The Top 3 Performance Management Basics for Managers

Do Not Underestimate the Performance Management Basics
Mastering the performance management basics is critical. Yet, far too many managers — particularly those new to the role of management — stumble when it comes to applying the core principles effectively.

Employee Expectations Have Shifted
Adding to the challenge, traditional performance management practices — like rigid processes and annual reviews — are increasingly out of step with today’s fast-moving organizations and employees who expect more. For instance, my former employer, Accenture, has replaced annual evaluations and rankings with timely, personalized feedback for every employee. Similar shifts are underway at companies such as GE, Goldman Sachs, Microsoft, Morgan Stanley, Adobe, and the GAP.

Both Managers and Employees Want Something Better
It’s clear that both employees and managers are seeking something better. Our annual Best Places to Work employee engagement surveys reveal that fewer than half of employees feel their managers provide meaningful, relevant feedback. Meanwhile, most managers we interview view the performance review process as a cumbersome and largely unproductive exercise.

Gallup research underscores the problem:

• Only 20% of employees strongly agree that their performance is managed in a way that motivates them to excel
• Only 29% strongly agree that their performance reviews are fair
• Only 26% strongly agree that their performance reviews are accurate

Corporate culture assessment data confirm that these dynamics are far from what is needed to foster a high-performance culture.

The Five Drivers of Performance Management Basics
Performance reviews serve five essential purposes that are directly linked to higher performance and stronger employee engagement:

• Monitor and track performance
• Foster a culture of accountability
• Support skill development and career growth
• Recognize and reward high performers
• Address and improve substandard performance

The Five Drivers Are Difficult to Accomplish without a Performance Management Process
While it’s understandable that managers want to reduce administrative overhead and employees seek more meaningful feedback, companies that abandon performance reviews risk falling short on the five core performance management priorities.

In particular, managers are likely to struggle with delivering clear, timely, and accurate performance feedback — the very feedback needed to drive higher team performance and boost employee engagement.

Five Questions that Must Be Answered with or without Performance Reviews
Whether or not annual performance reviews are used, managers and employees must be able to measure progress, allocate resources, and adjust strategies and tactics effectively. The first step in mastering the fundamentals of performance management is ensuring that both managers and employees can answer key questions tied to these essential practices:

1. Do your team members know what you expect of them in terms of goals and accountabilities?
2. Is there a clear line of sight to how your team and each team member contributes to the overall strategic priorities?
3. Does everyone know how their performance is measured?
4. How is excellence rewarded?
5. How are under performers handled?

Three Performance Management Basics for Managers
To unlock your team’s full potential, a handful of time-tested performance management basics — refined over decades of performance management training — must be consistently applied:

1. Set Clear Performance Performance Expectations
   There should be no ambiguity around what constitutes success or failure in any role. Ensure that goals and performance metrics are relevant, consistent, fair, achievable, accurate, and timely. To get it right, involve employees in co-designing these metrics with you.
2. Ensure Transparent Performance Measures
   Performance goals and success metrics should be visible to everyone. Transparent objectives not only boost accountability but also help employees track progress, understand what’s working, and identify where adjustments are needed to drive results.
3. Establish Meaningful Rewards and Consequences Upfront
   In high performance cultures, exceptional results are rewarded, and subpar performance carries consequences. When applied effectively, rewards and consequences guide people toward the behaviors, actions, and mindsets you want — and away from those that undermine success.

   The final “basic” — addressing poor performance — is often the hardest for managers to enforce. It’s uncomfortable to deliver negative feedback or impose consequences, especially for those who want to be seen as “nice.” Yet, holding people accountable is essential for keeping high performers motivated, engaged, and committed to staying.

The Bottom Line
When it comes to the performance management basics, be supportive, encouraging, and candid. Underperformers can eventually hold the entire team back, so it’s your responsibility to ensure improvement or make the difficult decision to move them on within a reasonable timeframe.

To learn more about performance management basics for managers, download 3 Must-Have Ingredients of High Performing Teams for New Managers