It has been said that execution is more important than strategic goals. While you may have excellent strategies and clear goals, the chances of failure to meet your goals can be high if these strategies are not executed well. On that note, let’s discuss how a performance management system can help align people with organizational strategy to get the best results out of the workforce.

What is a Performance Management System?

A performance management system [PMS] is the integrated approach to help an organization achieve its goals with perfect synergy between the people and the organization. It creates a shared understanding of organizational objectives and strategies that lead the employees towards achieving the goals.

The three primary areas in a PMS are the process used to communicate organizational goals to everyone, reinforce individual accountability, and track and evaluate the performance results of both the individual and the organization.

However, a performance management system requires strategic deployment. Ideally, the strategy must include an employee’s own development goals and drive business results, i.e., your organization’s strategic goals can be achieved by aligning employee performance management with business strategy.

How to Align Performance Management with Business Strategy?

Step 1: Setting Business Goals

Each area of the organization must have set targets that reflect the overall strategy. For instance, you may want the sales lead to achieving a certain sales volume or the marketing lead to meet a certain number of client retention. You would need to make sure that these targets are measurable, so the goals must be specific, i.e., instead of using the word, ‘improve,’ your goal must include ‘by how much.’ A good example is setting SMART goals – Specific, Measurable, Achievable, Relevant, and Time-bound.

Step 2: Let the set goals cascade to the Teams.

These business goals must cascade to their teams according to individual rules and responsibilities. They must be clear, realistic, documented, and explicitly agreed upon between the manager and the employee.

Step 3: Monitor the Performance Frequently

Frequent checking in with the individual employee is vital to the process. Managers must also make these reviews more than a formality. The monitoring process of review and feedback can be meaningful only when they are frequent, i.e., weekly or monthly. Leaving reviews for longer than that can derail the path towards the set goal. Any deviation from the path can be noticed and corrected. On occasion, you may need to revise the goals or have alternative plans.

Frequent reviews also ensure that no contribution goes unnoticed. When employees are recognized and rewarded immediately, they are motivated and energized to work with greater zeal.

People Strategy is multi-pronged:

• The organization’s vision,
• Identify problems and ensure that appropriate training is available for employees.
• Create an efficient feedback loop 
• Include all stakeholders in the process
• Communicate the strategy across the board
• Track and document the progress and revise as needed.

Execution of people strategy needs the following elements of the organization – the leadership team, the organization’s culture, and environment, talent, and the HR department. A well-aligned organization requires all components to work together to ensure that the journey towards meeting the individual and organizational goals results in employee loyalty and retention. Organizations implementing a robust PMS will find the inherent objectives of the system accelerates the journey to business growth and success.

Objectives of a PMS

The below objectives of a PMS are essential to a strong and high-performing workforce:

• To leverage the employees to achieve the organizational goals.
• Provide clarity in individual objectives for each role and at all levels of the organizations
• Encourage growth and high-performance work culture
• Identify training needs and empower employees by meeting those needs
• Improve the relationship between managers and team members
• Offer performance recognition and well-structured reward programs.

Performance management systems work best when they involve all levels of the workforce and reflect the organizational culture. Moreover, the PMS must ensure total transparency in employee engagement practices. Employees are made aware of their accountability, and they are suitably recognized and rewarded for their contributions.

Employee engagement includes employee growth, which is possible only through a vital learning and development department. Over 70% of the workforce stays with an organization because they are provided growth opportunities, and their individual goals are given due importance. When organizations offer training to develop their skills, employees feel more valued. The modern PMS can offer these, and more.

Evolution of PMS

Performance management systems have evolved over the years. While the annual review process initially worked well, it did not suffice. Employees did not become aware until the end of the year that they had gone off track. So, they did not get the required support at any point during the year.

On the other hand, the modern PMS offers a regular performance-review cadence to identify and fix issues within a time frame. Regular and frequent reviews can be formal or informal, daily, weekly, or monthly, making them more impactful. Frequent check-ins help course-correct as and when the employee falters, allowing managers to offer direction and support. This is a great morale booster and builds the employee’s confidence. These reviews can also be performed through short surveys.

Employee surveys must be customized according to the need. The objective of the survey is to discover the pulse of the organization across different levels, including new hires. Each one will have defined questions to elicit the right response. Upwards assessment is a new trend where the feedback is on the manager from the team member. The feedback surveys are created to share positive input and opportunities for growth.

How to make the modern PMS Effective?

PMS can only be effective if you avoid the common pitfalls of traditional performance appraisal systems. For instance:

Too many goals – Goals or objectives must be limited to three to five so that the employees can remain focused on achieving the key results. Too many goals will fracture their attention and muddle the process.

Unclear accountability – Every individual team member must be clear on what they are accountable for, especially when multiple departments work together towards a common goal.

Lack of training for managers – Managers must have strong people management skills or must be offered sufficient training to support their team members. It will help build a better manager-team member relationship.

Wrapping up

The best performance management system is holistic and will cover all aspects of the organization. It will include the business objectives, the people involved in meeting those objectives, and the perfect alignment between the individual and the organization. Choosing the right PMS and implementing it in your organization will make all the difference to your market position.