Unlocking Success: The Core Components of Effective Performance Management Systems (Full Transcript)

Speaker 1: Hi, this is Dr. Rick Goodman, leadership and employee engagement expert and author of the book, The Solutions Oriented Leader. Do you have an effective performance management system? You have to ask the question first, what is a performance management system? It is the formal processes by which you articulate employee responsibilities, monitor their performance and provide feedback, and of course, corrections as needed. The system must be fair, efficient, and result in your team members making continuous improvements. Now does all this describe your performance management system? If not, there are several reasons why it's in the interest of every team leader to implement one immediately. So let me share with you five core components of an effective performance management system. Number one, they have to have job descriptions. Establishing clear job descriptions so that each team member knows what they should be doing and what are the responsibilities associated with each role. Number two, onboarding procedures. This is critical for new employees to get oriented with their new environment. This helps to ensure that your new team members have a foundation for success and it also enhances the employee experience and helps to increase retention. Number three, continuing education. Implementing a system that provides employees with ongoing teaching, coaching, feedback, and professional development attracts top talent. Number four, career development. Ensure that there are some formal career development opportunities in place for the members of your team. This also enhances the employee experience and increases retention also. Number five, compensation systems. Verify and make sure that your compensation systems are sufficiently rewarding. The people who make meaningful contributions to the team and the bottom line need to be recognized. So what are the benefits of the performance management system? Well, here are just some of the advantages your team can anticipate when you adopt a performance management system. One is consistency with your process. The way you choose employees to take on new projects, to be transferred, to be promoted, or to be terminated. A more formalized performance management process helps you apply a consistent standard to all your staffing decisions, ensuring that you always have the right person in each role. Number six, motivation for your team members. When you implement a great program, you create objective standards for employee appraisal and review. And this can be incredibly motivating for team members, having a clear sense of what they need to do and how to be measured if they want to advance. It also increases morale and employee retention. And with improved motivation comes higher morale and better retention of your top talents, all of which makes your team more productive and more efficient. And of course, the positive impact on the organization. Here's where we can get to some of the fun stuff. Organizational psychology has proven again and again the benefits of a performance management system. And again, the employees who recognize clear standards of accountability will become more responsible. And when employees become more responsible, they'll tend to have a more positive impact on the business, including a more positive financial impact. Also recognition of training needs. That's another important benefit of a performance management system. It helps you to identify the areas where employees most benefit from formal training. In other words, it empowers you to make prudent decisions about when to bring in an executive consultant or coach. And minimization of firing risks. Finally, note that terminating employees can be a risky thing, even when a team member is underperforming. You may question whether you can safely terminate their employment without the risk of legal action. When you have an employee performance system in place, it means there are formal standards of accountability. So you can document and prove that the employee in question is failing short. This can help shield you from legal risk. As you think about putting a performance management system process into place, these are just some of the benefits you should have on your radar. Well, I hope you enjoyed this short lesson. Please subscribe to our channel. And if you learned something, please like the video and remember, sharing is caring. So thank you very much for tuning in. And always remember one thing, we get paid for solutions and results. So make it happen.

Speaker 2: To learn more about Solutions Oriented Leadership, please visit our website at RickGoodman.com. Or feel free to email me at info at RickGoodman.com. And please subscribe to the Solutions Oriented Leader on iTunes or your favorite podcast app to get your weekly episodes automatically. Thanks for watching. And I'll see you next time. Bye.