Written by Pete Wilkinson

Last updated 24 June 2022 ·

Performance management as a system: 5 steps to incorporate it into your business

In this day and age, it’s more important than ever to be able to quickly adapt to change and keep your business moving forward towards greater success. Your employees are your most valuable resource, and the better you can manage them in such a way that aligns with your vision, the more likely you are to succeed as an organisation. Performance management is one of the most effective ways to ensure that every team member is working toward the same goal and helping your business as much as possible.

In business, plenty of tools and methodologies help you manage your resources effectively, with performance management being one of the most prominent ones. If you’re wondering how to incorporate performance management as a system in your business, here are some tips to help you start setting up performance management as a system in your company.

Step 1: Define your performance standards

Performance standards are measurable criteria to determine productivity, efficiency, and effectiveness. Clearly defining your performance standards is fundamental to success. All employees should be aware of their performance in their work at all times. This sets the tone of expectations for employee roles and responsibilities.

Standards set should be motivational and inspirational to the employee and achievable with a degree of stretch, driving ambition and encouraging employees to strive for high performance. Employees should always be made aware that their performance is being analysed so they can take action to meet or even exceed these standard expectations.

Step 2: Create an action plan

A highly effective way to establish clearly defined expectations of roles and responsibilities is using OKRs, Objectives and Key Results. Having well-considered OKRs provides the perfect action plan and helps employees decide where to focus their daily hard work. The idea is that any company, project or campaign has an Objective, and the success of that objective is measured using Key Results. Each objective is broken down into 3 to 5 key results, which are measurable actions required to achieve that objective. There are many ways to lay out this strategic planning information. At Reclaro, we created the award-winning 1-3-5® business planning method, which allows you to set 1 Vision, 3 Objectives, and 5 Key Results per objective.

Step 3: Set realistic goals and review progress

Work with managers and leaders to ensure your OKRs are realistic, with stretch, and inspirational - you should feel excited to work towards achieving these. Make sure you regularly log your OKR progress, performance and achievements in a central place; this could be a Google doc, spreadsheet or, if possible, using OKR software. There are many benefits of using an OKR software system to log performance, such as increased visibility, transparency, time savings, improved team alignment and employee engagement. Review progress within regular 121 meetings. Constant communication helps avoid inefficiencies that may creep in when an employee feels they need help but may not know where or how to get it.

Step 4: Reward people who meet expectations

Using our 1-3-5® OKR plan or most alternative OKR structures dramatically improves performance visibility across the board. They can see at a glance which teams and individuals are performing the best in the business. This helps leaders and managers easily identify which team members should be recognised for their efforts and rewarded. OKRs clarify expectations so employees know exactly what they need to do to stand out from the crowd and make a positive impact. Whilst rising stars can be easily identified, so can any areas for development lacking performance. Appropriate action can be taken to minimise this, such as more training and support provided.

Step 5: Document everything systematically

The final step requires combining the OKR planning process with performance management altogether in a system. OKRs allow you to structure workloads aligned with the overall business vision and objectives whilst enabling performance to become much more visible and transparent at all levels. It’s not just top-down either; employees can see the OKR plans of their peers and even their managers should they allow that.

To learn more about our 1-3-5® OKR software, look at our customer stories to see how using OKRs, and our award-winning 1-3-5® planning method has benefitted them.

Alternatively, if you are just starting your journey with OKRs, download The OKR Builder™ today. It contains a step-by-step guide on how to write compelling OKRs that cascade perfectly throughout all levels of your business.

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