Performance Management

The Low Cost (and Huge Impact!) of Effective Performance Management

by | March 2, 2020

A consistent theme in business today is talent – acquisition, management, and retention. As business owners, we know that a robust interview process, onboarding experience, training program, and cultural engagement are essential to successfully hiring and keeping good employees. But often these activities don’t get prioritized amid day-to-day demands. Is there one area, though, that can have a tremendous impact on retention without significant investment? Yes – performance management.

I know your immediate reaction is that performance management is a huge time commitment – and I agree it certainly can be. However, once you understand what “performance management” is, you will find that you can have an effective plan to implement that is easy to maintain. The impact dramatically outweighs the cost.  

UC Berkeley identifies their own performance management as “… an ongoing process of communication between a supervisor and an employee that occurs throughout the year, in support of accomplishing the strategic objectives of the organization.” Yes, that sounds very big and challenging- but at its core, it’s aligning your employees’ activities with the company’s objectives. You’re already partway there! You have company objectives, and you have employees doing jobs. They are probably mostly aligned – but perhaps there are some gaps.

Where do you start? Here are a few tips for tackling these gaps and improving your performance management systems:

Connect the Dots.  

Employees want to be a part of something meaningful. They want to understand how their work contributes to the bigger goals of the company. You likely have company goals for the year, quarter, and month. Does each employee know how their efforts impact those goals? You’ve already created the goals; now, you need to engage your employees. Ask each employee how their role can impact the goals and have them develop personal goals to achieve that impact. Through this process, the employee will feel a part of the more significant company objectives. The impact is great for the overall health of the business and it doesn’t require much of your time. Besides, you have created the critical information needed for ongoing one-on-one performance check-ins. 


In the busy-ness of everyday operations, it’s easy to be out-and-about or heads-down just getting things done. How long does it take for your team to feel disconnected from you? It’s hard to understand the employees don’t know about everything going on. Even more, they know only enough to make them worry about what they don’t know. A few years ago, we were hiring a new employee and did not include many employees as part of the process. I realized that even though these employees had no role in the process, by not including them at all, we created much anxiety for these employees. Regular communication is essential for the efficiency of the team but also for employee engagement. 

Harvard Business Review reported, in November 2019, that “One study of 2.5 million teams found that, when managers communicated daily with their direct reports, employees were three times as likely to be engaged than when their managers did not communicate regularly with them”. You likely already have a particular rhythm of communication in your business. These can include regular meetings at different levels or regular internal communications. Consider the purpose of each of these existing communications and what is missing. Maybe you are communicating from the top to the middle management but missing a connection to lower-level employees. Perhaps there are many group meetings but no one-on-one connections. Determine where there are gaps in communication and identify the interactions to fill them. Employees will immediately feel more connected to their jobs and the company. 

Build Trust. 

The performance management process also includes feedback. We are all familiar with the process. The manager and employee sit down, and the manager shares how he or she perceives the employee’s performance. This process may occur once or twice per year – or only when there’s something negative to say. Of course, both are feeling very vulnerable and uncomfortable. Why? Feedback should be an ongoing process with a focus on growth, not a once per year event. It should be grounded in trust between the company and employee to improve alignment between the employee’s activities and the company’s objectives. Ongoing feedback may feel like a big task that you don’t have time to tackle. Remember, though, that every day you interact with your team members, you gain thoughts about their work. Consider how you can translate those interactions into positive or constructive feedback at that moment. 

Performance management is a work in progress.

My team will attest that I’m not the poster-child for effective performance management. We’ve got some great tools in place to help to foster communication and trust. We do this through transparent goals, daily huddle meetings, regular 1:1 meetings, and a trusting environment for new ideas. We could do a better job in other areas – but it’s a work in progress. Take small steps through transparency, communication, and trust to focus on what your employees need to feel more connected to your company.