Research shows that happy employees are 12% more productive in the workplace– and happy salespeople produce 37% greater sales. But how can you ensure that your employees are satisfied? The answer: through better performance management. Although performance management is a critical aspect of any organization, only 55% of employees feel that their company’s performance management processes are effective.

Most Employers Don’t Actively Track Employee Performance

Although performance management is a critical business process, most employers aren’t actively tracking their employee’s performance. Management may feel that it’s too difficult to track employee performance or may not have a system in place to help. There may not be an emphasis on performance management processes throughout the organization, or it may be considered the realm of higher level executives. Commonly, managers may rely upon their memory to conduct employee performance reviews, which can lead to an environment that feels biased and unfair.

Realistically, it’s harder for individuals to remember positive things rather than negative or critical things. When everything goes smoothly for an employee, a manager may not notice them at all. When an employee makes a mistake or is not meeting expectations in one area, it may have such significant consequences for a manager that the manager can’t help but remember. Tracking employee performance through an unstructured way exacerbates these issues, making it far more likely for an employee to be penalized for their mistakes and shortcomings than rewarded for their accomplishments.

The Importance of Effective Performance Management for Company Success

Effective performance management is critical because traditional performance reviews are flawed. Not only do employees often react negatively to performance reviews, but the reviews themselves may not lend any useful information.

• 57% of organizations don’t do anything to remove bias from their reviews. It’s common knowledge that employees don’t leave companies, they leave managers. If an employee feels that management is biased against them, they are likely to leave, leading to poor employee retention.
• Only 6% of organizations believe that their review process is effective. Businesses continue to engage in annual reviews because it is a standard component of the business process, rather than believing it is truly effective.
• 62% of employees feel blindsided by performance reviews. With an emphasis on the negative, employees often feel as though a performance review indicates they can’t do anything correctly. These employees may become unmotivated or feel helpless. More transparent, continual communication may be needed to ensure that employees aren’t surprised by their performance reviews.
• 57% of employees felt as though performance reviews pit them against other employees. Comparing employees to one another appeared to be a disheartening measure and one that was less likely to inspire employees and more likely to make them leave altogether. In fact, 37% of office workers reported they have looked for another job due to a performance review.
• 70% of employers are currently looking to review or update their performance management solutions. Managers agree with employees: current performance review standards are often biased and lax. Managers also feel that performance reviews are a waste of time, which is why many companies are now looking to update and refine their performance management solutions.

Employees Are Motivated through Recognition

Existing performance management processes appear to stumble when they involve unhealthy levels of criticism or foster an environment of unhealthy competition. By slanting employee reviews and performance metrics in this way, employers fail to capitalize on what drives employees: recognition. 

Over 50% of employees believe that employers can increase engagement through recognition. Recognition is the major factor in employee retention — and it’s one way to make performance management more effective. By recognizing employees for their accomplishments and consistently giving them goals to work towards, businesses can make their employees feel valued. 

Of course, it can be hard to identify the employees who need to be recognized without having a method of tracking employee data. 58% of organizations are using spreadsheets as the only way that they’re tracking performance. This is contributing to difficulties when creating effective performance management; managers are unable to work with real data to improve their employee’s productivity. 

By also creating better business and data management processes, an organization can ultimately foster a relationship with its employees that is recognition-based and goal-focused. Through this, it can create effective and comprehensive performance management strategies, with the ultimate goal of aiding the organization towards higher ROI.

Looking for some tips and tricks for modernizing and reviving your company’s performance reviews and performance management processes? Be sure to check out our video: Reviving the Performance Review for ways you can reduce the negative impacts of traditional reviews, and update your company’s performance management for a modern workforce.

Looking for ways to engage your managers and employees in ongoing performance and development discussions? Book your live demo of emPerform – automated & complete performance management software.