Performance Management Process

The performance management process is a collaborative, communication based process where

employees and management work together to plan, monitor and review the employee’s objectives,
long-term goals, job expectations and comprehensive contribution to the company.

This process is continual, with regular sessions where both management and employees have the
opportunity to give and receive feedback.

The steps in the performance management process can be broken down into four broad categories:
Planning, coaching, reviewing and rewarding. Each step is equally important, and together forms the
backbone of a company’s performance management process.

1. Operational and strategic Planning

The first step of the performance management process is planning.

1.1 The defining stage

The performance management process begins with the operational and strategic planning stage.

HR and management need to define the job itself, including a comprehensive description, long and
short-term goals and KPIs, identify key strategic objectives and develop a clear KPIs for how those
objectives and goals will be assessed.

KPIs should be clear, done in the SMART format (specific, measurable, attainable, relevant, time-
based) and clear performance standards should be set.

1.2 The feedback stage

Once management has completed the defining stage, employees should have the opportunity to
give input on this material. They are the one doing their job and will have a key insight into what
skills, competencies and goals will best assist the company to achieve organisational goals.

1.3 The approval stage

Management and employees both agree to the definition of the role, goals and objectives.

By making this first step of the performance management process collaborative, management sets
the stage for the process as a whole to be collaborative, and the employee feels that they are
involved in goal setting.

2. Learning and development

2.1 Organize meetings on a timely, regular basis

Once the parameters of the job and objectives for the future have been set, the next step of the
performance management process begins.

The Learning and development process is extremely important and must be done on a regular basis.
Meetings should be at least quarterly, although monthly meetings are the ideal.
2.2 Provide necessary training, coaching and solutions

These meetings should focus on solutions and learning opportunities, rather than punitive measures
for lacklustre performance.

If accountability is made into a negative, then employees will avoid it rather than being honest about
where they are struggling.

In some cases, management training in this area can be very helpful to an organisation.

2.3 Solicit feedback on both sides

Management should be able to give - and receive - honest feedback and work with employees rather
than adopting a combative stance. The ability to give actionable feedback is important here.

2.4 Revisit objectives as necessary

As the performance management process continues, management should revisit objectives to see if
adjustments should be made, as well as pay attention to career development opportunities for their
employees.

This step involves reviewing the overall performance of the employee, how well the process itself
worked, and it also includes the reward - which is an extremely important part of the overall
process.

3. Reviewing

3.1 Reviewing employee performance

At the end of the yearly performance management cycle, there should be an employee review,
which is sometimes also called a performance appraisal. Typically, these are held once a year, to look
at how well the employee performed over that span of time.

Managers need to be aware of the responsibilities they are professionally and legally accountable for
and conduct their work practices within these parameters. Legislation that might impact in
performance management includes:

Legislation dealing with discrimination

Human Rights legislation

Fair work legislation

Privacy legislation

Workplace Health and Safety Act

There should be a clear record from previous check-ins to show the employee’s progress throughout
the year. The monthly check-ins are to help the employee with problem-solving, adjusting goals and
other future-looking tasks. This performance review is the only step that looks backward, to assess
the behaviour of the past year.
3.2 Reviewing the performance management process

At this stage, it is important for both management and employees to look over the previous year and
see how well the performance management process worked.

3.3 Reviewing overall objectives and KPIs completion

Of course, one of the main questions to answer is ‘did the employee reach their goals?’ How well did
the employee succeed at the tasks given to them throughout the year?

It is important to look at both smaller and larger goals, as this can give an indication to problem
areas where training or interventions can be applied.

3.4 Giving actionable feedback

A key part of the review is to give and receive feedback.

Management should give actionable feedback for the employee so that they know areas where they
can improve future performance.

The employee should also be invited to give feedback on the process, and how management can do
better on their end.

All records and documentation related to performance management and appraisal needs to be kept
secure and must be accessible to individual employees. Records and documentation can be stored in
manual file such as employee personal file or in soft copy.

Employee should have option to appeal the outcome of the performance evaluation at higher level
or in HR where independent review can be conducted.

4. Action

The last step in performance management process is Action.

4.1 Reward and recognition

The last step of the performance management process is the reward and recognition.

This step is absolutely key - employees will not stay motivated if they are given no reason to. This
does not necessarily have to be monetary, although it likely will include monetary compensation.
Other rewards could be new projects, company-wide recognition, time off, or leadership
opportunities.

4.2. Managing poor performance

A clear system for managing underperformance is good for both a business and its employees.

Best practice employers are aware that ineffective performance management can dramatically
reduce the level of performance in a workplace. Employees that perform well can lose motivation if
they have to carry the burden of poor performing colleagues. Also, most employees who are not
performing well would like to improve.

A consistent approach to performance management provides opportunities to address problems

and generate effective solutions. A successful performance management process is one that
supports the workplace culture and is accepted and valued by employees.

Below is the process for managing underperformance.

Step 1 - Identify the problem

It is important to understand the key drivers of performance or underperformance within the

workforce.

It is also important to correctly and specifically identify the problem.

Step 2 - Assess and analyse the problem

The employer should determine:

 How serious the problem is

 How long the problem has existed, and
 How wide the gap is between what is expected and what is being delivered.

Once the problem has been identified and assessed, the employer should organise a meeting with
the employee to discuss the problem.

The employer should let the employee know the purpose of the meeting in advance so they can
adequately prepare for the meeting.

The employee should be allowed to bring a support person of their choice or a union representative
to the meeting. Employers working at best practice will inform the employee that they can bring a
support person as a matter of process.

Step 3 - Meet with the employee to discuss the problem

It is important that the meeting takes place in private and in an environment that is comfortable and
non-threatening, away from distractions and interruptions.

The employer should begin by holding a discussion with the employee to explain the problem in
specific terms. From this conversation, the employee should be able to clearly understand:

 what the problem is

 why it is a problem
 how it impacts on the workplace, and
 why there is a concern.

The employer should discuss the outcomes they wish to achieve from the meeting.
The meeting should be an open discussion and the employee should have an opportunity to have
their point of view heard and duly considered. The employer should listen to the explanation of why
the problem has occurred or to any other comments the employee makes.

When having this type of meeting, it may be useful in facilitating discussion to refer to recent
positive things that the employee has done to show them that you also recognise and appreciate
their strengths.

Key points for employers to remember when holding the meeting are to:

 talk about the issue and not the person

 explore the reasons why there is an issue
 clarify details
 stay relaxed and encouraging, and
 summarise to check your understanding of the situation.

And, when discussing shortfalls in any area, it is important to check that the employee:

 is aware that it is a task that is required of them

 has been shown what is required,
 understands the gap between what is happening and what is required.

Step 4 - Jointly devise a solution

Where possible, it is important that a solution is jointly devised with the employee. An employee
who has contributed to the solution will be more likely to accept and act on it.

When working out a solution, the employer should:

 explore ideas by asking open questions

 emphasise common ground
 keep the discussion on track
 focus on positive possibilities, and
 offer assistance, such as further training, mentoring, flexible work practices or redefining
roles and expectations.

A clear plan of action should be developed with the employee to implement the solution. This can be
in the form of a performance agreement or action plan. A performance agreement or action plan
can:

 reflect an understanding of performance expectations and what is to be achieved over the

specified time period (performance improvement milestones)
 clarify roles and responsibilities of the employee
 include strategies for training and career development
 include timeframes for improvement (these may vary depending on the issue and needs of
the business, however it is important to give an employee adequate time to improve their
performance)
  reinforce the value and worth of the role being performed.

A date should be set for another meeting with the employee to review progress and discuss the
employee's performance against the agreed action plan.

The employer should keep a written record of all discussions relating to underperformance in case
further action is required. Generally, it may also be used as evidence if legal action is taken about the
matter.

Step 5 - Monitor performance

The employer should monitor the employee's performance and continue to provide feedback and
encouragement.

A meeting to review and discuss the employee's performance should be held even if there is no
longer an issue. This enables both parties to acknowledge that the issue has been resolved. The
employer should provide both positive and negative feedback to the employee and should work
with the employee to ensure that performance improvements are sustained.

More serious action may need to be taken if the employee's performance does not improve
including further counselling, issuing formal warnings and ultimately if the issue cannot be resolved,
termination of employment.

Termination of employment

If an employee's performance does not improve to an acceptable standard, termination of their

employment may be an option.

Employers cannot dismiss their employees in circumstances that are "harsh, unjust or
unreasonable". What is harsh, unjust or unreasonable will depend on the circumstances of each
case. However, it is important to be fair to employees particularly when it comes to termination of
employment. They should be given reasons for dismissal and an opportunity to respond to those
reasons.

4.3 Setting the stage for next year’s performance management cycle

The end of the performance management cycle gives management and employees one last chance
to offer feedback on the process as a whole and asks for thoughts and feedback for the planning
stage for the next year’s cycle for the continuous improvement.