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Learning and Development | 5 Min Read

Performance Management: Your Key to Retain Top Talent

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Do You Still Believe in Performance Management?

Oh absolutely, I am so influenced by the idea that I make sure that all my employees are appraised and their performance is measured against the pre-requisites.

Employee appraisal, is it just another name for Employee management?

Many organizations use performance appraisal as the strategic lever for individual and business performance. Rushed discussions where ratings are handed out, petty lapses are picked, or payment is addressed, and that’s what sums up the performance management for many companies. This may not be the best way to function when what you are dealing with is dynamic humans, their behaviour and ultimately trying to meet targets.

What Is the Truth Behind Performance Management?


A rainbow of ideas and activities, it is as important for small companies as the million dollar industries.

Employees expect feedback, overperformers want to be engaged and under performer’s look for a clear improvement plan to do the magic, and all the colors of the VIBGYOR come from Performance Management. Do not mistake it for the bland annual performance review.

You may not be doing it correctly or may still be confusing it with the mid and yearly appraisals. Performance management is a continuous process in which appraisals are a small part. Since a long time companies have just been focusing on one aspect of the rainbow, imagine what benefits come when we include everything and try to do it the right way!!

It starts from the time you employ a candidate and stays with him forever. It is promoted with the sole idea of bringing out the best in employees and improve their effectiveness.

Performance management goes for building an elite culture for individuals and teams so that they can together work towards enhancing the business processes regularly.

It focuses on the clarity of objectives and the idea of getting the right thing done at the right time.

A continuous process of setting objectives, assessing the progress of employees and an ongoing guidance and feedback mechanism to see if they are meeting the goals that is the truth behind performance management.

I know you are clear and never will you ever confuse performance appraisal with performance management, but still here is a quick recap of the difference-


If I May Ask, Do I Really Need a Performance Management System?

Contributing the appropriate amount of time, resources and efforts in performance management can bestow us with the following results-

  • 22% higher investor returns, McKinsey
  • 30% increase in company value, Watson Watt
  • 19% increase in operating income, Towers Watson 

In this era of ferocious rivalry and globalization, the top three challenges on the list of any organizations would be

  • Retaining, engaging the employees
  • Building a world-class leadership pipeline
  • Reskilling and upskilling employees

Now try and guess what these issues have in common. Kudos to you if you said Performance management.

A well-structured performance management system can play an essential role in streamlining the activities of the employees in understanding a definitive corporate mission and vision. Performance management guarantees constant progress via constant monitoring.

The 2012 Global Workforce Study Engagement at Risk found that,

  • Attracting employees is almost entirely about providing a sense of security.
  • Retaining employees has more to do with the quality of the work experience overall.
  • Employees have doubts about the level of interest and support coming from senior leaders.

A performance management system can be that secret ingredient which fulfills all the desires opening the doors for individualized goals and aligning them with the organizational strategies

When we plan to build an empowered and skilled labour force, companies have to do more than just audit achievements. There is a need for a continuous cycle, where evaluation isn’t the primary objective but a steady, sustained performance management system.

This brings us to the next question-

What Exactly Is a Continuous Performance Management System?

Supervising performance and giving feedback isn’t an isolated event; it is an ongoing process which happens consistently.

The performance management system is a cycle, where the dialogues vary from one year to another in the light of the evolving subjects.



  • The Expectations

Everything starts with a perfect JD(Job Description), defining the key responsibilities and role the person is expected to deliver. It is only when the people hired know clearly what is expected out of them, that they work well to achieve the expectations.

While defining performance expectations the person ought to make sense of the existence of the job, its association with the company’s objective. The managers should communicate the behaviour expected from the candidates and also tell them about the results to be achieved.

These expectations form the basis of communication throughout the year. Hence a written document of the mutually decided performance expectations serve as a clear record.

  • The Verifiable Expectations

Quantifiable performance expectations make the work easy and efficient. But many times these expectations are difficult to measure, forming qualitative measures which can be spelled out in terms of behaviour demonstrated and the target dates do the magic.

Some common ways to verify an employee’s performance are; Records of attendance, finances, and inventory or rating scales for the behavioural conduct or simply directly observing the person throughout the tenure.

A special mention should be given to developmental plans as a part of this performance management cycle. This could entail job mastery skills and professional development skills that go beyond the idea of the KRAs mentioned in the JD.

 Observing and Evaluating

  • The Feedback Mechanism

You have a target to meet and when you fall short, then you ought to know where the GAP occurred and why.

 Once the employees start working and carrying out their responsibilities, the managers are expected to keep an eye on them and give feedback.

This process is two-way communication between the managers and the employees. Managers are responsible for giving a constructive, detailed and timely evaluation and the employees are expected to seek feedback, understand it and communicate their feelings as well.

“Let me share a secret with you, what if I tell you that you can evaluate your employees better and faster with one tool, would you believe me?”

Training need assessments are one effective way by which managers can readily identify the GAP between the employees and the expectations. These assessments can distinctly tell the improvements required in terms of behaviour and functionality. Companies such as Mettl are proficient in providing these services.

 By giving a point by point input, managers play an essential role in the employee’s growth and inspiration to meet the organizational objectives.

This mechanism supports better communication, an increased level of self-esteem among the employees and maintains commitment. Managers ought to unmistakably tell workers what they are doing and the impact of their behaviour on the team, company, and customers.

  • Coaching- The Effective Tool

It is about preparing, mentoring and giving direction. It can be used to enhance performance, growth and improve the individual’s obligations and responsibilities. The idea of performance coaching strengthens the employee-manager relation by recognizing the worker’s progress and additionally help develop new skills.

Managers assess and address the developmental needs of their workers with training need assessments and help them acquire the required skills. The two parties can then work on creating plans for preparing new assignments, work enhancement.

These developmental plans infuse a greater sense of loyalty in the employees for the companies who have developed talent from within. It, in turn, benefits the company with a pool of talent for future planning.

 The Review and Rewards 

“Organizations that assign learning based on performance reviews see 38 percent better engagement and 61 percent greater amount of positions with a ready and willing successor identified.”

Do not mistake the review session to be just a recapitulation of the year. This is the time of carrying forward the momentum built over the year, setting the tone for an open discussion and a fruitful conclusion.

For the event to be more effective, let there is a self- evaluation session by the employees and one session where the manager evaluates the employee’s performance.

Now if you have followed the cycle of performance management correctly, then you’ll see that the gap between the self-appraisal and the manager’s appraisal will be less. Take into consideration, that once the expectations have been set practically and training need assessments have been done, then there will be no surprises, and the GAP will no longer exist.

  • The Review Day

Let the discussion be a dialogue rather than a monologue. Express your opinion about the performance, the areas of concern and applaud them whenever needed. Listen to the employee’s explanations and move forward with a positive attitude. The 360 degree feedback would be a saviour here. The name itself says it all; it is a feedback of the employee collected from his junior, his boss, his boss’s boss and not to forget his peers.

It is crucial to let your employees know that they met, exceeded or underperformed to the expectations and that they will be rewarded with pay, bonuses for the same.

Now plan for future, start chalking out the action plans. Make one thing clear that you and the employee are on the same page while discussion these endeavours. Discuss the new areas of responsibilities and end on a positive note.

The Implementation

What good is a system which cannot be executed well?

So far we talked about the processes and tools which make the performance management system, but what really matters is how effectively the system is implemented and how religiously it is followed by the people. A good implementation shall follow the criteria of-

  • Alignment

A good system shall be in sync with the main organizational goal of the company; ultimately everybody is working towards the one common goal.

The system shall also be aligned with other HR systems in the organization. For instance, skills that are used to as a standard in the performance management shall be used for staffing and training as well. This makes sure that employees are assessed on a sustainable arrangement and also sends a solid message of the values of the organization.

  • The Commitment of Top Management

“A change of one standard deviation in an index of human resource management practices produced increases of $20 000 to $40 000 in stock market value per employee.”

 – Stanford professors O’Reilly and Pfeffer

The greater the commitment from the top level the more the program is expected to be successful. An organization with committed CXOs, who participate actively and establish clear expectations for everyone, will have a higher rate of success than the ones without any support from the top.

This requires a serious effort from the top management who treat performance management system as an integral part of the company. It is only when everyone participates with equal zeal, that the execution can be perfect.

What Can Be the X-Factor to Your Performance Management System?  

Whenever people take the initiative, they want to do it the best. Sometimes they are unable to achieve the target, and the others get lucky.

Now let us define that luck in case of our performance management system.

The basic objective of this guide is to develop a system that can be used to improve the effectiveness of the team. People work in tandem to monitor, assess and appraise the performance and compare the growth with the standards set. Now, wait, wait and think for a moment-

What if the expectations set are not realistic?

How can the competencies set be validated?

How can the review period be more efficient?

No doubt that a lot of time and energy is spent in getting the goals and expectations right, then measuring them against the set standards is another tedious task. However, things can improve with that X-factor in your bucket.

Assessments are the special band in the spectrum of colors once they are included the rainbow is complete. One basic requirement of an effective performance management system is identifying and setting expectations against which the employees can be measured.

The role of assessments in forming these expectations shall not be denied. We at Mettl provide a platform to assess people and the services can be availed by various companies looking to form a competency framework for the employees and setting benchmarks in the very first step of the performance management cycle.

The role of these assessments doesn’t end in the planning phase but goes all the way down to the review period. When you need to see a figure of improvement and need some scale to compare the present performance with the set standards, assessments are your saviour of time and energy.

I do not say that Formal Appraisals are a bad idea, but all I want to convey here is that, refine your strategy by adding performance management to your strategy.

Carve your way from appraisals to managing performance effectively with Mettl’s assessments.

Get Inspired to Do It!

We love to see results, we want to know who else succeeded in the plan and that’s what motivates us to do it with more confidence, so here I present to you Adobe.

Since 2012, Adobe has promoted ongoing conversations between the managers and employers, focusing on empowering and engaging. This effort has reaped results in the form of 30% drop in voluntary turnover and saving 100,000 manager hours each year.

This one and many such examples testify to the success of an integrated performance management cycle, I may have many more to quote, but I want to quote your success story. So get going, implement one in your organization and we shall meet soon.

A strong performance management system with perfect execution provides a clear picture of the company’s top and average performers and the core strengthens and areas of improvement for the organization.

Originally published May 27 2018, Updated August 17 2020

Divyeshwari Singh

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