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Beyond the Annual Review: Best Practices for Effective Performance Management
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Talent Development

What Is Performance Management and Why is it Important for Businesses?

One Minute Takeaway

  • Performance management is all about helping employees reach their potential.
  • Best practices to achieve this include regular feedback and goal setting.
  • For best results, businesses need a Talent Development strategy.

Performance management has a bad reputation. For 74% of employees, performance reviews come once a year or less, and only 14% strongly agree these reviews inspire them to improve (Gallup). It should come as no surprise then that 87% of HR leaders are considering changing how they review their employees’ performance (Gartner).

Rather than a yearly chore that employees fear, performance management should be about inspiring your whole team to achieve their potential and produce results. Continuous development requires an ongoing conversation about performance, rather than infrequent and ineffective evaluations.

Give Performance Management a Makeover

 In the past, performance management has been all about looking back on an employee’s work from the last year. Those who didn’t quite hit the mark might end up on a performance improvement plan. Sure, the yearly performance review can help measure output, but it certainly doesn’t do much for nurturing talent growth—especially when you consider that not all goals fit neatly into a one-year timeframe.

When we don’t connect goal setting with short-term outcomes, we often end up with vague objectives that are hard to measure. Plus, annual reviews can fall victim to recency bias, which means an employee’s hard work in the earlier part of the year might be forgotten.

Why Talent Development Matters (A Lot!)

Whether you’re dealing with superstar talent or a  team member who needs a bit of extra support, finding ways for  each employee to unlock their full potential should be a  continuous process. What’s more, communication can’t be one-way. Managers need to work with their teams to set goals and understand each individual’s challenges and aspirations.  It’s all about being both a coach and a leader in today’s workplace.

Providing a coaching, nurturing environment is especially important considering younger generations are more likely to be on the lookout for their next job opportunities. If employees feel stuck in their development, they might start searching for greener pastures. That’s why investing in talent development is crucial for keeping your teams engaged and productive.

When you give performance management the attention it deserves, you’ll  make the most of your investments in recruiting, onboarding, and training. You’ll also be in a better position  to make  smarter decisions when it comes to succession planning and compensation strategy.

Performance Management Best Practices

Helping your team reach their full potential may be easier than you think. Just follow these performance management best practices and watch the magic happen:

  • Regular Feedback: Keep the Conversation Going
    If your employees can’t remember the last time they received feedback, it might be time to rethink your approach. Most employees want more face-to-face feedback than they’re getting. Depending on your industry, you could consider weekly, monthly, or quarterly reviews. The best part? More frequent reviews can be quicker, more focused, and require less prep time.
  • Setting Clear Goals: Aim High, but Stay SMART
    Believe it or not, people enjoy having targets to strive for. Goals are not only key to employee engagement but also to living a fulfilling life. Just make sure these goals are SMART: Specific, Measurable, Attainable, Relevant, and Time-bound.
  • Track Metrics: Keep an Eye on the Prize
    Pairing employee goals with actual business results creates a winning combo. The Objectives and Key Results (OKR) methodology helps you blend performance management with measurable job outcomes. This way, you can monitor performance based on real-time, data-driven insights.
  • 360 Feedback: Get the Full Picture
    Traditional performance management can be a bit one-sided, with employees mainly receiving detailed feedback from their supervisors. But don’t overlook valuable input from peers, teammates, and subordinates. Broadening your feedback perspective provides a more rounded view of an employee’s strengths and weaknesses.

Performance & Career Management Software to the Rescue

Creating a culture of continuous feedback and real-time, measurable goals might sound challenging, but performance management software is here to help! Paycor’s Talent Development has you covered with:

  • Automated Workflows: Focus on Coaching, Not Admin. Let your team concentrate on coaching by eliminating unnecessary administrative tasks with automated workflows.
  • Customized Templates: Make the Most of 1:1s. Equip managers with customized templates to optimize their one-on-one meetings with direct reports, ensuring more effective communication.
  • Feedback Tools: Encourage Open Dialogue. Foster conversation between peers, teams, and supervisors with easy-to-use feedback tools.
  • Integrated Goal-setting: Supercharge Productivity. Boost productivity with integrated goal-setting features designed to keep everyone on track.
  • Easy Access to Historical Feedback: Increase Accountability and Reduce Bias. Access past feedback effortlessly, promoting accountability and minimizing bias in performance evaluations.

Along with performance management, investing in the future of your workforce with career management pathways is a tremendous motivator as employees feel valued and meet their achievement and recognition goals, improving employee retention overall.

  • Clearly define role responsibilities and set expectations together, so employees receive feedback that’s specific to their development plan and future career opportunities.
  • Remove the complexity of succession planning with templates and fillable checklists for easy implementation of your career pathing strategy.
  • Use 9-Box methodology to identify skill gaps or risks of talent leaving to future-proof your workforce.

Paycor Empowers Leaders to Build Winning Teams

Paycor’s human capital management (HCM) platform modernizes every aspect of people management, from recruiting, onboarding and payroll to career development and retention, but what really sets us apart is our focus on leaders. For more than 30 years we’ve been listening to and partnering with leaders, so we know what they need: a unified HR platform, easy integration with third party apps, powerful analytics, talent development software, and configurable technology that supports specific industry needs. That’s why more than 30,000 customers trust Paycor to help them solve problems and achieve their goals.

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