Updated April 25, 2023
Introduction to Employee Performance Management Tools
Monitoring the performance of their employees is one of the most important tasks of management in an organization. Whenever a new company is formed, complete management decides some parameters that become the benchmark of an employee working there. These parameters differ according to work, daily tasks, and the person monitoring their work. Every employee is entitled to achieve that target no matter what.
Managing the performance of an employee or a team is a comprehensive task that should be flexible. The key is to know how well and efficiently an employee has worked throughout the year. Their performance may not exceed what the management expects but should be equal and efficient. When we say efficient, we refer to employees’ contributions to the organization’s growth last year. For example, an employee may be punctual, hardworking or have a good professional relationship with their managers and other team members; however, it is more important to figure out whether he is a good contributor to the growth of the company. Did he do anything extra or out of the box, or did he achieve all his targets and be a good team player? Although metering an employee’s performance is always based on hard data, it is very important to make it flexible, considering other qualities. For instance, Being a team player and motivational to others is equally important as being a smart worker. One has to apply their soft and hard skills to work; that’s why an employee’s performance should not be only based on hard data. And that is where key performance tools come into the picture to provide the right decision on performance.
5 Very useful performance-tools
Whether non-commercial (non-profit) or commercial, every company prefers to monitor their employee’s performance weekly, monthly, or yearly, or manage and monitor even daily (depending upon the nature of work). I believe it is a good thing; if someone is giving all their efforts to complete the task, the organization should benefit from that in an equal ratio.
There are some very useful performance tools available to ease up the work of the management of the organization and also equally beneficial for the employees. There are-
- Key Performance Indicators
- Performance Appraisals
- Lean management
- Management Dashboard
- Mission and Vision Statements
These are the top five management tools widely used by many organizations successfully. Every tool has its specifications, benefits, and flaws. It is very important to understand the nature of the contribution an employer expects their employees to pick up the appropriate performance management tools to measure, manage and monitor the employee’s performance – Key Performance Indicators.
#1 – Key Performance Indicators
With a usage rate of about 75%, the Key Performance Indicator, also known as KPI, is one of the top management performance tools. A key Performance Indicator is a quantifiable metric that applies at an organizational and individual level. At an organizational level, it measures how efficiently an organization achieves its goals.
Think of a situation of calculating the key performance indicators of an organization. For example, if you provide superior customer service, KPI will tell you the number of customers who remained unsatisfied with the services last week. This way, you can calculate the ratio of happy customers. However, considering the flaws of KPIs, if the number of customers complained about your service is very less or below normal, you can’t always assume you are providing a wonderful service. It may also mean you are not approachable to unsatisfied customers well.
A key performance indicator for an employee is directly linked to the organizational strategy. It monitors your performance at team, department, and organization levels. Furthermore, KPIs include organizational vision, objectives, overall organizational KPI, and goals. It ensures that every employee’s work is aligned and organized toward the organization’s success.
Primarily, the value of KPI is in enabling hard data-driven performance and better decision-making. What data will you consider monitoring your employee’s performance, and what points and achievements do you want your employees to achieve completely depend on you? Ask yourself what qualities you want in an employee for the growth of your organization. Then a balanced scoreboard will tell you how well your employees are doing.
#2 – Performance Appraisal
A recent global survey of over 3000 organizations indicates that Performance appraisal is the second most commonly used performance management tool. With 60% of usage, Performance Appraisal is one of the top five performance management tools. These performance management tools are flexible with parameters and performance areas and are rated as one of the most structured and formal tools. The performance appraisal management tool is excellent for aligning organizational and individual goals.
Performance Appraisal management has so much to offer to the management to monitor performance. It helps managers chalk out the employees who deserve promotion and frame training programs for less-rated employees. Also, employees and employers communicate, which helps them understand each other’s skills and merits and improving the professional bonding between them. However, sometimes a bad meeting during appraisal may ruin the bonding between them they had for the past year (or maybe more). That somehow directly or indirectly will affect their performance in the future.
#3 – Lean Management
Lean management refers to the management tool that seeks to eliminate and waste time and create more value and services for customers with fewer resources. This performance management tool monitors and identifies each step to determine what department or step is not useful and productive to the organization, which can be eliminated later. Compared to the previous year’s surveys, this performance management tool is gradually expanding its users across the organizations. Lean management is a simple and straight tool that focuses on what is important, productive, valuable, and comparatively less expensive and how one can improve that. Also, what is not productive and beneficial can be eliminated from the process to avoid any waste.
Many organizations believe that Lean management is only useful for manufacturing firms; however, this performance management tool can be applied to any business for employee management with proper parameters. It is a process of implementing beneficial and productive steps to the growth of one organization, but this is a long-term and repetitive process that achieves small but incremental changes.
#4 – Management Dashboard
The management dashboard is one of the top performance management tools organizations use nowadays. Key work or, in its case, we can make a specialty of this management tool, compiles all performance information together. Daily productivity, timing extra work, or anything specific all come under one roof. Performance information presentation is often in graphs or charts. It is mainly a day to the day development process. One of the best qualities of this performance management tool is that the dashboard of an employee can be seen anywhere, making it easy to monitor the activities of employees. It is easy to use and has a real-time user interface. Still, that only shows the operational performance, not the strategy. It has its limitations, and employers need to understand all these to avoid any mistakes while measuring the performance of their employees.
#5 – Mission and Vision Statements
With the usage of approx 50%, Mission and Vision statement management tools are one of the most used performance management tools. Many recommend and encourage this management tool because of its overriding purpose. Mission and Vision statement performance management tools ensure that operational, individual strategies and performance levels are the same. They both should be on the same page. Mission describes the purpose of an organization and the existence that motivates team members.
Often, Mission and Vision statements may be misunderstood by many but not every time. It is very important that all the employees understand the mission so that their actions can result in the organization’s growth. For example- Google’s mission is to ‘Organize the World’s information and make it accessible and useful for everyone. The vision statements of an organization should be inspirational and clear. For example, John F. Kennedy’s famous vision, ‘We will put a man on the moon and bring him back safely by the end of the decade’. Undoubtedly, this vision is inspirational, clear, and crisp.
How did this complete performance management software process work? We can segregate this into the three most important steps for better understanding. Here they are-
- Work planning and reviewing the performance and productiveness
- Development of objectives
- Feedback and development of job title
Work planning and Reviewing Performance and Productiveness.
For a quick understanding of this process, let me explain it this way- The process starts by reviewing the work done by a junior employee. Managers or supervisors review the work done by the employee in the past year or month (depending upon the session) and measure that on multiple parameters that define how useful that employee is for the company and how/what is she or she doing for the past one year to contribute in the growth of an organization. The immediate manager or supervisor majorly does performance observation.
Development of objectives
Next comes the development of a performance objective which indicates how an individual’s goals and daily efforts can be directly linked to the primary objectives of a company. This step is to ensure their (both organizational and individual goals) are aligned properly. This step is about developing organizational strategies, criteria, mission, and vision and ensuring every performance management software is effective.
Feedback and development of job title
The conclusive step outlines the steps required to develop the job responsibilities and skills of the employees. Management often decides to develop new training programs as well as policies for the betterment of the company.
Commons perceptions of Performance Management Tools
Dr. W. Edwards Deming claimed, ‘there was no way to make such “appraisals,”statistically valid. Unless employees believe that the appraisal process is fair, equitable and with much of the subjectivity removed, it is typically a poor tool for motivating performance – but can be an extremely powerful de-motivator.
Management guru Kent D Miller believes, “Organizations must think in terms of total rewards and not just financial rewards if they are to enhance employee involvement, commitment, job satisfaction—and performance.”
Performance management software is an ongoing process. Repetitive and consistent usage has proven to be a beneficial tool for both the organization and employees. When they monitor how they work and how beneficial their steps are in the growth of an organization, they become more inspired and dedicated to their production. However, many organizations today don’t believe in appraising an employee based on statistical values and numbers. An unnecessary parameter may affect their overall score. A good thing about this process is two levels of an organization share their views.
Along with letting the employees know how they are working, it is also important for the management to know how their employees feel about their work. That’s why quick activities such as employee engagement surveys, one-on-one sessions, and team feedback are equally significant and should be a part of annual performance management software. These activities foster professional growth, improving employees’ and employers’ areas of development and strengthening their bond.
This has been a guide to Performance management tools. Here we have discussed the basic overview and five types of beneficial performance management tools for the organization and employees. You may also have a look at the following articles to learn more –