Running a company that strives to achieve business targets, it is very important to implement good performance management. Performance management is the mechanism of constant input, feedback, and communication between management and their staff to ensure the success of the company’s strategic goals. A good performance management consists of continuous monitoring, a well-designed performance management strategy, and a culture of open communication. Most companies have already understood the importance of having effective performance management, but according to Willis Towers Watson, only 64% have already established an effective approach to it. Getting to know performance management, here is why your company needs to establish an effective performance management.
Regular feedback for employees can boost profitability
Good performance management that provides regular feedback to employees can boost profitability. According to Gallup, employees who receive regular feedback on their strengths are on average 8.9% contributing more profitability and 12.5% higher productivity compared to employees who received no feedback. Feedback is beneficial, desired both by management and the employees, and it will create a big impact on the workplace.
Help identify the right promotion and the required training
Feedback in performance management can help your company to understand the individual performance of your employees and therefore assess the suitability for their promotion. Regular performance management can help managers really understand the progress and the challenges that were faced by the employees on an individual level. Good performance management can turn difficul discussion into a honest coaching session, because it uses objective data, therefore reduce the risk of implicit biases and discrimination. Not only that, by applying performance management companies can better understand the skill set and the gap for each employee in delivering their job, therefore providing the required training for the employees.
Boost morale and increase employee retention
Performance management provides a system for managers to recognize and praise their team. According to LinkedIn, 69% of employees said that they will work harder if they feel their efforts are recognized by their leaders and their company. Not only positive feedback, from a survey conducted by Zenger and Folkman, 92% of respondents agree that constructive feedback, if delivered in the right manner can also effectively improve individual performance. Moreover, based on a research by Gallup, companies who provide regular feedback to their employees have a 14.9% lower than other organizations who didn’t provide regular feedback.
Effective performance management is essential and crucial for businesses. It helps companies to obtain valuable feedback and helps them align their employees, resources, and systems to meet business objectives. Understanding the benefit of performance management, it is now time for your companies to implement the right performance management system that is suitable with your company’s culture and strategy with the aim to keep your employees engaged and productive, therefore contributing to profitability and business success. Performance management will also help your organization to foster a culture of trust, and transparency, in which ideas, creativity, and innovation live freely in your company, therefore driving long-term positive business impact for your organization.
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