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What is employee performance management? A complete guide

Learn how to improve employee retention, development, and productivity in your workplace by muscling up your employee performance management.

Door Hannah Wren, Staff Writer

Laatst gewijzigd April 23, 2024

Employee performance management definition

Employee performance management refers to how an organization monitors its employees’ caliber of work and efficiency, often to improve the employee experience and strengthen business performance.

Employee performance management is essential for any company that wishes to establish a high-performing workforce because it allows organizations to better align employees with team goals.

Establishing clear objectives, continually evaluating employee performance, and providing necessary feedback are at the core of managing employee performance. Above all, a successful employee management program should make your workforce feel valued.

Turn to our guide to get started and learn about the benefits of employee performance management, best practices for implementing processes, and tips for effectively navigating the cycle.

More in this guide:

Benefits of employee performance management

Investing in tools to improve employee performance management can have long-lasting effects on your organization and employees alike.

An illustration of an individual on a bike accompanies a list of ways employee performance moves the needle for businesses.

Business significance of performance management

Effective employee performance management can drive business efficiency and help teams hit organizational goals. Here are four ways businesses can benefit from employee performance management:

  • Strengthens business performance: Effective employee development management plans can boost productivity by allowing employees to align on performance expectations and make more informed decisions.
  • Improves risk detection: With increased communication and monitoring of employee engagement metrics, businesses can quickly identify and tackle issues like underperformance or employee disengagement before exacerbating them.
  • Increases talent retention: Organizations can decrease employee turnover rates by recognizing workplace achievements, offering ongoing development training, and more
  • Provide insights into your workforce: Setting objectives, evaluating workforce management metrics, and providing ongoing feedback can give you better insights. For example, by monitoring the average handle time for agents, you can understand how long it takes to solve customer issues and set a goal for continued improvement.
Four icons represent four employee performance management benefits.

Benefits of performance management for employees

The employee performance management process encourages business efficiency, but it also impacts your workforce. By implementing a transparent management process, you can see the following team member benefits:

  • Helps set clear employee goals: Establishing clear employee goals is critical to running a business. Managing employee performance can help team members set more explicit goals and create accountability by providing additional direction and real-time feedback.
  • Improves well-being: Employee performance management is centered around the employee (after all, it is in the name). If you encourage open communication and feedback, team members can identify personal growth opportunities within a supportive environment.
  • Creates superior training experiences: Identifying training needs through employee performance management plans benefits team members. By recognizing areas of improvement through performance monitoring, staff can receive personalized learning opportunities.
  • Increases motivation: You can heighten employee satisfaction and motivation by allowing team members to feel valued and heard through feedback sessions. Motivation is a positive attribute for the employee that affects other team members and leads to more positive customer experiences.

Integrating a performance management plan benefits the core business and individuals within your workforce. Focusing on employee performance management builds a better, more capable workplace.

Best practices for implementing a performance management process

Implementing a performance management process for employees can feel daunting, but general best practices can get you on the right path. All workplaces are different and will likely require customization, but beginning with these concepts provides a solid foundation for any organization.

Five icons represent five employee performance management best practices.

1. Encourage employee development

Employee development is a vital aspect of the performance management process, and it helps ensure your team members are the best they can be at work. You can foster a positive learning environment in multiple ways and encourage your employees to continue growing in their positions.

Begin by providing access to learning opportunities, such as industry workshops, seminars, and courses. Leveraging knowledge base software can help your business by allowing employees to learn 24/7 at their own pace. As team members begin their educational journey, providing personalized career development plans with specific objectives can help individual employees stay on track.

You can also encourage employee development by providing learning opportunities. For example, you might delegate one of your weekly managerial tasks to an employee working toward a manager position. This enables employees to grow and take on tasks outside their current roles.

2. Provide employee recognition for performance

When an employee meets their set goals or surpasses objectives, it is beneficial to recognize their performance. In addition to feeling satisfied with self-worth, boosting an employee’s morale can lead to greater productivity and foster a positive company culture. Happiness within a workplace is infectious—don’t be afraid to let it spread.

You can recognize employees who have performed well in various ways. Here are a few approaches you might want to consider implementing in your workplace:

  • Provide a personalized award or certificate for meeting goals.

  • Voice praise in a company meeting, allowing for peer recognition.

  • Organize a small thank-you event for high-performing employees.

  • Feature accomplishments internally, such as on the intranet.

  • Provide performance bonuses in the form of cash or gift cards.

  • Show employees they have done well by offering additional opportunities.

Customizing employee recognition to suit your workplace and team members’ desires is best. Collect employee feedback to understand whether the recognition has its intended positive, motivational effect.

3. Have employees set realistic goals

Elevate your team’s performance by incorporating SMART goals into their routines to help them reach business and career path objectives. SMART is an acronym that stands for:

  • Specific: What are you attempting to achieve by setting this goal? Example: Improve employee productivity by 8 percent.
  • Measurable: How can you measure your progress and know when you have reached your goal? Example: Monitor the number of tasks each employee achieves in a month.
  • Achievable: Is the goal realistic and attainable? Example: Make sure you have the resources to achieve the goal.
  • Relevant: Does the goal align with your company’s primary objectives? Example: Reduce customer agent handling time by a set percent to exceed customer service expectations.
  • Time-bound: How long are you giving yourself to complete the goal? Example: My employees will complete this goal in six months.

Once you set your employee goals, your teams can leverage performance data to understand the efficiency of their established processes.

4. Leverage team performance data

If a business sets goals but doesn’t use data to understand where it is on a strategic path, it can quickly become lost. With team performance data, you can make critical adjustments to keep your employee performance management strategy on track if it isn’t performing as intended.

Identify key performance indicators (KPIs) related to your current initiatives and goals—they help organizations use available data to better understand operations. For example, if you aim to increase your customer experience with KPIs, you might want to monitor the Net Promoter Score® (NPS) to see how it varies over time.

5. Utilize AI tools

AI is rapidly becoming a powerful tool in various industries, and businesses should consider how it can help them improve current processes—employee development is no exception. For example, AI can take the guesswork out of quality assurance by analyzing conversations and highlighting problem areas or gaps. Zendesk AI automatically identifies knowledge gaps and uncovers coaching opportunities to pinpoint training needs and improve employee performance.

With AI, you can create a better experience for both employees and customers. When agents are equipped with the knowledge and tools to deliver fast, personalized support, customers benefit by continually interacting with employees who are aware of their problems and can provide necessary solutions.

Improve agent performance with Zendesk WEM

Zendesk WFM and QA leverage AI to enable teams to analyze productivity metrics, driving better decision-making for a more effective workplace. Take the next step and learn how our workforce engagement management offerings (WEM) can help.

The performance management cycle is a repeatable process used to help improve employee success and business efficiency. It is a valuable strategy when implementing an employee performance management plan.

Organizations can break down the performance management cycle into several stages: employee goal setting, ongoing performance monitoring, plan evaluation, and recognition. Here are several tips to help your team navigate the performance management cycle with expertise.

Five icons represent the five steps to navigate the performance management cycle

1. Utilize workforce optimization software

Workforce optimization software can help businesses achieve employee performance management objectives. With workforce management tools, for instance, you can automate repetitive functions to ensure optimal workforce productivity. Additionally, quality assurance (QA) tools provide instant insight into your support team’s performance so you can make adjustments as needed.

For example, Zendesk QA empowers companies to collect analytics and assess the quality of customer service interactions. Thanks to systematic feedback, managers are also equipped to give specific performance guidance to their team and offer 1:1 coaching sessions to help struggling agents improve.

2. Foster open team communication

Open communication is key to increased employee performance and a positive work environment. By encouraging transparency, companies can communicate with employees better and set SMART goals that everyone understands.

As your team reflects on progress, open communication also allows employees and management to voice constructive feedback without fear. If an employee fails to achieve their goals, being transparent about it helps you figure out how to support them in reaching their targets and earning the recognition they deserve.

3. Enable consistent growth conversations

The performance management cycle is a recurring process for employee development that requires organizations to repeat their methodologies to achieve desired results. A key part of the cycle is having regular conversations or coaching sessions, but the cadence of these discussions is just as important.

Set up consistent growth conversations to keep your employee management process on track and company goals in sight. While regular meetings (whether face-to-face or virtual) are one option for growth conversations, you can also stay connected through scheduled emails if that works better for your team.

Leaders may want to consider employee experience journey mapping to gain a deeper understanding of what each team member needs to thrive and progress

4. Establish efficient onboarding

Employee performance management begins on day one—that’s why it’s important to integrate it into your onboarding process. Setting goals is a big part of making sure employees perform well, so it’s crucial to lay out objectives that give new hires a clear picture of what’s expected of them in their new roles. This knowledge enables them to get up to speed quickly and hit the ground running.

Establishing a performance review schedule during onboarding also sets up employees for success with dedicated check-in times. Plus, reviews allow leadership to identify knowledge gaps or areas where additional training or support might be needed, fostering ongoing growth and development discussions.

5. Offer explicit employee feedback

Employee feedback should be clear and direct, whether positive or negative. Acknowledging achievements and shortcomings is critical when trying to achieve set goals. We should emphasize that feedback should be explicit but always constructive.

When an employee doesn’t meet a goal, feedback should acknowledge it but provide a positive path forward for improvement. Leveraging workforce management tools like Zendesk WFM can help you engage your agents through continuous feedback and real-time performance reporting.

Frequently asked questions

Keep a handle on agent performance management with Zendesk WFM and QA

Investing in performance management is imperative for managing your employee experience because it can improve retention rates, strengthen performance, and enhance problem-solving abilities.

As your training and development initiatives progress, the positive impact on your employee experience can create a ripple effect that extends to your customer base, enhancing their experiences and fostering a more positive perception of your business.

You can take it all a step further by investing in a workforce optimization solution like Zendesk to enhance agent performance through better quality assurance and promote engagement through 360-degree feedback. Such solutions provide better visibility into the quality of your employee-customer interactions and actionable insights for improving metrics.

Net Promoter, Net Promoter Score, and NPS are trademarks of NICE Satmetrix, Inc., Bain & Company, Inc., and Fred Reichheld.

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