How to Develop a Performance Management System

Co-authored by Jeffrey Fermin

Last Updated: December 7, 2023 Approved

Performance management involves more than simply providing an annual review for each employee. It is about working together with that employee to identify strengths and weaknesses in their performance and how to help them be a more productive and effective worker. Ready to make a system of your own? Keep reading to learn how to develop a performance management system so that you can help everyone in your organization work to their full potential.

1

Evaluate your current performance appraisal process.

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Also, look at how frequently you are providing feedback. Determine if there is anything you need to change or add to the evaluation itself. You may decide to build on what you already have or to develop a new system altogether. ^{[1]
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2

Identify organizational goals.

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Take the time to clarify what your goals are for the next year as a company. Performance management systems help rally staff members around your organization's goals because they help staff know how they are to be involved in reaching that goal. ^{[2]
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- Identify processes or procedures that could be simplified or done more effectively.
- Declare your sales goals for the next year or new products you would like to develop.
- Share your hope for better communication between departments and staff members.

3

Set performance expectations.

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As you sit down with each employee, clearly lay out your expectations for them. Identify specific things you would like them to accomplish over the next year, or whatever time frame works best for you. Prioritize these so the staff member knows which is most important and make sure to give them a deadline for each task. ^{[3]
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- Acknowledge what they are already doing well. Use this to encourage them.
- Share some weaknesses that you have observed in them and in their work habits, and how overcoming those would help their performance in the company.
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4

Monitor and develop their performance throughout the year.

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As employees begin to work on their performance, keep an eye on how they are doing. Give praise where performance is strong. If they appear to be struggling to meet performance expectations, talk with them and see if you can offer any support or coaching.

5

Evaluate their performance.

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At each performance review, let the employee know how they are doing. It is often helpful to assign a numeric value on a scale, rating the employee from "not meeting expectations" to "meets expectations" to "exceeds expectations." ^{[4]
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- Provide feedback on their performance. Be as specific as possible, noting key examples of when they demonstrated a certain quality.
- Talk about the consequences or rewards of their performance. Let them know if they are on probation, are getting a raise in pay, changes in vacation days, or any other relevant action.
- Discuss any problems they may be having. Listen to their concerns or worries as you talk through potential solutions.
- Align feedback with feedback given throughout the year in their one-on-ones.
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6

Set new performance expectations for the next year.

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However, since these are also based on organizational goals, you will need to re-examine your goals for the upcoming year. ^{[5]
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How do you deal with an employee who thinks they are the boss?

Jeffrey Fermin
Marketing Manager, AllVoices
Jeffrey Fermin is a Performance Marketing Manager based in Miami, Florida, who currently works for AllVoices. He’s also the Founder of a full-service marketing company called New Theory. With over 10 years of experience, he specializes in digital marketing and content creation. He earned a Bachelor’s Degree in Psychology and a Bachelor of Education from Florida International University. Jeffrey has won a Microsoft Octas Innovation Award and is a TechCrunch Disrupt Runner-Up.

Jeffrey Fermin

Marketing Manager, AllVoices

Expert Answer

Take some time to understand the root cause of the employee's behavior. Once you have a better understanding of their motivations, you can approach the situation with greater empathy and tailor your approach accordingly. Once you have a better understanding of the employee's behavior, it's important to provide them with specific feedback about how their behavior is affecting the team and the company's goals. Be clear about your expectations for their behavior and performance, and provide concrete examples of how they can improve.

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What do you say to an employee to help them improve?

Jeffrey Fermin
Marketing Manager, AllVoices
Jeffrey Fermin is a Performance Marketing Manager based in Miami, Florida, who currently works for AllVoices. He’s also the Founder of a full-service marketing company called New Theory. With over 10 years of experience, he specializes in digital marketing and content creation. He earned a Bachelor’s Degree in Psychology and a Bachelor of Education from Florida International University. Jeffrey has won a Microsoft Octas Innovation Award and is a TechCrunch Disrupt Runner-Up.

Jeffrey Fermin

Marketing Manager, AllVoices

Expert Answer

Offer solutions to help the employee improve their behavior and performance. Provide them with different resources (like mentoring or training) to help them develop the skills they need to succeed. Be clear about what actions need to be taken, and set clear deadlines for improvement.

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Tips

Reward and celebrate often. If a team exceeds expectations in meeting a specific deadline, take them out to lunch. If an individual is regularly staying late to make sure things get completed, find a way to thank them for their effort.

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Put your performance plans in writing. This provides a record that both the organization and the employee can return to. It also verifies that both parties saw and agreed to the plan (via their signatures).

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Tell your employees about the new performance management system. Explain why this change needed to take place and how it will help them as a staff member and the organization as a whole.

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How to Develop a Performance Management System

Steps

Evaluate your current performance appraisal process.

Identify organizational goals.

Set performance expectations.

Monitor and develop their performance throughout the year.

Evaluate their performance.

Set new performance expectations for the next year.

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