Performance Management Process: 4 Steps to Success in 2023

October 7, 2022 Mike Lovett

Performance management is one of the most important processes your company can implement.

It helps train employees, develop their talent, improve their relationship with their manager, and take on more responsibility within the company.

When that effect is multiplied by the entirety of your workforce, it creates a lasting impact on your company.

A good performance management process won’t reduce your turnover rate to zero, but it will help achieve goals, improve collaboration, and keep employees engaged. Here’s what it looks like.

What is the performance management process?

steps in the performance management process

The performance management process is an ongoing series of meetings and check-ins between a manager and employee that plans, monitors, and reviews the employee’s objectives, long-term goals, and overall impact on the company.

While it is often thought of as an annual or bi-annual performance review delivered from management to an employee, performance management is at its most effective when it is performed throughout the year in a collaborative manner.

We know it as Continuous Performance Management.

What are three stages in the performance management process?

While comprehensive as a process, performance management can be broken down into three distinct stages: coachingcorrective action, and termination.

Coaching: The coaching stage of performance management sets the tone for your company and the success of your employees. Coaching involves training, outlining standards and goals, two-way feedback, and collaboration to help employees get better. More on this later.

Corrective Action: If an employee isn’t meeting the standards and expectations of the position after coaching from their manager, the next stage of performance management is corrective action.

Corrective action calls on the manager and employee to work together to find the reasons for poor performance and develop a plan to improve the situation.

Termination: If coaching and corrective action fail to improve an employee’s performance, the final stage of the performance management process is discharging the employee.

While a difficult decision to make, the termination can have a positive effect by boosting team morale and offering you a chance to improve at that position.

What are the steps in the performance management process?

When your performance management process is humming, it’s largely remaining in the coaching stage. That’s not to say every day is roses, but it means the team is responding to challenges in the moment with coaching and collaboration – and performance isn’t suffering drastically as a result.

A successful coaching stage consists of four main steps: planning out goals, monitoring performance, reviewing results, and rewarding success.

Planning: This step calls for establishing expectations and developing a strategic plan for employees. Here you should set S.M.A.R.T goals, determine deadlines, and make clear how they will impact the team and the entire company.

Monitoring: Crucial to achieving goals is consistent monitoring of progress. You don’t want to be a helicopter manager, but you do want to frequently check in with employees to help work through problems as they arise.

Whether it’s weekly, bi-weekly, or monthly, consistent check-ins keep employees and managers working together and on the same page.

Reviewing: With frequent check-ins, performance reviews turn into more of a formality rather than an intensive process. This is the official place for employees and managers to share their view on how the year went and look back on the progress and achievements.

Rewarding: Nothing plays a bigger role in employee motivation than this. Rewarding employees for their efforts and achievements throughout the year, not just once at the end of it, lets them know their talents are appreciated and encourages them to continue to perform at a high level.

Inadequate rewarding can leave them discouraged, unappreciated, and looking for a new job.

What are the key elements of performance management?

Every company may have unique aspects to its performance management process, but as Jo Rosser points out, in general, every company with a good one keeps these core traits in mind:

Consistency: Coaching approaches and tactics may vary, but the performance management process should be the same for everyone. Inconsistencies will only add confusion and frustration.

Accuracy: When recording key outcomes throughout the performance management process, accuracy is essential. If need be, you want your documented record of events to be an unimpeachable account, not an inferred one. A tool like Conversations® keeps all those details in one place.

Futureproof: Futureproofing your performance management process doesn’t mean peering around every possible corner, but rather, prioritizing agility. So as circumstances change, you can too.

Employee engagement: Performance management is at its best when it is a two-way street with employees and managers working together. Engaged employees at all levels will improve the process itself by helping companies strengthen their coaching and avoid corrective action and termination.

Ease of use: Part of keeping employees engaged in the performance management process is making it an easy system for them to use. Hurdles or cumbersome steps in this process won’t help the employee or the company.

A performance management process is just that – a process. It’s not a checklist or a passive responsibility; it requires active participation on behalf of employees and managers.

The result is aligned teams, inspired employees, and a culture that nurtures personal growth and development, i.e., an effort that is well worth it.


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