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Signs your organization needs a performance management system

20 April, 2022
4 mins

Talent remains to be one of the most crucial assets for any organization, and yet organizations are using the traditional performance management system that fails to develop and motivate their employees. In today’s era, performance management is about than just having annual reviews. It now constitutes a key aspect of the strategic work for ensuring that not only the employees have been performing well but are developing in their respective careers. If you have been wondering where the current performance management system of your organization needs to be updated, make sure to stay hooked until the end. 

Signs your organization needs a performance management system

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There’s a strong case for getting a robust performance management system for your organization sooner than later. Performance management serves as an inevitable strategy for helping you to measure the contribution, productivity levels, and growth prospects of each employee. Having such top-notch systems enables you to establish a foundation for giving raises and bonuses, determining high-performing workers, increasing employee engagement, and retaining the talented set of employees. Not to forget, employee engagement and retention have become more significant than ever as employees are quitting their jobs at escalating and historic rates over the past two years. 

An organization will always require clear performance metrics for evaluating its development and growth over time. A spreadsheet alone will never meet the purpose when the organization expands beyond five employees. With the lack of a proper performance management system in place, you and your managers will often feel uncomfortable confronting the demands of the employee and justifying the decisions of the organization. Consequently, your organization will end up ignoring the high-performing employees when. The new and less experienced leaders might also lack the analytical and judgmental skills for evaluating the workforce in an optimal way. 

When employees do not feel valued and are not rewarded for their contribution, they start quitting their jobs. An employee performance management tool enables the organization to track the performances, give them sufficient support and guide them in keeping their productivity and motivation levels high. But how to understand if your organization needs a performance management system? 

1. Organization heading towards hypergrowth

A startup initiates with four or five employees who share various responsibilities for reducing the cost of the operations. Such is not the case with an already established organization heading towards hypergrowth. As you grow, it becomes necessary for you to specify the roles and responsibilities of each employee, monitor their progress, review their output and be attentive to their sustainability and development. This makes it tough for any leader to oversee any operation and do it all alone. You have to delegate tasks and use automated processes for ensuring consistency and results. Leveraging a performance management system enables you to streamline operations by establishing delivery expectations, organizational alignment, and enabling documentation of performance and workflow. Moreover, automation helps you in saving time and serves as the record of the processes that a deliverable has taken. 

2. Difficulty in retaining high-performing employees

We live in a competitive environment where employees are familiar with the global organizational culture and processes. Today’s workforce seeks opportunities for growing mutually with the organization that values them, considers their opinion, and recognizes their efforts. Owing to such times, there is a need for a system that enables you to measure and recognize the performance of your employees and teams, rather than narrowing your focus down to just the results and outputs. Moreover, when employees are involved in their goal-setting process, they are far more likely to be engaged in their work and hence extremely less likely to leave their organization. Having a performance management tool works to assure that the employees and managers are adequately communicating about the growth and objectives. 

3. New managers lack skills for evaluating direct reports

For establishing their potential and skillsets in the new organization for proving themselves, new managers end up using unconventional practices for managing people and end up making common leadership mistakes. The performance management system helps the managers to establish clear expectations when it comes to annual reviews, appraisals, employee development, and continuous performance management. When these systems are clearly laid down within a formal system, the new managers do not have to take the burden of figuring everything out on their own. They just have to follow a process and have resources to seek if they need any assistance. The new managers will be able to complete performance reviews without any kind of hassle. 

4. Inconsistent performance management practices 

As organizations scale, the procedure to give performance appraisal, continuous feedback, talent management, and such initiatives become highly complicated. When performance management is tracked manually like with spreadsheets, departments end up developing specific practices around their employee reviews. For instance, one department may follow a holistic and formal procedure, while the other department may have a more scattered one. This will eventually lead to inconsistency and unhappy employees in the organization. Once your organization hits the scale or expands, systemizing becomes the need of the hour. The performance management program adds consistency to performance reviews across the board and ensures that all the employees are evaluated in the exact and right cadence. 

A performance management program provides a blueprint for the success and growth of both the employees and the organization. Instead of complicating things in emails and spreadsheets, an automated tool provides much-needed ease and clarity. To learn more and seek proficient assistance, contact us!