Performance Management Plans Are Vital to Employee Engagement & Retention

Employer holds performance management plan meeting with employee to increase employee retention

In an increasingly tight labor market, most employers know all too well the value of ample front-end investment when it comes to candidate recruitment and new employee training. Far too often, though, the time and attention paid to ensuring that the latest hire is a good fit falls by the wayside after the first day on the job. The immediate tasks at hand become the focus of both worker and supervisor.

From the Fortune 500 ranks to mom-and-pop retailers, a robust performance management plan (PMP) is critical. It ensures that both new and experienced employees have clear expectations and tangible goals as they forge ahead. Here are four of the key elements to remember for employee engagement and retention.

Focus on frequent feedback, not just the paper trail

Large or small, the annual (or quarterly) performance review is a staple of most businesses these days. Written reviews serve a valuable purpose in both assessing past performance and setting future expectations. But as the Society for Human Resources Management (SHRM) notes, companies are now “focusing more on feedback and coaching, rather than a time-consuming paper trail.” If your PMP only consists of a periodic, written appraisal, it’s time to up your game.

Listen (don’t just talk)

Two-way communication is critical to the performance management process — even if it means having uncomfortable conversations.

A top-down approach to employee management may drive short-term results. The best bosses understand that overly rigid workplace hierarchies can reduce innovation and cultivate quiet quitters. You may find it a challenge to tell Joey that he hasn’t made the grade —or hear Joey’s thoughts on how to improve productivity and boost morale — but it will pay dividends in the long run.

Set realistic, actionable goals

Chasing overly ambitious goals with little chance of coming to fruition is an exercise in futility. Setting the bar too low, on the other hand, could cause employee engagement to plummet. As SHRM notes, goals should be SMART:

  • Specific, clear and understandable
  • Measurable, verifiable and results-oriented
  • Attainable, yet sufficiently challenging
  • Relevant to the organization’s mission
  • Time-bound, with a schedule and specific milestones

Improving the PIP

Performance improvement plans (PIP) remain a valuable tool for course correction. Is an employee is falling short of expectations or might their performance require a progressive discipline process? This will help document shortcomings and raise the bar of expectations.

By their nature, such plans can seem (and often are) punitive. Yet note the key word here: improvement. An effective PIP must not only outline the performance shortfall, but also establish actionable, measurable steps to improve performance. Spell out the consequences of continued subpar efforts.

As with the above tips, setting clear expectations with frequent, measurable check-ins is essential. A PIP that only gets discussed at quarterly sit-downs or the next year’s annual review is doomed to fail. Employees want and need (if not crave) regular feedback. Senior management must be sure to give middle managers the necessary time and resources to foster such conversations in ways both formal and informal.

About the Author
This article was written by Christina Faro-Pilliteri, SHRM-CP, PHR, who serves as senior HR specialist and in employee relations at Integrity Employee Leasing.

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