In a traditional work environment, managing employee performance costs businesses a lot of time, money, and effort. Studies show that 71% of companies still conduct annual performance reviews, and managers spend an average of 210 hours on them. 

On the other hand, Gallup highlights that when managers provide weekly feedback (vs. annual), team members are 5.2x more likely to strongly agree that they receive meaningful feedback and 2.7x more likely to be engaged at work.

Annual reviews always paint a narrow picture of an employee's performance. And it is more evident than ever that people want regular, two-way feedback conversations with their managers—a core principle of agile performance management.

However, many organizations still choose traditional performance management systems and consider them a good method of evaluating performance. Some have implemented different performance management systems and strategic policies to improve the process. 

Nevertheless, the outcomes have frequently fallen short of expectations as people continue to feel disengaged. So, even if you don't use a performance management system or use one but the process is poorly implemented, it's time to take action. Read along to discover how to introduce performance management in an organization quickly.

What is a performance management system?

Let's start with the basics. A performance management system automates operations like scheduling, gathering feedback, and creating reports, speeding up the review process and saving time. It provides a centralized platform, making data retrieval and analysis easier, and provides templates and tools to help write good performance reviews. 

It's important to understand that effective performance management is continuous and involves 360-degree feedback. And if you're not yet convinced you should switch from annual performance reviews to continuous ones through a performance management system, let me briefly list a few of the performance management benefits:

✅ Improves employee development;

✅ Streamlines performance evaluations;

✅ Better decision-making through performance dashboard and insights;

✅ Drives productivity and boosts employee morale;

✅ Gets rid of unnecessary work, saving the company time and money.

Introducing a performance management system in an organization

In organizations without a performance management system or with poorly implemented processes, introducing it can revolutionize how performance is tracked, assessed, and improved. Let’s break down the main components and benefits of using Mirro:

Key components of a performance management system

Performance Reviews:

• Conducting regular performance reviews allows for a fair assessment of employees' work, setting the stage for meaningful discussions about their development.
• Creating personalized development plans based on performance reviews helps employees grow and advance in their careers.

Feedback:

• Providing regular and constructive feedback helps employees understand their strengths and areas for improvement.
• Gathering 360-degree feedback from multiple sources, including peers, managers, and even third parties, provides a comprehensive view of an employee’s performance and helps remove biases.

Recognition:

• Acknowledging and appreciating employees' efforts and achievements boosts morale and motivates them to maintain high performance.
• Encouraging a culture where employees can recognize each other fosters a collaborative and supportive work environment.

Objectives and Key Results (OKRs):

• OKRs help define clear and measurable objectives aligning with the organization's strategic goals.
• Regularly tracking the progress of these objectives ensures that employees stay on course and that any deviations are addressed promptly.

💡 Pro tip: use our HR ROI calculator to quickly prove the value of performance management and secure leadership buy-in instantly. 

Example of a performance management system in an organization

As the Chief Talent Officer at Zitec, I experienced firsthand the switch to a continuous performance management process that has helped us build a culture oriented towards open feedback, appreciation, and constant development.

Our colleagues have regular one-on-one meetings and performance check-ins every three months. During these meetings, they review the results, lessons learned, current level of satisfaction, and goals for the upcoming months. 

We've been using Mirro, a performance management software, for a few years to facilitate this process. This system helps us stay connected, allowing us to send and ask for feedback from any team member or outside the company, track career paths, and set development goals. The system also ensures that all feedback and performance data shared within the platform are managed in full compliance with GDPR, protecting both the organization and our people.

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Implement a performance management system in six steps

Once you have decided to implement a performance management system, the following steps involve planning and execution. Remember that the performance management system should align with the company's goals, values, and mission. Here are some key steps to consider:

1. Assess current processes

Every process should start with evaluating your current performance management system if you have one. This is the best practice for identifying gaps and areas for improvement to include in your performance management plan. 

For a comprehensive assessment, use qualitative and qualitative data to determine the effectiveness of your system correctly. For the qualitative research, interview a sample of employees and managers about their experiences with performance management.

After this step, corroborate the information with quantitative data, such as downloading reports from your system. Once you have collected the data, you can evaluate the outcomes with a benchmark report.

💡 TIP: If you don't have a performance management system in place, you could use this step to research what an effective process looks like thoroughly. Analyze best practices and market trends to create a plan.

2. Define performance goals

Next, establish what you aim to achieve with the new performance management system, such as improved employee performance, enhanced engagement, or better alignment with business goals.

Regardless of your objectives, it is important to consider some form of goal-setting strategy. This will help you support employee development and focus more on the future than past behaviors or actions.

💡 TIP: Set goals for departments and team members. All goals should be aligned with business goals.

3. Establish a performance management timeline

The next step is to determine the frequency of conducting performance check-ins. As already discussed, although many companies still choose annual reviews, people want to have more frequent conversations about their professional development.

So, depending on your business model and organizational culture, you could opt for quarterly, bi-annual, or annual performance reviews. 

4. Incorporate continuous feedback and recognition

One of the most important steps of the process is to incorporate continuous feedback and recognition into your performance management system. Feedback plays a crucial role in performance management and is the most effective tool for growth and development. 

So, regardless of the timeline you choose for performance check-ins, feedback should be constantly given, and it should go both ways. Gone are the days when only managers gave feedback to team members. Growth and performance can only occur when you take the pulse of your people and act on their feedback.

Besides continuous feedback, you should also consider building a culture of recognition. What does it have to do with performance management? Studies demonstrate that employees are 2.7x more likely to be highly engaged when they feel their organization will celebrate them. When employees are engaged, they perform better and are more dedicated to their work.

Source

5. Offer training to managers and employees

Another nice-to-have step is to offer comprehensive training to managers and employees to support the effectiveness of the performance management system. People have biases and are formed a certain way by working in other organizations.

Even the most open employees and seasoned managers may still have difficulties giving constructive feedback or completing a fair and objective evaluation. So, offer formal training and dedicate enough time and resources to ensure your people complete reviews that drive results.
Pro tip: Think of engaging hidden ambassadors within the company who can further advocate for the benefits of the performance management system and encourage broader adoption.

6. Tie it together with performance management software

Implementing a performance management system effectively requires leveraging the right software. Performance management software ensures consistency and transparency in the performance management process.

There are multiple performance management software available on the market. One such solution is Mirro, which streamlines the entire process, ensuring that all components-performance reviews, feedback, recognition, and OKRs-are integrated seamlessly. Tying your performance management efforts with software ensures that your organization remains agile, responsive, and aligned with its strategic goals.

Ready to introduce a performance management system in your organization?

Effective performance management entails more than paperwork and recurring meetings. It's a complex process that depends on multiple elements and procedures coming together to form a coordinated and efficient system. Performance management can also determine whether your company is moving in the right direction. 

So, if you want to drive better performance and have aligned, engaged, and happy people, it's time to implement a performance management system. Hopefully, this article gave you all the support you need to introduce an effective performance management system in your organization.