What Performance Management Tools Actually Motivate Employees?

When we have a team of engaged, content employees, we experience a whole range of business benefits. Employees who put in that extra mile are more likely to stay loyal to your organization, and they are generally much more productive.


An engaged employee really is the holy grail for any company, but creating an atmosphere conducive to great engagement and implementing the right performance management tools to motivate employees is far from straightforward.


The problem is: HR is a rapidly evolving area, with performance management trends falling in and out of favor with each passing year. Once upon a time, the annual appraisal was all the rage. But, given that business now operates at a faster pace and employees require more frequent feedback, this form of performance management is now being phased out and replaced with continuous performance management. However, progress is slow, given that businesses are often slow to adapt.


What you really need to know for the benefit of your business and your employees is which employee performance management tools are actually proven to motivate employees. Which ones should you incorporate into your performance management system today and which should you let go? Below, we’ll cover the most highly-recommended tools and why they add value to any business.


Aligned SMART objectives


Before you consider any other performance management tool, you need to start with an effective goal-setting process. Employees need to know what they are doing at work. They need to be enthusiastic about their tasks and they need to be clear on how what they do matters in the grand scheme of things — meaning they need to know how their objectives contribute to overall company goals.


For this reason, employees should be given clear SMART objectives. Ideally, the objective-setting process will be a collaborative one, with employees taking ownership and control over their goals. According to many sources, this ultimately means they will be more likely to complete their objectives well and to a high standard. Objectives shouldn’t simply be cascaded down from above — this is an old-fashioned approach to objective setting that has shown to be not as effective. Instead, in accordance with recommendations from the Corporate Executive Board, employees should align their objectives upwards.


Personal Development Plans (PDPs)


Personal Development Plans (PDPs) are a performance management tool that, according to research, has been shown to be a key driver of employee engagement and performance. This makes perfect sense when you consider how important development opportunities are to employees, and millennials in particular. According to one source, a remarkable 87% of millennials have said that development opportunities are a key determining factor in whether or not they accept a job offer.


For PDPs to be effective, manager and employee need to be on the ball. They need to be adhered to, updated, and adapted. They need to be carefully planned in order to help employees get what they want out of their careers.


Recognition programs


If you’re not using employee recognition as a performance management tool, you need to start today. Firstly, your employees need (and deserve) to feel respected and valued. They want to know that their efforts are acknowledged and appreciated. If you fail to do so, they will more than likely abandon your company, which results in high turnover and other related problems.


Managers and HR executives around the world should be waking up to the fact that the modern employee is actually more influenced and motivated by appreciation than money. What’s more, when employees are appreciated, they have been shown to work 80% harder, which can make all the difference to a growing business.


Employee recognition programs can come in many forms. Some of them are intricate, whilst some are simple. Some are expensive, but others are very cost-effective. There is always an inexpensive way of rewarding your team that they will enjoy.


Meaningful, real-time feedback


When managers deliver fair, meaningful, accurate feedback, it has been shown to boost rates of performance by 39%. Employees need to know how they are doing in order to improve, so it is a manager’s responsibility to step in and explain, in detail, what an employee has done right and where they can improve.


Managers should also know that on top of specificity, timeliness is a critical factor when delivering feedback. It needs to be given as soon as possible — preferably in real time. If feedback isn’t delivered for months, employees will form bad habits that are difficult to break. They will also begin to grow resentful due to the lack of helpful feedback afforded to them. Fortunately, we live in a highly technical age, where we can use software to our advantage. Employees and managers can use collaboration tools such as Slack to solicit and deliver instant feedback, and performance management software can be used to schedule regular feedback sessions.


One-on-one performance check-ins


Regular performance discussions — conducted at least once a month — have been shown to really motivate employees and heighten productivity levels. On top of this, it has been shown to reduce voluntary turnover. We can look to Adobe as an example, which managed to reduce voluntary turnover by 30% since it evolved from annual appraisals. Companies large and small including HarperCollins, IBM, and Microsoft have incorporated regular performance check-ins and seen similar benefits, making the implementation of this performance management tool one of the wisest decisions you could make for your business.


This is a guest post by Stuart Hearn, founder and CEO of Clear Review, an employee appraisal software that takes companies from broken, outdated annual appraisals to meaningful, helpful performance discussions. Stuart is enthusiastic about all areas of HR, particularly those of employee engagement, morale, and productivity.

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