The crossroads between performance management and employee engagement

Performance management and employee engagement are two critical aspects of the workplace that are also closely connected. While performance management focuses on setting and achieving goals and targets, employee engagement is about creating a positive and fulfilling work environment.

The best way to understand the relationship between the two is to consider that performance management and employee engagement activities have a symbiotic relationship — and a manager’s job is to ensure both feed into the other for the better.

Read on as we explore the link between performance management and employee engagement, providing you with actionable tips and tricks to boost engagement through performance management best practices.

What is performance management?

Performance management is a structured process that helps managers and employees set and achieve goals and targets together. 

When done well, the benefits of performance management are vast and include better team alignment, increased task and goal completion, and stronger relationships and trust. The pros not only influence individual performance, but have a ripple effect on the success of the business as a whole, ultimately helping a company improve their bottom line. 

The performance management process typically involves 4 stages:

Stage 1: Goal setting 

It’s important to use a goal-setting framework such as objectives and key results (OKRs) or SMART goals, when defining goals with employees. There are many out there, so use the one that best meets your needs.

⭐️ Take it to the next level! While it’s a manager’s job to guide and oversee performance management, always encourage employees to suggest and create their own goals that align with company objectives as a way to encourage participation in the process and help them feel empowered in their own performance.

Stage 2: Performance feedback

Make sure to provide feedback constructively and regularly, focusing on specific behaviors and outcomes rather than personal characteristics. Feedback goes both ways, so asking employees for their perspectives on performance and solutions can be enlightening!

Stage 3: Performance evaluation

Use objective criteria and data to evaluate performance, and remember that evaluations are best used as a basis for career development discussions, rather than solely for the purpose of salary and promotions.

Stage 4: Performance improvement

Provide additional resources and support for improvement, especially if employees look to level-up. The performance journey is an ongoing and agile cycle, so monitoring progress, providing support, and adjusting plans as needed should be done on a continual basis.

The connection between performance management and employee engagement

There is an undeniable link between performance management and employee engagement. Engaged employees are likely to perform at a higher level, achieve their goals, and do so with less stress. This inverse is also true; effective performance management practices help improve engagement and keep the virtuous cycle going.

What does effective performance management look like?

• Giving regular performance feedback to employees based on their progress towards their goals, which also helps create a sense of purpose and direction.
• Encouraging employee participation in the goal-setting process, ensuring that they have a sense of ownership over their work.
• Providing opportunities for growth and development, such as training and mentoring, to help employees feel valued and invested in their work.

Why is engagement critical for high performance?

Engaged employees are critical for high performance: they are more productive, better collaborators, and likely to stay with the company longer. In contrast, disengaged employees can lead to decreased productivity, lower morale, and higher turnover rates. Hence why focusing on employee engagement is non-negotiable to achieve high performance.

✊🏼 Enlist employee commitment from the whole team. Look out for these 5 key traits of high-performing teams and make them your north star.

Improving engagement through effective performance management

To improve employee engagement through performance management best practices, we’ve got helpful tips any manager can apply to their day-to-day.

Before we dive into things, it's important to understand the bigger picture of employee engagement. Read about the 10 key factors of employee engagement and how they can help you raise the baseline.

Schedule regular meetings and performance reviews

Regular, one-on-one meetings and performance reviews provide employees with feedback on their progress, offer opportunities for improvement, and help managers identify any roadblocks. You can use these opportunities to recognize and celebrate employee achievements, offer constructive feedback, and set clear goals and expectations. Make sure to create the perfect one-on-one formula for less formal touch-bases, and have a thoughtful performance review structure to get the most out of these meetings.

Scrap the conventional and discover how business leaders are changing the game of performance reviews by leaving behind traditional performance reviews and other archaic processes.

Set clear goals and expectations

When employees understand what is expected of them, they are more likely to feel motivated and engaged. Managers can ensure clear communication by setting goals and communicating expectations clearly — adjusting along the course.

Make goals sweet and to the point with these 9 employee goal setting tips for every manager.

Give feedback, often

Feedback helps employees understand where they stand, what they are doing well, and what they need to improve. You can and should provide feedback regularly, offering both positive and constructive feedback that is actionable and specific.

Deliver feedback in an empathetic and motivating way with these 22 constructive feedback examples and tips for managers.

Recognize achievements and efforts

Everyone needs to feel valued and seen. When employees feel appreciated, they are more likely to be engaged and motivated. You can recognize employee achievements through simple gestures like private thank-you notes and company shout-outs.

Modern employees want to be appreciated and valued. Move towards a culture of recognition with these 8 tips to increase recognition in your workplace.

Nurture employee development

Nobody looks to stay stagnant in their career, and employee development provides employees with opportunities to grow and develop their skills, and feel proud in their own progression. You can support employee development by providing key development goals as well as relevant training, mentoring, coaching, shadowing and other opportunities for growth.

Kickstart the conversation in your next one-on-one using our career development talk template.

Set and track performance metrics (OKRs)

Performance metrics like OKRs are an excellent way to measure progress and ensure alignment. Managers can use performance metrics to set clear goals, measure progress, and provide employees with feedback on their performance.

You really don’t have to start from scratch. Try using our goals and OKR tool to make your life easier and personalize your plans so they contribute to both employee performance and your organization’s growth.

Using performance management to improve employee engagement in different scenarios

Different scenarios at work require a different performance management approach. Here are best practices and examples of what to say for the 4 most common scenarios you might find yourself in as a manager.

Scenario #1: New hires

Provide clear onboarding and training, set achievable goals, and regularly check in to give timely feedback and support. This will help new hires feel welcomed and valued, and set them up for success.

Scenario #2: Underperforming employees

Use performance management to identify the root causes of poor performance, provide feedback, and create development plans to help the employee improve. By doing so, you can show that you care about the employee's growth and development, and help them become a more productive member of the team.

Scenario #3: High-performing employees 

Provide employees with opportunities for growth and development, recognize and reward their contributions, and seek their feedback on how to improve the performance management process. This will help keep high-performers engaged and motivated, and set them up for continued success.

Scenario #4: Remote employees 

Use video conferencing and collaboration tools to facilitate regular check-ins and feedback, provide clear goals and expectations, and create opportunities for virtual team-building and recognition. By doing so, you can help remote employees feel engaged and connected, despite being physically distant.

Performance management and employee engagement are key to success

Employee performance management and engagement are not only important for the success of individual employees, but also for the overall success of a company. And as a manager, you can feel empowered knowing you play a big role in boosting productivity, reducing turnover, and improving collaboration by prioritizing employee engagement in your performance management process.

By focusing on engagement, you can help your employees thrive and achieve their full potential, which can enhance overall team performance and contribute to better business outcomes.