that extra effort.

You can use the SMART objectives framework to clearly define goals and objectives, provide clear direction to employees, and aid in the evaluation process. This framework can help you set goals for yourself and for the business as well.

S     Specific: Define expectations, avoid generalities, and use action words.

M   Measurable: Define specific metrics for quantity, quality, timeliness, and cost that can be objectively measured.

A    Achievable: Make sure that objectives are challenging, but within reason. Don’t assign more than you could reasonably expect an employee to complete.

R    Relevant: Connect objectives to higher-level company goals – what impact can be made?

T    Time Bound: Specify a date or time when the objective needs to be completed.

To ensure success, you and other leaders in your company, along with employees, can:

  • Discuss how the employee’s role contributes to the team’s success and the overall business goals
  • Chat regularly throughout the year to make sure that everyone has a shared understanding of performance expectations, the role that they play, and what the business priorities are.
  • Look for ways to use your employees’ talents in meaningful ways and help them to develop and grow.
  • Review, revise, and add objectives in response to changes in the business.

Performance Management Process: Mid-Year and Year-End Evaluations

The formal performance review process can help in many ways, including:

  • Showing progress made toward achieving objectives
  • Demonstrating the contributions an employee has made to the business
  • Exposing opportunities for greater skill development
  • Establishing plans for going forward

You and your managers as well as your employees can gain the following benefits:

  • Higher quality results
  • Clearer direction
  • Increased motivation
  • Stronger working relationships
  • Enhanced productivity and improved business results
  • A firm foundation for the next performance period
  • Creation of a culture of constant learning

A good performance review discussion should help lead to better collaboration, productivity, and employee engagement. The discussion is an opportunity to reflect on the employee’s performance — specific strengths, contributions and areas of improvement. Take the opportunity to review the performance objectives, discuss your employees’ development and career goals, and even request feedback on your own leadership and how you can more effectively grow and motivate your team.

Performance Management Process: Ongoing Conversations

Ongoing conversations are an important part of the performance management process to encourage higher levels of engagement and performance and help develop both working relationships and individual careers.

Ongoing conversations include:

  • Ensuring that your business’s mission, vision, and priorities are known and understood
  • Discussing individual contributions and recognizing employee accomplishments
  • Coaching and giving feedback on performance
  • Helping your employees continue to grow and develop

As you can see, a good performance management strategy not only helps you to build an effective team that is ready and willing to play hard – but it can also help you to win the game.

The information included on this website is designed for informational purposes only. It is not legal, tax, financial, or any other sort of advice; nor is it a substitute for such advice. The information on this site may not apply to your specific situation. We have tried to make sure the information is accurate, but it could be outdated or even inaccurate, in parts. It is the reader's responsibility to comply with any applicable local, state, or federal regulations, and to make their own decisions about how to operate their business. Nationwide Mutual Insurance Company, its affiliates, and their employees make no warranties about the information, no guarantee of results, and assume no liability in connection with the information provided.