Performance Management Improvement Ideas for 2025

Performance management is an ongoing challenge in most organizations for a wide range of reasons. Chief among them is that they’re often built on random strategies, tactics, and best practices insights gleaned over time. But improving performance management processes isn’t about pulling another strategy off the shelf—or from the most recent article you saw on LinkedIn.

If competency ratings are failing, OKRs are not the solution. In fact, it’s literally impossible to identify what the solution might be without a way of diagnosing the underlying problem.

Effective performance management is created systematically. Effective performance management is about prompting employees to provide feedback on other employees for a business purpose. If this isn’t working for you, chances are it’s related to the overall reason behind your process, the prompts or process you’re using to gather input, the feedback employees are giving, the follow-through, and your overall approach to managing the process. 

Here we help you break down your performance management process and suggest ways you can improve it with a systematic, process-driven approach. 

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How Can Performance Management Be Improved?

Implementing Continuous Feedback Mechanisms

In traditional performance management systems, feedback is often given only during annual reviews, which can leave employees feeling disconnected from their performance trajectory. To truly enhance your organization's performance management strategies, it's crucial to implement continuous feedback mechanisms. This approach keeps both managers and employees in the loop about ongoing performance, allowing for timely adjustments and improvements. When feedback becomes a regular and expected part of the work environment, it nurtures an open dialogue that prevents minor issues from escalating into significant problems.

Utilizing Technology

Modern workplaces are driven by technology, and it's no different when it comes to improving performance management in the workplace. Performance management software like PerformYard can automate processes and provide clear data analytics, which helps in making informed decisions quickly. The tools available in these platforms allow HR professionals to gather and analyze performance data efficiently, facilitating more objective evaluations and goal tracking.

Establishing Clear and Measurable Goals

Goals should act as a roadmap for employee performance and organizational success. It's vital to set clear, measurable, and attainable goals. Doing so ensures that employees understand what is expected of them and can focus their efforts on achieving these targets. This not only aids in individual professional development but also aligns employee objectives with the company’s broader business goals, significantly improving HRM practices.

Encouraging Regular and Open Communication

Communication is the backbone of any successful performance management system. Encouraging regular and open discussions between managers and their teams ensures that everyone is on the same page. These conversations should not only focus on past performances but also on developmental opportunities and career progression paths. By fostering such dialogues, companies can create an environment that values transparency and aligns individual performance with organizational goals.

Promoting Employee Development Programs

Performance management isn't just about tracking progress; it's about fostering growth. By promoting employee development programs, organizations can motivate their workforce and bolster their commitment to the company's success. Training and development initiatives should be tailored to fit both the employees' needs and the organization's objectives, ensuring that they are not only improving in their current roles but are also being prepared to take on future responsibilities.

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Streamline your process

If your performance management process has been built piece-by-piece over time, chances are that it’s a mess. Nobody—including HR leadership—knows, for sure, exactly how the process should work from beginning to end. Managers and employees—many who may be new to the organization with no history of how this process has evolved—are often confused and unsure about exactly what they need to do and when.  

Is there a specific form to be used? Should managers (or employees) gather 360-degree feedback? Is there a form required for that? Should employees be formally reviewed before, on, or within a certain time after their formal hire date?  Is a formal review required? Does the manager need to have their manager review the review? And on, and on, and on.

Each of these steps may seem inconsequential, but when taken as a whole, they combine to create a process that can be difficult or even impossible to navigate. 

How does your process currently work? What are the steps? What steps add value? What steps are unnecessary? Who should perform each step? How should they document what they do? 

Taking an inventory of your existing process and then considering how an ideal process should work can be a good starting point for building/or rebuilding a better system. 

If it’s hard for employees—and managers—to participate in your performance management process or they don’t know what to do next, you have a system that is broken.  

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Find your purpose

Having a performance management process because companies have performance management processes is not enough of a reason to have one! What’s the purpose behind your process? Why are you putting in place a method for employees to receive feedback from their managers and others? What outcomes are you hoping to attain? How will you know if your process is a success?

Many performance management processes lack purpose. Without a clear purpose it is, of course, impossible to measure effectiveness. We have pointed to five purposes behind performance management. They are:

• To hold people accountable. While a focus on accountability has fallen a bit out of favor in recent years, it still—for some companies—has a place.
• To help people develop. This purpose has almost replaced the old focus on holding people accountable as organizations recognize the need to continually build a pipeline of talent not only for leadership positions but to fill other critical roles as well. 
• To recognize people for their efforts. Recognition is, arguably, an important potential purpose for the work they’ve done. Where this purpose can fall short, though, is where it’s used as the only way people are recognized for their efforts—and often only once a year.
• To ensure alignment. A performance management process that is designed to create alignment from the top down, and the bottom up, of an organization can help to ensure that everyone is spending their limited resources—time and money—appropriately, and in concert. 
• To reinforce values. This can be a great purpose to help make values real—to move them beyond something that hangs on the wall to something that employees consider every day as they do their work and make decisions. 

These are the five key purposes behind process management—the why behind the effort taken to share feedback with employees in some formal manner. Importantly, though, you must choose one purpose—not attempt to somehow build in all five! 

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Train your managers

Do you assume that new managers hired into your organization know how to conduct effective performance reviews? Do you assume that employees promoted into supervisory, or management positions will know how to do so? Both assumptions lead to inconsistencies and frustration—for management staff as well as employees.

Training is critical to ensure that all supervisory and management staff understand the why behind the process (your purpose) as well as the how—the steps to take to ensure consistency and alignment across the organization. 

It’s also important to understand that training needs to be an ongoing process not just a “one and done” event that takes place when a new manager is hired. As we’ve already discussed, over time things can change and, face it, supervisors and managers have a lot of competing priorities—it’s easy for performance management processes to fade into the background as they focus on other responsibilities. Regular reminders and ready access to information, FAQs, forms, tips, etc., are critical to provide a foundation for ongoing awareness and understanding. 

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Fix your prompts

When is the last time you conducted an audit of your performance management process and the forms you use? When is the last time you sought feedback from those using the forms about how challenging, confusing, or arduous the process might be? 

Some review forms can be exceedingly long, hard to understand and contain questions that really are no longer relevant, if they ever were. 

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Keep it relevant

Performance management shouldn’t be a check-the-box activity, or a paper-pushing exercise. If you ask managers and employees to complete performance review documents and then never actually look at them or do anything with them, you have a big disconnect and a clear clue that your process is not designed to achieve measurable and relevant outcomes. 

Effective performance management systems today do not rely on a once-a-year exercise—they involve ongoing check-ins and conversations throughout the year to ensure that employees understand what’s required of them, have the resources to achieve their goals and objectives, and have the support to address personal and professional development needs. 

Make sure performance management is not a paper-pushing exercise. If you’ve generated a bunch of forms and then never look at them again, you’re doing it wrong. Add check-ins to spread conversations throughout the year. Use reviews to discuss performance, goals to set intentions, and feedback to connect performance and goals to day-to-day. We’ve used these philosophies to build PerformYard so our users can easily manage an organized, simple and timely process that supports your big-picture goals.

Step back to take a systematic approach to performance management for real and relevant results.

What Are the Six Steps in Improving Performance Management?

Improving performance management within an organization involves a structured approach to ensure all employees are contributing to the best of their capabilities, aligned with the company’s objectives. Let's explore six critical steps that can enhance the performance management process.

Assessment of Current Performance Management System

The first step is to assess the existing performance management system. This entails evaluating the effectiveness and efficiency of current processes, identifying strengths, and uncovering areas that need improvement. HR professionals should engage with both employees and management to gather feedback on the existing system’s functionality and effectiveness from all angles.

Identification of Performance Gaps and Areas for Improvement

Once the assessment is complete, the next step is to identify performance gaps and areas that require enhancement. This involves looking into the feedback obtained and analyzing key performance indicators to pinpoint shortcomings. Understanding where the process currently falls short compared to desired outcomes is crucial in formulating improvement strategies.

Setting Performance Goals and Objectives

Setting clear and measurable goals and objectives is paramount for enhancing performance management. Define what success looks like in terms of both individual roles and collective organizational targets. Clearly articulated goals provide a roadmap for employees, ensuring that they understand their responsibilities and expectations.

Designing an Action Plan and Implementing Strategies

With performance gaps identified and objectives set, design a tactical action plan to move forward. This involves developing strategies to close gaps, such as training programs or changes in communication practices, and implementing these strategies systematically. Ensure that these strategies align with the organization’s strategic direction.

Monitoring Progress and Providing Feedback

Continuous monitoring of progress and providing feedback is integral to any performance management process. Implement regular check-ins or updates to track progress against goals, and offer constructive feedback to guide employees. Not only does this help in keeping employees on track, but it also fosters a culture of open communication and continuous development.

Reviewing Outcomes and Making Necessary Adjustments

Finally, the cycle completes with reviewing the outcomes of the new strategies and making necessary adjustments. This involves analyzing the results of the implemented actions and strategies and determining their impact on overall organizational performance. If certain strategies fell short, adjustments should be made to optimize results.

Enhancing your performance management system is a dynamic and ongoing process. By implementing these six steps, HR professionals can create more effective systems that support organizational growth and employee development.

Streamline and improve your performance management with PerformYard. Our intuitive software offers customizable solutions that enhance feedback collection, streamline performance reviews, and support continuous employee development. Join over 2500 HR leaders in experiencing a more effective and user-friendly process. Ready to transform your organization's performance management? Book a demo with us today!