Performance Management: The Key to High Performance and Growth
Managing Performance is an absolute necessary for businesses that want to create high performing teams. If an organisation does a great job of fostering a culture of growth, openness, and accountability, changes are that managing performance is a priority for them.
Despite what the name might lead people to believe, performance management is not just about addressing underperformance—it’s about reinforcing excellence and making sure every employee understands their role within the bigger picture! When done right, it is incredibly effective for increasing employee engagement and motivation by creating accountability and recognition through realistic goal-setting and feedback. Here’s how New Zealand businesses can create a robust performance management process and improve the overall performance and well-being of their organisation.
Creating a Culture of Feedback and Openness
High-performing employees thrive on feedback. They want to know they're doing great, and consistent, positive reinforcement keeps them motivated. On the other hand, employees struggling with performance benefit from the same practice as it can help them get back on track. For this reason, performance management is about establishing a continuous process of feedback and conversation.
When feedback is regular and constructive, it builds trust and shows employees that the company is invested in them, making it easier to address underperformance. After all, when we feel heard and like our input makes a difference, we are also much more likely to take things on board.
Setting Clear Expectations
Any kind of performance (whether high or low) needs to be measurable in order to be assessed properly. That’s why KPIs are so important and effective: they provide clear expectations and achievable goals for employees to strive towards. As helpful as they can be, businesses need to make sure they are setting the right KPIs in the right way.
KPIs should be tailored to the employee’s role and how it contributes to the company’s goals, values and direction. In addition, they should be set up using the SMART principle (Specific, Measurable, Achievable, Relevant, and Time-bound) and be regularly reviewed to ensure they remain relevant to changing business conditions. Involving employees in the process of setting these goals is a great idea: it fosters buy-in and provides them with a deeper understanding of the why and how behind their targets.
Feedback: A Regular Practice
Because the ultimate goal of performance management is to promote high performance across the board, feedback should be your best friend alongside goal-setting. As mentioned, employee feedback should be regular and never be limited to annual performance reviews. Employees benefit from check-ins (at least quarterly) to address issues and celebrate successes as they arise. Informal feedback, such as quick catch-ups or casual conversations, is just as valuable as formal reviews. This approach builds a culture of continuous improvement and keeps performance expectations top of mind.
On top of that, employee feedback sessions offer an opportunity to build relationships. They show that managers are not just there to criticise but to help employees grow.
Addressing Underperformance
As much as you can have frameworks and goals in place for every employee, unfortunately, not everyone will consistently meet expectations. When this happens, it’s important to address issues in a timely and supportive manner, keeping in mind that performance management is never meant to be punitive.
Even when critiquing an employee’s actions or raising underperformance, be specific, honest and mindful. These can be hard conversations to have at times, which is the reason why in New Zealand, many managers shy away from them. Directness and criticism are not known to be strong in the Kiwi DNA! As much as the prospect of having this kind of conversation can feel daunting, remember that addressing performance issues early can prevent long-term problems. Short-term pain for long-term gain!
Start by ensuring that the employee acknowledges their underperformance and understands what is expected of them. Conversations around improvement should be collaborative, focusing on what both the employee and manager can do to facilitate progress.
Support strategies can include:
- Buddy systems where underperformers can learn from high-performing peers.
- Coaching or additional training sessions.
- More frequent check-ins to monitor progress.
Informal and Formal Performance Management
To give some context, around 64% of all unjustified dismissal cases in New Zealand are ruled in favour of the employee and, in 62% of these instances, the employer is ordered to pay out $10,000 or more. Definitely not a road to go down!
It’s important to handle employee performance management fairly and in line with good faith principles to avoid these potential risks. Most issues can and should be addressed informally at first. However, when informal measures are not enough, formal processes can be initiated. A more structured approach such as a Performance Improvement Plan (PIP) for example, can clearly outline areas of concern, the steps needed for improvement, and a timeline. If all fails still, in some extreme cases, moving to disciplinary action can be explored.
Ultimately, managing employee performance management is not about punishing employees but helping them succeed. Raising concerns informally helps employees correct issues before they escalate, while formal processes are in place as a last resort.
Conclusion
Performance management, when done right, benefits everyone in the organisation. It motivates high performers, helps underperformers improve, and aligns individual contributions with company goals. By fostering a culture of regular employee feedback, setting clear expectations, and addressing issues proactively, businesses can create an environment where all employees thrive.
As always, basic frameworks such as the one outlined in this blog should serve as general guidelines only. At the end of the day, every business will have special and unique situations that might require more expert attention. If this sounds like you get in touch today and see how we can help!