Why is performance management important? That’s a billion-dollar question, and we’ll get to it right away! Read on…
Performance management is critical in order to monitor the efficiency of the resources. Annual checks, quarterly reports, and monthly assessments are a time taking yet crucial part of conducting business.
These evaluations are the key to better performance in the future. The performance management system allows PMs to keep an eye on the working efficiency of their team members. They analyze the strengths and weaknesses of their employees and suggest improvements for development.
This article gives you a detailed overview of the concept of performance management and why is performance management important.
Before we move on to the importance of the term, let’s take a look at what is performance management.
What Is The Meaning Of The Term Performance Management?
What is performance management? Performance management is a management tool that helps PMs evaluate the productivity of their employees. It aims to enhance the working efficiency of the teams with repeated assessments and feedbacks.
It helps improve performance by aligning individual and teams’ goals with the goals of the company. With the help of a performance management system, PMs are able to devise efficient management plans that boost up the productivity of the team.
Additionally, it helps track the progress of the team and provides opportunities for improvement. By analyzing the dos and don’ts, pluses, and minuses of the team, agile PMs can narrow down possible areas for development.
Consistent feedback and appraisal boost employees’ morale and motivate them to work harder to improve their performance in any given team.
It is important to note that performance management is not limited to year-end reviews or annual reports, it’s a regular process with day-to-day reviews.
Efficient performance management aids both the employees and the top management. With regular feedback and rewards, employees are able to track their performance and as a result, they strive to better it with every passing day. Top management, on the other hand, profits from the efficiency of its employees.
It’s a fifty-fifty situation benefitting all the parties involved.
Why Is Performance Management Imperative For Companies?
Why is performance management important? Various reasons make the Performance management process an imperative part of a company’s management system.
The following paragraphs give an insight into the importance of performance management.
Without further ado, let’s get down to business and have a look at all the important aspects of the performance management process.
1. Allows Exchange Of Feedback
Why is performance management important? Well, the first and foremost important feature of performance management is that it allows the exchange of feedback between the employees and the management.
It allows individuals to communicate their reservations, this way the company can improve its working and give its employees a better environment to work in.
Similarly, feedback on the employees’ part, gives them an insight into their weaknesses and the areas where they can improve their performance.
After all, feedback is the key to improvement.
2. Boosts Employees’ Morale and Improves Their Efficiency
The importance of performance management is evident from the fact that once employees are aware of their shortcomings, their strong and weak points, and their overall performance, they work harder to improve their productivity. Feedbacks have a positive impact on the abilities of the employees.
Rewards and recognition from employers encourage employees to explore the areas that need improvement. PMs can help their team members identify the opportunities for growth by providing them regular feedback.
The appraisal can be in the form of verbal recognition, salary increment, a bonus, or a certificate of appreciation.
In a similar manner, PMs can inform the respective individuals of their unsatisfactory or inadequate performance. This way, both the individuals can work out a plan that can help better the working efficiency of the employee.
Constant feedback on the employees’ part can also help them alleviate risks and issues before they become insolvable mistakes.
It is important to address the productivity issues with employees and help them find ways to rectify them so that no one is left behind.
3. Allows PMs To Identify Issues And Rectify Them As Soon As They Arise
One of the most important features of performance management is that it allows managers to identify issues and fix them as soon as possible. A good performance management system has the ability to track the working ability of the team.
PMs can make the efforts on their own to find the issues in the management processes, regularly review the performance of each individual, make sure that everyone stays on track, and tries to find solutions to the problems to fix them as early as possible.
The tracking tools used for this purpose can be technological as well as human. PMs can evaluate the performance of their team members on their own or employ the use of agile project management tools such as nTask, Monday.com, Jira, etc.
Similarly, PMs can employ the use of different appraisal methods to give feedback to their employees.
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4. Performance Reviews Make The Employees Feel important
The fact that the organization is keeping an eye on the progress of their employee, is informing him of his strengths and weakness, and is working on resolving performance-related issues, makes them feel that the company cares for them.
Employees feel that they are an important asset of the organization and they are adding value to their team. While high-performers feel more confident and work more efficiently, low-performers, in contrast, work on their improvements and try to mend their ways in line with the requirements of the company.
To do so, PMs can set daily, weekly, monthly, or quarterly reviews so that the members of their team can develop their performance accordingly.
In such a way, reviews and feedback become a part of the routine. The employees will not fear them but will rather look forward to these rhythmic evaluations in order to better their efficiency.
5. Enhances Employees’ Engagement In The Company
Improving employees’ involvement in the company is one of the key factors that can help increase a company’s profitability.
Once the employees feel connected with the company they work in, they strive harder to produce efficient, more beneficial results.
Repeated engagement between the employees and the team members creates a healthy working environment. Individuals will work better in an environment where their opinions are heard, and they are given the opportunity to explore their abilities.
An engaged team will be motivated to work for the betterment of their organization. Employee engagement is the hallmark of improved productivity.
6. Aligns Individual Goals With The Goals Of The Company
The discrepancy in the goals of the team members and organizational goals highlights the importance of performance management.
PMs should make sure to communicate the goals of the company to the employees so that their goals are aligned with those of the organization. If employees are unaware of the objectives of the company, their performance will be limited to the completion of individual goals, and they may not contribute as much as they would have otherwise.
Once they are aware of the company’s objectives, they’ll mold their goals accordingly. It’s important that the PMs covey the importance of their individual goals and where they fit in the big pictures.
The importance of employees’ short-term goals inadvertently affects the company’s long-term goals so it’s important that the goals are aligned, and both the company and the individual are working in the same direction for the attainment of the same goal.
Another plus point of performance management is that it alleviates any ambiguity and brings clarity. Continuous feedback gives employees the freedom to set relevant, achievable goals and they are also able to control their performance for increased efficiency.
7. Enhances The Performance Of The Individual And The Team
With performance management, PMs can help employees set individual, achievable goals. Accomplishing these goals will be easier and more efficient for the individual as well as the company.
Employees are more motivated to achieve goals set in accordance with their abilities. These goals should not be as easy as ABC since it will not challenge them to channel their abilities and make use of their skills. Similarly, the goals should not be hard to achieve since it will demotivate them and they might lose the will to work.
The best way to drive employees’ abilities is to give them challenging goals, this way they will be able to enhance their skills.
To make it even better, PMs can extend individual goals to team goals. Once team members are aware of their responsibilities and their position in the team, they will try their best to play their part and be as productive as they can be. This way all the team members will be on one page.
On a related note, people at the top management are able to increase the overall team efficiency if they can keep tabs on everything.
A performance review outlining an individual’s performance and its impact on the team is very effective. Hence, individuals will optimize their productivity so as to not lag behind the team, bring the whole team down or damage the overall efficiency of the team.
8. Helps HR With Future Recruitments, Training, etc.
Early identification of problems is important for immediate action. By regularly monitoring the performance of employees, companies can pinpoint the areas that need improvement.
It can help PMs detect the need for training. Once a company is aware of the loopholes in its system, it can identify ways to get rid of them.
Employees can be trained for the skills they lack, and they can be equipped with the latest tools to help enhance their performance.
Repeated evaluations are also a source of employee recruitment. Feedback reports let the HR department identify the skillset they are lacking or a specific skill that might improve the overall performance of a team.
Once they are aware of the deficiency, they can hire someone with the relevant skillset and fill that gap.
PMs and HR can work together to level up the skills of an individual or hire a new employee. Communication between the both is key to better productivity.
9. Helps Create Development Strategies
Regular check and balance mean the top management is aware of the employees’ strengths and weaknesses and has the opportunity to develop improvement strategies.
PMs and team members can communicate their responsibilities and expectation and work on developing strategies that can help them improve their overall performance.
Using the feedback reports and the efforts of the employee, companies can develop strategies that comply with the individual’s abilities.
Having an understanding of your employees’ skills allows PMs to devise relevant plans. Through the performance management process, an organization can optimize the working abilities of its employees and can create a more efficient working environment.
Not only the feedback helps the company, but it also helps the individual channel his efforts in the right direction and work for his improvement.
Now that you are aware of the answers to ‘what is performance management? and why is performance management important?’, let’s explore project management tools that can help you keep track of your performance.
nTask to the rescue
Staying at the top of your performance game can be a tough feat. PMs have a hard time managing their team, assigning tasks, and keeping track of their progress. Adding feedback to the mix will only complicate things for them.
Worry no more, nTask has got it all covered for you. nTask is a project management tool that offers multiple management tools that help PMs bring in their A-game and stay at the top.
With nTask’s online task management software agile PMs can:
- Create to-do lists and prioritize tasks
- Assign tasks to team members
- Customize the status of each task
- Track the progress of each task
- Add start and end date to keep an eye on the development
- Give feedback and comment on the work of the team members for improvement
- Get notifications and reminders about the tasks that are due
- Categorize tasks to highlight the importance of each task
- Track the time taken to complete a task
- Visualize the progress via Gantt charts, Kanban boards, or Calendar
With nTask’s project management tools agile teams keep track of their performance and work to optimize their productivity.
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