Performance management is a holistic and continuous process that involves setting clear expectations, monitoring employee performance, providing regular feedback, identifying areas for improvement, and recognizing achievements. It's about more than annual reviews—it's an ongoing dialogue between managers and employees that fosters growth and development while aligning individual efforts with organizational goals.

• Employee Engagement and Satisfaction: Regular feedback and recognition can boost employee engagement and satisfaction, leading to increased productivity and lower turnover.

• Professional Development: Ongoing performance management helps identify strengths and areas for improvement, offering opportunities for learning, development, and career growth. How will you nurture and grow your star talent? You may try things like developing internal training program, providing a mentorship program, or making an educational stipend available to employees.

• Business Performance: By aligning individual performance with organizational goals, performance management can drive business results and foster a culture of high performance.

• Risk Management: Performance management can help identify and address performance issues early, reducing the risk of future problems or conflict.

• Compensation Decisions: Performance evaluations play a significant role in compensation decisions, including raises, bonuses, and promotions. By recognizing and rewarding top performers, companies can retain key talent and motivate employees to strive for excellence. At the same time, underperformance can be addressed with targeted development plans or even affect compensation negatively, providing a clear signal of the importance of performance in the workplace.

Consider a mid-size software company:

• At the beginning of the year, managers set performance objectives for each employee, aligning these with the company's strategic goals. These objectives are SMART: Specific, Measurable, Achievable, Relevant, and Time-bound.

• The company decides that a 360-degree feedback system is the best fit for their goals. In a 360 review, employees receive feedback from their managers, peers, and direct reports. This comprehensive feedback provides diverse perspectives on an individual's performance.

• Throughout the year, managers hold monthly one-on-one meetings with employees to discuss progress, provide feedback, and address any issues or concerns. These meetings create a safe space for open communication and mutual feedback.

• At the end of the year, managers conduct formal performance reviews, recognizing achievements, discussing areas for improvement, and setting objectives for the coming year.

• Performance Management Tools: Platforms like Lattice can streamline performance management, providing tools for goal setting, feedback, reviews, and reporting.

• Training and Development: Use performance reviews not just to assess past performance, but to identify opportunities for growth and development. Encourage employees to set their own development goals and provide the resources to achieve them. Invest in training for managers on providing effective feedback and conducting performance discussions. "High Output Management" by Andy Grove is a must for any people manager.

• Employee Feedback Tools: Software like SurveyMonkey or Google Forms can help gather employee feedback, offering valuable insights into employee engagement and areas for improvement.

• Establish Clear Expectations: Clearly communicate what is expected from employees in terms of job responsibilities and performance standards. Make sure these are aligned with the organization's overall goals.

• 360-Degree Feedback: Encourage feedback from all directions - managers, peers, subordinates. This provides a more holistic view of an employee’s performance and fosters a culture of transparency and collaboration. Warning - if you work in a small company, the feedback may not be as anonymous as desired.

• Celebrate Success: Recognize and reward high performers. This not only motivates them but also sets a positive example for others. Consider a software platform that allows managers and peers to reward employee accomplishments through small gestures like a Starbucks or Amazon gift card.