Strategic performance management: 5 Steps to do it right

Behind every great performance is the right kind of preparation and guidance, and performance in the workplace is no exception! In fact, strategic performance management is so pivotal in achieving organizational success that we've decided to break it down into easy-to-follow steps so that you can work on mastering it, too.

Why? Because when great strategic performance management aligns with your organization's goals and objectives, you'll see your growth propel and your success reach new heights. And since that's something we all strive for, a systematic approach to achieving it is a must.

What is strategic performance management?

We're in a whole new era of performance management. One that's broken away from the archaic mold of the annual review to become one that hinges on a more dynamic approach. Think more frequent, more informal conversations, staying on top of progress tracking, and regular realignment to progress together as individuals and as a team.

In essence, strategic performance management is a systematic approach to applying specific strategies across teams and departments to ensure that the organization's business goals are met. It entails setting clear expectations and guidelines to help ensure that employees are aligned with their goals and able to efficiently work towards achieving them. It includes performance appraisal strategies like regular check-ins, continuous feedback, and performance evaluation.

Why is strategic performance management important for employee performance?

Did you know that according to Officevibe data, 62% of employees say they don’t understand their performance expectations? That statistic in itself highlights the need for all organizations to implement effective strategic performance management. And since only good things can come of it, it's a no-brainer. So what does it bring to the table in terms of the top benefits?

To begin with, it's a great tool for setting and tracking clear goals. This can also help guide resource allocation and improve decision-making along the way. When everyone is onboard and aligned, you start to see increased accountability and decreased micromanagement, which leads to better employee engagement, motivation, and morale. This, in turn, can help increase retention.

This regular communication style even has a positive impact on improving relationships between managers and employees. It can also help point out where there's room for improvement and identify training needs. From here, it can also help define career paths moving forward.

Now that we've established the value of strategic performance management, let's move on to the key components that make it so effective.

Key components of strategic performance management

For a strategy to be effective, it needs the right components in the mix. Consider this your strategic performance management cheat sheet:

Strategic goals and objectives

Goals, goals, goals! The foundation of a great performance management strategy is high-level, long-term targets that your organization aims to achieve. Strategic goals provide everyone with a crucial sense of direction and purpose. Strategic performance management then ensures that all activities and efforts align with these objectives, ultimately setting everyone up for success from the jump.

Key Performance Indicators (KPIs)

Once your goals are clearly laid out and communicated, you'll need specific metrics like KPIs to measure the progress toward these strategic goals. These KPIs can help you track performance along the way, as well as identify areas that appear to need improvement. In order to be effective, they should always be relevant, measurable, and aligned with your organization's strategic objectives, of course.

Measuring performance and setting targets

Without a specific target in place, it's hard to know where to aim. This means that to gauge progress and track success, you'll need to have a concrete performance measurement strategy in place. These are specific data points, like set targets or benchmarks that you can then use to define the level of performance that's expected to be achieved by each member of your team, over a specific period of time.

Strategy mapping

Strategy mapping ties everything together in a way that visually connects your strategic objectives, KPIs, and initiatives. This gives you a clear view of the cause-and-effect relationships between the different elements in your organizational strategy and provides a clear understanding of how various activities contribute to your overall strategic success.

Performance reviews

With data in hand, you'll want to conduct regular employee performance reviews and evaluations. These are essential for assessing progress, providing feedback, and identifying areas needing improvement. Employee performance reviews can come in different shapes and sizes, meaning some may involve formal performance appraisals, while others may be better as more informal, ongoing performance discussions.

Steps for implementing strategic performance management processes in your organizational strategy

Now that we have a detailed understanding of the benefits and components that help a performance management strategy come to life, we'll take a look at the tangible steps required for putting it into play:

1. Align goals across the organization with cascading objectives

Alignment gives everyone a sense of purpose. That's why the first step in effective strategic performance management is ensuring that your goals cascade down throughout the organization.

To create a cohesive and aligned workforce, the objectives of each department and individual should align with the higher-level strategic goals. This helps to connect the dots and gives everyone a sense of how they're part of the big picture.

2. Collect and analyze performance data

The data that you collect through employee performance helps monitor performance, track progress, and give actionable feedback. The best way to collect and analyze data is to use a handy performance review tool. This makes it easier to assess progress, identify trends, and make strategic data-driven decisions.

3. Conduct performance review meetings

Gone are the days of the annual performance review. Today, it's all about conducting regular employee performance reviews and evaluations. This practice is essential to assessing progress, providing meaningful, actionable feedback, and identifying areas that could use improvement.

This kind of frequency helps prevent things from falling through the cracks and keeps everyone progressing in a more effective way.

When managers and employees come to performance review meetings prepared and in the right frame of mind, these conversations can really build employee confidence and strengthen manager-employee relationships. Win-win.

4. Adjust strategies for continuous improvements

No organizational strategy is (or should be) set in stone. It's important to remember that strategic performance management is a cyclical process that promotes continuous improvement, so that means fine-tuning it along the way is necessary. Think of it as adjusting the seasoning to perfect a dish.

Employee performance reviews, continuous performance management, and data analysis are all ingredients needed to identify areas for enhancement. Identifying the improvements needed leads to making these adjustments and refinements in strategies and actions, and the cycle continues!

5. Use a performance management software

One of the greatest tools you can use when it comes to elevating your strategic performance management is the right performance management system.

The right tool or software can help ensure goal alignment across the organization, keep track of the performance goals and KPIs we touched on before, and streamline the entire employee performance review process. It can help you work smarter and make better use of the data you gather. Performance management systems are truly a game-changer in the entire process.

Strategic performance management best practices

Key components, check. Implementation steps, check. Now, last but certainly not least on the list are tried-and-true strategic performance management best practices.

Ensure clear alignment with the right strategy

When it comes to alignment, we can't talk about it enough. In fact, we've said it before and we'll say it again for good measure: always ensure that performance management processes are directly aligned with your organization's goals and objectives. Every performance measure and target you set should contribute to the overall mission and vision.

Get a leg up with 5 ways to ensure team alignment and improve performance.

Set SMART objectives and targets

To support each employee's performance and attain the organizational success you set out to achieve, you first need to set Specific, Measurable, Achievable, Relevant, and Time-bound (SMART) objectives and targets. This ensures that goals are clear and achievable, and help guide decision-making and resource allocation. This system makes it easier for employees to come up with challenging, yet realistic goals and makes the process of setting goals less daunting.

Take the guesswork out of goal-setting with 5 of the best employee goal-setting frameworks for managers.

Select relevant KPIs

As we touched on in the key components, carefully choosing KPIs helps to provide meaningful insights into organizational performance. Focusing on quality over quantity and selecting KPIs that are measurable, actionable, and aligned with strategic priorities is a great way to keep employees accountable for keeping track of and successfully reaching their goals.

Measuring progress along the way helps keep employees motivated and moving towards the goals they set, and clear KPIs and benchmarks enable employees and managers to track this progress.

Get engagement and commitment from all stakeholders

Despite the name, performance management isn't just in the hands of the management team. There are many stakeholders who play an important role in the performance management process, so it's important to keep them all involved.

This means managers, employees, managers, and leadership are accountable for their contributions. Having a shared sense of ownership and commitment to organizational goals starts with open communication and collaboration, so be sure to keep those channels open and conversations going!

Communicate results with transparency

Another shift in today's workplace landscape is the need for less gatekeeping and more transparency across the board. It's essential to be transparent when it comes to sharing employee performance results and organizational progress.

Regularly communicate updates and performance insights to all stakeholders to keep them informed and engaged, and encourage open communication between managers, employees, and leadership to build and maintain trusting relationships.

Offer regular constructive feedback on performance

One of the most effective performance management tools in the toolbox is conducting continuous feedback sessions, whether that be a quick check-in or scheduled one-on-one meetings. These are always great opportunities for managers, teams, and individuals to discuss challenges, acknowledge progress, and give well-deserved credit for accomplishments. Offering constructive feedback and recognizing worthy achievements helps everyone progress.

New to the process? Here's how to give performance feedback to employees.

Recognize and reward your employees

Employee efforts should always be recognized. That's why it should be a key component in every strategic performance management plan. When you recognize and reward great work, the performance outcomes are positive ones. It can improve employee motivation, boost their loyalty to your organization, and create a more positive company culture overall. Recognizing and incentivizing employees who consistently contribute to achieving your organization's strategic objectives works in everyone's favor.

Focus on learning and development

No matter how junior or senior someone may be in their role, there's always room for learning and development. If you're going to implement strategic performance management, then be sure to back it up with learning and development initiatives.

Providing training and support to employees gives them the opportunity to expand their skills and improve their capabilities while staying aligned with organizational goals. After all, knowledge is power, so the more you encourage learning and skill development, the more powerful your team will be, and the more your business will grow.

Implement a culture of continuous improvement

Much like the power of providing new learning and employee development opportunities, there's a lot to be said about fostering a culture of continuous improvement where employees are encouraged to innovate and enhance their performance. Use failures as opportunities for learning and growth, and celebrate successes, both big and small. After all, recognition is a huge motivator (and appreciated by all!).

Adapt and be agile

More than ever, business environments are evolving and changing. That's why the need for flexibility and the ability and willingness to adapt performance management strategies stands front and center.

These days, rigidity will get you nowhere, but responding to changing market conditions and organizational needs promptly will help you grow, progress, and keep up with the times. Embrace change, try new things, let go of fear, and watch the magic happen.

Achieving long-term company goals with strategic performance management

Strategic performance management goes far beyond simply evaluating employee performance. Setting and tracking goals, keeping communication open and often, adjusting as you go along, and implementing a culture of collaboration and continuous improvement are just some of the ways you can help your organization soar together.

Using a comprehensive performance management tool like Officevibe can help streamline the entire process, help you reach company goals, and garner the results you're striving for. It's time to get going and get growing.