The COVID-19 pandemic has led to many workplace changes, and the newest trend we’re seeing is “The Great Resignation.” This refers to workers quitting their jobs in droves–according to the U.S. Bureau of Labor Statistics, nearly four million Americans quit their jobs in July alone. Many factors have likely contributed to The Great Resignation, including:
- Employees experiencing burnout caused by the pandemic
- Employers asking employees to return to work in a physical office after they’ve settled in to working from home
- People wanting to pursue “dream jobs” or schedules that allow for more time with loved ones
- Low-wage workers wanting better pay
Whatever the cause is for The Great Resignation, it’s a growing concern for employers. You invest time and capital in your employees, which means you want to retain them for as long as you can. After all, hiring new workers is expensive. To avoid losing employees to The Great Resignation and in general, you have to create a solid performance management process. Doing so will help you continuously manage, evaluate, and coach your employees so that they want to continue working for your organization.
In this guide, we’ll introduce you to what performance management is and show you how to create an effective performance management process.
Are you ready to learn how you can cultivate employee loyalty and retain talent through performance management? Let’s get started!
Performance Management: Frequently Asked Questions
Performance management refers to all the ways organizations and their leaders engage with and manage employees. Performance management includes not only traditional performance reviews and evaluations, but also ongoing training, coaching, and communication with your employees.
Continuous performance management enables employees to grow in their positions, move up in their careers, and communicate openly with their managers.
In addition, performance management helps you, as an employer, retain talent, optimize your operations, and grow your organization.
Your HR team is partially responsible for leading performance management. They will define business roles, align team goals, document and review employee performance, identify advancement opportunities, and conduct and analyze exit interviews.
Your HR reps can’t go it alone, however. Managers and their directs have to actively engage in performance management for both individual careers and the organization as a whole to progress.
An effective performance management process starts with identifying what your employees need to succeed and feel fulfilled in their jobs. We’ll cover the steps of setting up your process in the next section.
Also, it’s worth your while to consult with HR experts for help optimizing talent management and retention. A third-party perspective can help you identify gaps or shortcomings you might not be able to see when creating your performance management solution alone.
How to Develop a Performance Management Process: 9 Steps
Developing your organization’s performance management process will take time, reflection, and action on the part of your team. Let’s walk through nine critical steps you’ll need to take to ensure you have everything in place to be successful.
Step 1: Write clear and thorough job descriptions.
Great performance management starts with well-written job descriptions. Job descriptions determine what talent you attract to your organization, helping you to find employees to hire and train.
Job descriptions literally define your company’s expectations for individual roles. They can be used in the performance review process to gauge whether or not an employee is meeting (or exceeding) expectations. Job descriptions should also be updated as the positions’ responsibilities evolve, ensuring you can continue to use them as an evaluation tool for performance management.
In other words, job descriptions lay the foundation for effective performance management. This means your job descriptions for every role, no matter how big or small, should be more than just a paragraph or two. Here are some essential components to include in your job descriptions:
- Job title: Job titles should illustrate where the position fits in the hierarchy of your organization, while still being general enough that the position is recognizable and can be researched. Study the job titles used for similar positions at other organizations. This will help you choose language that accurately reflects the job’s industry and hints at likely duties.
- Duties: List out the duties and responsibilities for the job. Ideally, you should include a percentage that illustrates how much time will be spent attending to each duty.
- Skills: Identify skills and qualifications applicants should have in order to succeed in the role. For example, you might list “3+ years in an academic counseling role” or “Must be fluent in French.” This shows job applicants what to highlight on their resumes in order to demonstrate how well they will fit the role.
- Competencies: In contrast to hard skills, competencies are characteristics employees should have based on your organization’s values. “Open to accepting and incorporating feedback” and “Organized and efficient” are examples of competencies. These will also guide your applicants in preparing their resumes.
- Relationships: Establish who the employee will be reporting to. This shows your employees the boundaries of their role and potential advancement opportunities the role might lead to in the future.
- Salary: Provide a salary range competitive within the role’s industry and job market. You should also provide information about benefits such as healthcare and retirement fund matching, as well as total compensation perks like corporate gift matching, volunteer grants, or bonuses.
To help you write solid job descriptions, we’ve created a template to guide you:
Monitor the health of your job descriptions so that you can use them to define roles at your organization and evaluate employees. They should be updated regularly to reflect responsibility changes, job market shifts, and to include a wider pool of applicants.
Step 2: Conduct job interviews with performance expectations in mind.
Once you have recruited a pool of job candidates who appear to align with your organization’s values and qualify for the given role, it’s time for interviews. To learn more about your candidates, you’ll need to prepare questions that allow candidates to speak about their experiences and qualifications for the role. According to the Society for Human Resource Management (SHRM), these should be open-ended questions, such as:
- Tell me about your past work experience.
- What are some of your strengths and weaknesses?
- What was your relationship like with your previous manager?
- Why do you want to work for our organization?
- Tell me about a time where you had to solve a problem in a previous role.
- Describe a time when you were faced with a strict deadline and had to work under pressure.
Questions like these will help you gauge how well the job candidate fits the job description, but job interviews also give you the opportunity to clearly communicate your organization’s expectations. After all, a job applicant can only learn so much about your company’s hierarchy, culture, and work/life balance expectations from a written description.
Now is your chance to make sure job candidates understand what will be expected of them if they are hired. You should also briefly introduce them to your performance management process, letting them know they’ll be evaluated and coached on an ongoing basis with the goal of long-term retention. This will enable you to identify candidates who will respond well to your performance management system, succeed in the job they’re interviewing for, and stay with your organization for the long haul.
Step 3: Optimize your company’s onboarding process.
After an employee has been hired, your company begins the onboarding process, training them how to do their day-to-day duties and bringing them up to speed on your larger organizational goals. The onboarding process is a critical time. According to an SHRM article from 2016, 20% of employee turnover happens within the first 45 days of an employee starting a new role.
The beginning of any job is a stressful time for a new employee. Between learning how to do their job, they typically also have to familiarize themselves with new software, meeting protocols, and coworkers and work culture. In other words, the pressure is on for new employees. Streamlining your onboarding process can help you reduce the high turnover rates that are becoming more and more ubiquitous during The Great Resignation.
According to our article on the relationship between onboarding and retention, here are some questions your HR team and managers can ask themselves when improving the onboarding process:
- When will onboarding start and how long will it last?
- How do you want your new employees to feel and think about your organization at the end of their first work day?
- What do employees need to know about the work culture and environment?
- What role will HR play in the process? Direct managers? Coworkers?
- What goals will you set for new employees? (Hint: You can base these off of the job description for the new employee’s role!)
- How will you measure the success of your onboarding program, and how will you get feedback on the program?
Once you’ve fully onboarded your new employee and have them meeting initial expectations for their role, you can start the ongoing communication and coaching process that’s essential to performance management.
Step 4: Provide frequent opportunities for communication and coaching.
Effective performance management requires providing continuous feedback, training, and communication opportunities. Instead of a one-off performance review at the end of every year, this performance management model allows for a more informal system of evaluating employees, preventing turnover, and solving problems as they arise.
Here are some different tools your organization can employ for continuous performance management:
Regular One-on-One Meetings Between Managers and Direct Reports
One-on-one meetings should ideally take place once a week and last for 15 to 30 minutes. These meetings serve as an outlet for questions employees might have for their managers about current projects and expectations, but they can also be a space for broader career development and retention conversations. In these meetings, managers should get to know their directs and check in with them on how they feel about their job and life in general (especially during the COVID-19 pandemic).
Here’s how your managers and employees should prepare for their weekly one-on-one meetings:
As the graphic indicates, feedback will be a large part of these one-on-meetings. These meetings will take place in a semi-private setting, whether over a video call or in a quieter part of your office, providing a great opportunity to give both generous praise or constructive feedback.
To ensure that employees are comfortable with feedback, managers should aim to give them positive feedback and reinforcement most of the time. This will communicate to them that they are valued by the organization and help them be more open to constructive feedback.
An “Open Door” Communication Policy
Organization who want to identify retention problem areas early need to have an “open door” communication policy. This means letting your employees know that they can speak to their managers and your HR team at any time about burnout or other problems related to their role.
A 2019 SHRM article on workplace communication asserts that listening is essential to conversations like these, especially if your company is worried about retention. Here’s what they recommend:
- Listen to learn instead of listening to react, judge, or respond.
- Acknowledge and validate what is being said.
- Ask open-ended questions like “Tell me more” or “Explain what you mean” to better understand what your employee needs from you.
Be clear about your “open door” policy. Include it in your job descriptions, onboarding handbook, and remind employees about it in meetings. Showing that you’re willing to listen and learn will make your employees want to talk to you when problems arise.
Coworker Mentoring Program
According to Officevibe, 70% of employees say that having friends at work is the most crucial element to being happy at work. Though friendships are likely to form naturally between your employees, you can help facilitate friendships by providing a coworker mentoring program.
New employees often work closely with their managers as they’re being onboarded and getting used to their new role. However, they should also get to know other employees in similar roles. This helps them not only advance their learning, but also encourages them to participate in workplace culture and activities, improving retention.
Regular Performance Reviews
Though performance management is far more than solely conducting performance reviews, they still contribute to the overall process.
Establish protocol that encourages managers and directs to use performance reviews in future workplace development conversations. These discussions can take place in the one-on-one meetings we discussed previously.
Retention Surveys
You can learn more about your employees’ experience with your organization by directly asking them for feedback. Feedback from employees can help you identify organizational changes you need to make to improve retention rates.
At Astron Solutions, we offer a Finders Keepers™ Employee Retention tool that can help you gather actionable feedback. With this tool you can empower your company to improve by getting feedback from new employees, job candidates who turn down job offers, star employees, and employees who leave your organization.
Step 5: Offer ongoing training and career development opportunities.
Many employees want to find personal fulfillment in their careers, and one way they’re able to do that is through growing and progressing at your organization. You can show your employees that your organization is aware of this desire by offering opportunities for ongoing career development and training. These might include:
- Continuing education (Hint: If you want to offer your own online course, check out these software providers.)
- Recertification/relicensing opportunities
- Conference or webinar registration
- Association memberships
- Management training
When your employees see your organization as a place where they have opportunities to move up in the hierarchy of your organization and to build out their professional networks, they’ll be more likely to want to continue working for you.
We recommend surveying your employees to find out what learning and growth opportunities they want your organization to offer. Offering customized opportunities shows your employees you’re listening to their feedback, improving retention!
Step 6: Invest in dedicated performance management software.
You can streamline your performance management process by investing in a dedicated performance management system. According to our article on performance management systems, “your performance management system should aim to support all employee engagements as well as provide the resources needed to grow your organization.”
The graphic below outlines some benefits you’ll be able to take advantage of with the right performance management software:
If you’re interested in investing in a performance management system, you should familiarize yourself with the three available types:
- Standalone tools: These tools can help you target a specific need, like managing performance reviews. While standalone tools are cheaper, if you decide to expand your software, there’s a risk that individual solutions won’t work together.
- Comprehensive platforms: Comprehensive platforms help you handle any performance management need that might arise. The only downside is that solutions like these have a higher price point.
- Modular solutions: Modular solutions help you to customize your performance management system, which allows you to get tools for your specific organization’s needs. For example, here are some of the modules we offer with Astron Solutions’ Flare® Talent Management Software Suite:
The great thing about a modular solution like Flare® is that the power is put back into your hands. When you customize your system with the modules you need and want, you control how much you spend on your system!
Step 7: Hold performance reviews.
When it’s time for performance reviews, you need to have the right protocol in place to blend performance reviews into your broader performance management strategy. According to RealHR Solutions’ article on performance reviews, here are some general steps you should take to set up performance reviews:
- Identify your organization’s goals, plans, and processes for performance reviews and make sure all managers and employees are on the same page.
- Have managers provide instructions and self-assessment materials to employees.
- Give employees time to complete and share their self-assessment with their manager.
- Instruct managers to get feedback on the employee’s performance from peers, clients, and direct reports (if needed).
- Schedule and host performance review meetings in which you walk through the employee’s self-assessment and the expectations for their role.
- Take the time to discuss compensation changes with the employee (if applicable).
The key to a great performance review experience for your HR team, managers, and employees is preparation. Check out the graphic below for an illustration of how everyone at your organization can prepare to get the most out of performance reviews and move forward in a positive direction:
Step 8: Take a total rewards approach to compensation.
More and more organizations are coming to realize that pay isn’t everything for the people they employ. This is why many employers have moved in the direction of offering total rewards compensation, which is a compensation system in which you take a holistic approach to how you compensate your employees for their work.
There are two parts of total rewards compensation: direct compensation and indirect compensation.
Direct Compensation
Direct compensation is all of the financial compensation you give to your employees. This could include:
- Salary
- Base pay
- Commissions
- Bonuses
- Equity benefits
Indirect Compensation
Indirect compensation is all of the non-financial ways, both tangible and intangible, that you compensate your employees, including:
- Benefits: Employees want health insurance, retirement plans, and PTO as part of their compensation packages.
- Flexibility: This includes how flexible you are with PTO and work/life balance (especially with hybrid and remote work during the COVID-19 pandemic).
- Performance Recognition: This includes the different ways you recognize your employees’ exemplary behavior. Do you give them shoutouts in meetings? Take them to lunch after a successful quarter?
- Career Development: As discussed above, career development opportunities like association memberships, conference registration, or continuing education courses are attractive to employees who want to grow in their roles.
- Workplace Culture: Believe it or not, workplace culture is a big part of total rewards compensation. Does your office set up regular events, activities, and meals outside of work hours for employees to socialize? Remember, providing opportunities for workplace friendships to grow is a big part of your job as an organization!
We recommend working with a compensation consulting firm to update or set up your approach to total rewards compensation. At Astron Solutions, we offer both base compensation and specialized compensation consulting to set your organization up with a strong employer brand. We can also help you create custom total compensation surveys to learn your organization’s compensation needs.
Step 9: Conduct exit interviews and analysis.
It can be difficult when an employee chooses to leave your organization for a different opportunity. Instead of letting turnover paralyze your team in a cycle of worry and self-doubt, you should take the opportunity to study the employee’s experience at your organization.
Exit interviews and subsequent analysis can reveal a lot about your performance management strategy’s effectiveness. Here are some questions you could ask your employee in an exit interview or questionnaire:
- Why did you start looking for a different job?
- How would you describe the culture of our organization? What would you change about it?
- What could have been done to help you remain employed here?
- What would you change about your role?
- What do you wish you would have known about our organization or the role before you started working with us?
- What was your experience like with your manager?
- How could we improve our employee compensation offerings?
- What did you like most about working here?
- What did you like least about working here?
- Would you recommend a family member or friend work here? Why or why not?
- Would you consider returning to this organization in the future?
Using your performance management software, you can create reports for your entire organization to learn from exit interviews or questionnaires. You’ll also be able to take a closer look at individual departments and managers so you can provide feedback as needed.
Once you have gathered and analyzed all the information about why an employee left, you can work together as an organization to make improvements to your performance management process and aim for better retention in the future.
Wrapping Up
The COVID-19 pandemic and The Great Resignation have challenged employers to take a good look at how they’re engaging and managing their employees. While these problems likely won’t be completely resolved anytime soon, you can follow the steps in this guide to set up a sustainable performance management process that will help you retain employees and make your organization a great place to work.
As you plan out how performance management will look at your organization, remember to get input from your employees and work with an HR consultant who can point you in the right direction by providing informed feedback on your strategy.
Interested in learning more about improving your workplace and employer brand? Check out the resources below.
- Compensation Surveys: Are They Necessary? If you’re interested in fine-tuning your employees’ compensation packages, this article is for you!
- Top 30 Matching Gift Companies by Double the Donation. One form of indirect compensation employees love is corporate gift matching. Check out this roundup of gift matching companies to learn how to set up your own program.
- HR Consulting Firms for Small Businesses: 15 Leading Experts. Interested in scaling the tips in this article for your small business and want to know which consultants are best for you? Look no further than this article.
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