Performance Management: What Top-Performers Wish More Companies Knew

Performance management has evolved over the years, moving beyond the traditional (and often outdated) model of annual performance reviews. Today, high-performing businesses understand that continuous feedback, goal alignment, and recognition are key drivers of employee engagement and retention.

According to HR data, companies implementing effective performance management strategies experience higher retention rates, increased productivity, and stronger engagement. Gallup found employees who receive regular feedback (versus annually) are 3.6 times more likely to be engaged at work. 

By refining performance management processes, organizations can foster a culture of growth and sustained success. Let’s explore the best practices and tools to help achieve this. 

Best Practices for Effective Performance Management

Many leaders have little confidence in their performance management systems, leaving organizations without an effective way to set clear expectations. This challenge is even more pressing in today’s rapidly evolving workplace, where shifting expectations and the rise of remote work demand a more adaptive approach.

So, what can leaders do to step up and elevate their strategy? A good place to start is with three performance management best practices. Managers can use these tools to align their teams, increase touchpoints, and celebrate employee achievements. 

1. Align Performance Goals with Company Objectives

Not enough team members understand what is expected of them and how their roles connect to the bigger picture. Especially with the rise in shifting work environments, there’s an erosion of the relationship between one’s role and the organization’s mission or purpose. 

Employers should keep in mind the value that employee and company goal alignment can deliver—a 32% decrease in turnover and a 15% increase in productivity.

Action Items

Organizations should implement structured goal-setting frameworks, such as objectives and key results (OKRs), to create clarity and alignment. These measurable goals help connect individual and team efforts to broader company objectives. 

Examples of objectives:

• Increase sales performance
• Enhance customer satisfaction
• Strengthen cross-team collaboration

Examples of key results for those objectives:

• Achieve a 10% increase in quarterly sales
• Improve Net Promoter Score (NPS) or increase positive client reviews
• Boost cross-functional collaboration by achieving a 15% increase in project approvals

Leaders can also take this a step further by:

• Helping employees understand how their efforts align with company success
• Encouraging team members to share experiences that reflect their pride in their work
• Ensuring the employee experience consistently embodies the company’s mission and values
  

2. Implement Continuous Feedback Loops

Traditional annual reviews often miss the mark by failing to provide timely insights. Instead, businesses should adopt real-time feedback mechanisms, fostering open communication between managers and employees throughout the year.

Research notes a workplace where feedback on performance is frequent: 

• Promotes agility
• Improves work performance
• Retains talent

Action Items

Creating a healthy feedback loop requires structure along with discussion points that are considerate, productive, and helpful: 

• Establish a review process: A structured review and adjustment framework ensures the continuous evolution of your employees’ goals. This approach includes routine check-ins, ongoing progress reviews, and annual planning sessions. It establishes clear protocols for refining OKRs in response to shifting business priorities while upholding accountability.
  
  
• Solidify a communication strategy: A well-defined communication strategy outlines how objectives are shared, discussed, and updated across the organization. This includes designated communication channels, meeting cadence, and reporting structures that keep all stakeholders aligned. 

• Communicate feedback that’s specific and future-oriented: Make sure feedback is relevant to the individual's contributions and the organization's purpose. This helps reinforce how a person’s day-to-day efforts influence the big picture. Specific feedback also helps define expectations and provides an opportunity for metric adjustments to ensure employee and company goals align. 

When managers criticize mistakes, they demotivate employees. Instead, managers should focus on empowering individuals to leverage their past to make more informed choices for the present and future. 

Ask questions such as: 

• How can we improve? 
• How do we prepare? 
• What lessons did we learn? 

These can help spark productive conversations that drive growth.

3. Integrate Recognition & Rewards

Let’s not forget the power of recognition when it comes to employee performance. Roughly 50% of team members have quit due to feeling underappreciated by managers. On the flip side, employee recognition decreases voluntary turnover by 31%, increases engagement by 40%, and improves productivity by 14%.

Simply put, the power of recognition cannot be overstated. A strong performance management system is one that includes a quality rewards and recognition program. 

After all, your workforce is the driving force behind company initiatives and outcomes. They deserve to be celebrated for their talents and contributions.

Action Items

Consider the following to make your rewards and recognition as impactful as possible. Remember, it’s all about making employee celebrations timely, specific, and personalized. 

• Offer customized rewards: Understand how each employee prefers to be recognized. A one-size-fits-all approach may not be effective, so ask employees what they value in a reward. Tools like Awardco can help employees choose their own rewards.
• Mix monetary and non-monetary rewards: While cash and gift cards are effective for some, incorporating non-monetary rewards like recognition, professional development, and extra PTO can create a more meaningful and inclusive reward system.
• Invest in their growth: Support employees' professional development through training, promotions, and skill-building opportunities, which enhance job satisfaction and retention.

Learn more about how to effectively reward employee performance.

The Role of Performance Management Tools in HR Success

Technology has transformed performance management, providing HR teams with powerful tools to track employee progress and engagement. 

Essential performance management tools worth considering include:

• Project management platforms: These platforms ensure alignment between individual and organizational goals (OKRs, KPIs, etc.), making progress measurable and transparent.
• AI-driven performance analytics: AI-powered insights help HR teams predict employee success, identify areas for development, and make data-driven decisions.
• Employee recognition tools: Intuitive recognition platforms allow for real-time rewards and acknowledgment, reinforcing positive behaviors and performance.

Enterprise Performance Management: Scaling Success

Large or growing organizations face unique challenges in performance management, requiring a more structured and scalable approach. 

Key enterprise considerations include:

• Aligning performance tracking across global teams: Enterprise businesses must ensure consistency in evaluation criteria, feedback, and goal tracking across multiple locations and cultures.
• Managing leadership accountability: With multiple levels of leadership, enterprises must establish clear expectations and accountability frameworks to maintain performance standards.
• Balancing automation with human coaching: While automation streamlines performance tracking, human elements like mentorship and coaching remain essential for employee growth and morale.

Awardco’s platform supports enterprise-level performance management by seamlessly integrating recognition into performance strategies, making it easier to scale engagement and rewards across large organizations.

Amplify Your Performance Management with Awardco

Effective performance management is the foundation of a thriving workplace. By implementing best practices, leveraging cutting-edge tools, and addressing enterprise-specific challenges, businesses can enhance employee engagement, retention, and overall success.

See how Awardco enhances performance management with recognition-driven solutions. Learn more today.