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What is performance management? Best practices and top 5 benefits

4 min reading time

The most powerful asset for any organisation is its people, yet many employers struggle to tap into the wealth of available talent, skills, and potential within their workforce. Right from the outset, employers need to harness the potential of their employees with a comprehensive onboarding process, plentiful learning and development opportunities, and effective performance management practices. In this blog, we’ll focus on performance management, looking at what it is, best practices, and some key benefits.


What is performance management?

Performance management is the process through which employers evaluate employee performance and output, ensuring that they are working to the required standard and effectively contributing towards helping the company achieve its goals and objectives.

The practice of performance management involves providing continuous feedback to employees, typically delivered by a manager, and setting dynamic goals, objectives and development plans for employees to work towards. Feedback may be relayed during regularly scheduled one-to-one sessions or continuous communication between employees and managers.

The performance management process requires managers or employers to regularly track and monitor employee performance using metrics such as KPIs which allows them to measure performance against goals and objectives.

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Top 5 benefits of performance management

  • Gives employees a wider purpose, with personal goals to work towards.
  • Ensures that employee objectives are in line with wider company objectives.
  • Helps employees improve their performance.
  • Encourages employees to hold themselves accountable for their work.
  • Creates a stronger employee/manager relationship by facilitating continuous communication and feedback.


Performance management best practices


Ensure employees have a clear understanding of what is expected of them

To effectively measure employee performance, there needs to be transparency around what is expected of them and the tasks they are required to carry out. Employers must first define job roles, duties, and responsibilities, and how they will measure output for each employee.

what is performance management

Many organisations rely on performance management metrics such as key performance indicators (KPIs) to provide a quantifiable means of measuring long-term performance. KPIs can ensure employees stay on track with their individual responsibilities and objectives by providing clear evidence of past performance and achievements.

Looking for some performance management strategies? Find out more by reading our blog.


Set out long-term development goals and objectives

Managing performance effectively requires employers to look at the past, present, and future. While analysing past performance is a key part of the performance management process, it’s also important to lay out a path for future development. This can be achieved by defining long-term goals and objectives and setting out ways employees can achieve them.

Goal setting should be a collaborative process, with managers and employees working together to set new challenges. This provides employees with the opportunity to share their career aspirations and find ways to achieve this with the help of a clearly defined development process. As a result, employees feel motivated and engaged with their work.

Personal development plans: Discover how to build and manage them with a TXP.

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Monitor progress and activities

Performance management practices are only impactful and effective when supported with performance-related data. Employees need to gain an accurate and factual understanding of what they are doing well or why they are falling behind. To achieve this, employers and managers must maintain a clear record of performance insights taken from areas such as meeting notes, KPI reports, L&D activities, and feedback documentation. Armed with this information, managers can build a clear picture of employee performance over time which will further guide future performance management.

Looking for ways to automate data gathering? Get to know LMS reporting.

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Schedule regular feedback sessions

A key component of any performance management strategy is the practice of regular feedback. This is an opportunity for managers to provide constructive and timely feedback that drives future development and improvement. Feedback sessions can take place in the form of weekly one-to-ones or monthly appraisals, and to maximise their effectiveness these sessions should be structured and evidence-based, with plenty of opportunities for open and free-flowing communication.

Consider incorporating practices such as 360-degree feedback which asks for input from other members of the workforce, producing a well-rounded analysis of employee performance as a result. Most importantly, employees should be given the opportunity to provide their own input and create their own targets and objectives.

How to deliver effective employee performance check-ins: Read our checklist here.

managing performance with a performance management strategy


Empower employees with L&D opportunities

The purpose of performance management is not just to ensure that objectives and goals have been met but also to empower employees and help them grow and develop. Performance review sessions can provide an opportunity for employees to outline their personal development goals and highlight any skills they wish to acquire.

Managers can create development plans for employees, incorporating comprehensive and relevant L&D courses and programmes using a learning management system (LMS), and using performance management sessions to monitor progress.

Deliver impactful and dynamic L&D programmes with an LMS. Find out what an LMS is here.


Implement the right tools and technology

Achieving an effective performance management strategy is no mean feat; it requires a great deal of planning and effort so many organisations rely on modern tools and technology to maximise efficiency and output. The ultimate tool to meet this need is a performance management system.


What is a performance management system?

A performance management system is a platform specifically designed to carry out performance management in an online or digital setting. With a performance management system, all records and performance management materials are stored in one centralised system which can be easily accessed by both managers and employees.

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Performance management systems elevate performance management techniques in a way that is unmatched by offline practices. With automation tools and centralised documentation management, organisations can save hours spent on admin and refine processes designed to help identify areas for improvement. For example, managers can use dynamic goal-focused dashboards to efficiently identify skills gaps and implement training and development opportunities that may have been missed with offline or manual performance management practices.

Want to find out more? Read our ultimate guide to performance management systems here.


Some key performance management system features are:

  • Goal setting with dynamic goal functionality – this feature allows managers to clearly outline what the key objectives and goals are and how they can be achieved, and measure progress in a quantitative way.
  • Evidence areas – Upload evidence of employee progress and development
  • 360-degree feedback tools – Collate feedback from an entire organisation using clear feedback parameters for each employee.
  • Reporting and analytics – Gather data-driven insights into employee performance using instant reports.
  • Manage competencies – Outline clear competency frameworks using specific criteria that will contribute to progression between competency levels.


Tap into the true potential of your workforce with Totara Perform

With a clear understanding of what it takes to achieve a powerful performance management strategy, you will understand the many benefits of implementing indispensable performance management software. 

Totara Perform is our all-in-one performance management system, providing everything you need to empower your workforce and get the best out of your team. Visit our Totara Perform page to find out more or get in touch with one of our experts to find out what our performance management system could do for your organisation.

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