How to manage employee performance and development

Julian Hackenberg, HR Manager
By Julian Hackenberg, HR Manager


Tracking, guiding, and improving employee performance can take some effort, and in a small to medium-sized business where everyone is flat-out and task-focussed, it can be deferred or neglected. But if your business is going to succeed and your team members thrive, then performance needs to be front and centre.

This article delves into the key issues around managing and developing employee performance, from creating and supporting a high-performing culture to developing talent and setting up effective performance reviews. We also have a look at what to do when things go wrong and employees don’t meet performance expectations. Managing underperformance is a meaty topic, so we will cover that in more depth in a separate piece.

Building a high-performance culture

Firstly, we need to think about the framework and processes that are in place within the organisation to create and support a high-performance environment.

We talk a lot about company culture and while in some ways it can be an abstract concept, when it comes to employee performance, some well-defined tools and cohesive processes help people work as effectively as possible - both individually and as a team - to achieve business aims and add value.

It is broader than any one person’s performance and is a combination of ensuring everyone in the organisation is set up for success, you have the capacity and procedures to develop talent, and the ability to respond effectively to any issues that arise.

Let’s have a look at each of these aspects.

Setting performance expectations early

When we say everyone in the organisation should be set up for success, we mean the whole company, from employees to managers and the executive team.

Each employee needs to know what is expected of them, what the key objectives are for their role, how to be a top performer, and how to align themselves with the company values and culture. Managers and business leaders need to know how to set expectations, how they can support employee success, and model the behaviour and attitudes they expect from their team.

Get things right from the beginning of the employment relationship and ensure performance expectations are embedded early. Start at recruitment by identifying the critical aspects of the role, how it contributes to the organisation’s goals, and what characteristics other high-performers in the business possess, then define how you will measure performance and benchmark remuneration. These factors should underpin each step of the hiring process, from creating the job description to the interview questions, and will help ensure that what you offer candidates matches the reality of the job.

Then comes induction and onboarding, which can take more planning than many employers think, but it sets people up for lasting success and long-term buy-in. It’s all about making new employees feel welcome and making sure they understand the company culture and systems, their team, and what is expected in the role. Defining the performance criteria and method of assessment is especially critical if you are hiring someone on a probationary period, as is carefully documenting their progress. This will maximise the chances of success and minimise the risk of unfair dismissal or other contentious claims.

Ensure you schedule regular check-in conversations with the employee and create a forum for providing feedback and coaching. Some managers wait and see how the person adapts to the role before having these conversations, but employees need to understand your approach and be confident that they can raise issues and that you will be there to guide and support them, even if they make a mistake.

Remember, recruiting, onboarding, and training new employees is one of the most expensive and time-consuming processes for any company, so you don’t want to be ill-prepared or not have the correct processes in place and find you’ve hampered your new employee’s enthusiasm or that they don’t reach the expected performance standards and you have to go through the process all over again.

Find out more about effective recruitment.

Developing talent

Another essential part of ongoing employee achievement is the development of their skills and experience, because what an employee needs to do their job today might not be what they need in 6 or 18 months' time. The disruption and challenges of the past two years are an obvious case in point. People’s interests and aspirations also change over time.

Ideally, talent development is something that is planned for and built into the company culture and employment relationship from the outset, based on the organisation’s strategy and individual performance and career goals.

It should be a broad and ongoing investment in upskilling employees, including training and accreditation programs, coaching and mentorship, and opportunities to expand their on-the-job experience, e.g. job rotation or special project work. Evaluating skill gaps and managing succession planning are also important aspects of ensuring the business can continue to meet its objectives.

Involving employees in designing their development plans helps ensure they have buy-in to what is being proposed and that it aligns as much as possible with their personal and professional development needs.

Reviewing performance

Regularly evaluating employee performance keeps the focus on important outcomes and aligns individual performance with company goals, while also providing the opportunity to reward success, utilise potential, identify issues or training needs quickly and accurately, support career development, and improve transparency and communication.

We’ve written a lot about performance reviews and the stigma around them and we know they can be a lengthy administrative process that managers and employees neither enjoy nor understand the purpose of. We’ve also looked at common mistakes in the review process. But especially in the currently tight labour market, effective performance reviews are key to raising job satisfaction and engagement and retaining top talent.

Best practice performance reviews

There’s no ‘one size fits all’ approach to performance reviews. For most of our clients, we work with them to set performance goals on an annual basis and then have regular two-way discussions, e.g. quarterly, to see how things are tracking.

The thing we stress is not to get too caught up on the review period or frequency of check-in conversations, so employers and managers can focus not only on current effort, achievement, and areas for improvement but also what’s on the horizon, what skills the business needs to develop, and how you communicate this. Employees, too, can think about how they are going, where they are going, strengths to build on, and anything that might be amiss.

Whatever the performance review system is, it needs to be understood by everyone involved and should be tailored to your organisation. That may mean regular check-ins or more infrequent meetings, managers may need training in implementing it, and employees need to be fully involved in setting goals and evaluating their achievements. 

For smaller businesses, the process of conducting cohesive performance reviews and constructing training and development plans can seem too onerous, especially if you don’t have people with the time or necessary expertise. That’s where outsourced, expert help and tools can really add value.

Get more performance review tips.

Responding to issues

Unfortunately, there are times in any business when people don’t meet expectations, so you need to have clear processes for responding to issues. In its essence, it’s about identifying problems before they are ingrained or beyond recovery and working with the person to find remedies that enable you to reset expectations and give them a reasonable opportunity to get to where they need to be. You should also make clear what the consequences of this not happening are, e.g. a more formal performance improvement plan or potentially terminating employment.

Then there is ongoing follow-up and hopefully, the employee gets back on track, or you have to make some tough calls in a fair and legal way.

We cover this in detail in our next blog post, How to manage employee underperformance.

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