25 proven performance management best practices

Why it’s important to follow performance management best practices

Every organisation will have its own unique approach to employee performance management, but following best practices will deliver multiple benefits. These include:

• A standardised framework for success: adopting a continuous performance management approach provides a structured framework to assess progress and measure success. It sets out clear expectations for your employees, creates a fair process, and enhances efficiency for HR and managers
• Better goal alignment: following performance management best practices ensures employee goals are aligned with overall business goals, so everyone is working towards a common purpose
• Boosts employee motivation: providing a clear framework for success, sharing visibility into goals, and actively rewarding top-performing employees can boost morale and motivation for the whole team, positively impacting productivity
• Supports staff retention: rewarding high performers is often listed as a performance management best practice. This can help to support long-term employee retention, as it makes your top talent feel valued and supported to progress in their career
• Enables data-driven decision making: putting performance management software at the centre of your strategy allows real-time data to be collected from multiple sources to provide an accurate picture of employee progress. This data can then be used to identify skill gaps and training needs, or inform decisions regarding pay rises and promotions

25 performance management best practices

Discover our best practices for performance management, categorised by performance management strategy:

Goal setting

1. Set SMART goals

Employee goals need to be set in line with the SMART framework, which ensures that goals are Specific, Measurable, Achievable, Relevant, and Time-bound). This breaks down targets for employees to make them feel more achievable, and means everyone has a clear roadmap to success.

Read more: How to set SMART targets for employees

2. Align employee goals to business goals

Individual employee goals need to align with wider business objectives to ensure everyone is working towards the same purpose. Managers need to communicate organisational goals with employees, so they can clearly see how they can contribute on an individual level.

3. Keep goals agile

Another performance management best practice is to keep goals agile where possible so they can be adjusted if necessary. If goals do need to be reworked due to a change in project scope or other unexpected circumstances, they will need to be realigned with the SMART framework and wider organisational objectives.

Continuous feedback

4. Utilise peer feedback

Feedback gathering is an integral part of continuous performance management, with peer feedback especially beneficial. Asking an employee’s direct colleagues for feedback on their performance and what they’re like to work with paints a more rounded picture of their overall performance. This is much more effective than simply gathering feedback from their manager, and makes the performance management process more collaborative.

5. Gather 360-degree feedback

360-degree feedback goes several steps further than gathering peer feedback. With this approach, HR and management will speak to each employees’ peers, as well as colleagues in other departments and even third-party contractors to source more diverse feedback on their performance. This helps to reduce bias, and ensures people have a fair understanding of their strengths and weaknesses.

6. Encourage self-assessment

Self-assessment is another effective performance management practice. When your people are required to review and report back on their own performance, it encourages a culture of accountability, and inspires individuals to take responsibility for their contribution to the company.

7. Record feedback in real time

Gathering and recording performance feedback in real time means people can clearly see their progress, boosting their motivation. It also allows you to quickly identify employees who may be underperforming and take action to address this, rather than waiting until several months down the line when the next formal performance review is scheduled to take place. Talos360’s performance management software allows you to log feedback in real time.

Encourage managers to act as coaches

8. Invest in leadership training

Developing managers to become coaches fosters a more collaborative approach to performance management. Invest in training those in leadership roles to develop skills such as mentoring and active listening to make this as effective as possible. 

9. Move away from appraisals

Transitioning from annual or quarterly performance appraisals to continuous performance management facilitates a two-way process that can be more collaborative rather than ‘top-down’. 

Read more: Continuous performance management vs performance appraisal

10. Regular check-ins

Booking in regular check-ins with direct reports is one of the top performance management best practices for effective continuous monitoring. Frequent check-ins allow you to keep an eye on people’s performance in a more informal setting, and they provide employees with an opportunity to ask questions or raise concerns.

Improve employee onboarding

11. Prioritise preboarding

Effective employee onboarding starts from the moment a candidate is offered a role. This is when the ‘preboarding’ period begins, and is an ideal opportunity for you to make a strong first impression and begin the performance management process. This is when a buddy should be assigned to every new starter, and your company handbook should be shared with new hires so they know what to expect in terms of performance management from their very first day.

12. Follow a new starter checklist

Follow an onboarding checklist to make sure nothing is missed in the run-up to new hires’ first day. Right to Work checks need to be completed and essential equipment set up, and you should book in initial 1-to-1s to set KPIs and expectations from the start. The new starter checklist should set out a schedule for check-ins in their first few months to make sure they feel supported from the start.

13. Introduce a buddy system

Assign a buddy or mentor to new starters to show them the ropes and free up HR time. This performance management best practice ensures new hires know who to approach with questions in their first few days and weeks, so it makes sense to pair them with someone in a similar role to them. The buddy or mentor is an ideal person to gather feedback from when assessing initial performance.

Create a magnetic culture

14. Encourage open communication

It’s important to create a magnetic culture that people actively want to work for, and that motivates them to perform at their best. Clear communication is a key part of an open culture, and you can encourage this by:

• Being transparent about company updates
• Hosting regular sessions where leaders can share plans, and employees can provide feedback or ask questions in an open forum
• Acting on feedback to show employees that their opinions are valued

15. Survey your people

Use anonymous employee engagement surveys to find out how people feel about working at your organisation. This will provide data-driven insights to inform the future of your performance management strategy.

16. Ask for feedback on your processes

Make sure your performance management processes work for your people by asking for their feedback on what’s working and what isn’t. Put a suggestion box in an accessible place and consider setting up a digital route for remote staff to provide feedback. 

Read more: Remote hiring: how to do it properly

Empower employee growth and development

17. Personal development plans

Using goals, objectives and 360-degree feedback to inform personal development plans (PDPs) is another of our tried-and-tested performance management best practices. PDPs provide employees with a clear roadmap to professional development. Tracking individuals’ skill gaps and developing PDPs in your performance management software means you can not only spot these gaps, but also support employees in their own development.

18. Offer clear progression opportunities

Setting out clear paths to progression for different roles is an integral part of the performance management process. When you let people know what they need to achieve to receive a salary increase or promotion and grow in their career, this can help to motivate them to exceed their goals. 

19. Provide visibility into goals

Our performance management software provides people with full visibility of their goals, so every employee can see exactly what’s expected of them and keep themselves accountable. This fosters a culture of transparency, and keeps employees motivated. 

20. Align performance with pay

Encourage employees to continue to grow in their career by implementing a performance-driven culture that aligns performance with pay or other rewards. A merit-based culture can help to make people feel valued and appreciated.

Read more: What is employee value proposition and why is it important?

Recognise and reward employees

21. Tailor rewards

Personalise rewards or acts of recognition to individual employees to make them feel more valued. This is an effective performance management tactic, as it shows you’ve listened to what they value. It can also help to boost morale, positively impacting staff retention.

Read more: Workplace benefits: an employer’s guide

22. Share praise publicly

Another performance management best practice for recognising employees is to share praise publicly via the performance management platform. Giving people a shoutout will make them feel valued, and it can also be motivating to other staff who may strive to achieve the same.

Embrace performance management software

23. Utilise automation

Using automated performance management software features helps you to save time and reduce admin, supporting overall efficiency and productivity. Automation enables real-time data collection, providing you with more accurate insights into performance at both an individual and team level. 

24. Provide full visibility

Our performance management solution provides you with a dynamic dashboard that offers a full picture of each individual’s performance, so everyone can see what’s expected of them, and whether they’re on track to achieve their goals. This level of visibility is vital to create a culture of accountability. What’s more, it’s possible to link performance management data with HR analytics tools, such as Power BI, to create a fully centralised dashboard.

25. Integrate with existing systems

Last on our list of best practices in performance management is integration; look for a platform that will integrate seamlessly with your existing HR system to make the transition as smooth as possible. 

Read more: 8 essential performance management software features

Follow performance management best practices with Talos360

By providing enhanced visibility into employee performance, recording real-time feedback, and favouring a continuous performance management approach, Talos360’s all-in-one solution is set up to support performance management best practices, allowing you to:

• Manage performance reviews 
• Schedule regular performance check-ins
• Gather feedback in real time
• Track PDPs
• Identify skill gaps and training needs
• Set and track SMART goals
• Identify high performers
• Share employee recognition
• Automate performance reporting

Contact us today to book a demo and start transforming your performance management.