9 Practical Performance Management Models to Choose From

One of the key responsibilities of the human resources (HR) department is managing employee performance, which can make a vital contribution to how the organization as a whole is functioning.

Every business is different, so there's no such thing as a ‘one-size-fits-all' performance appraisal model that will deliver results for every employer.

Considering the unique traits, needs and goals of the company will help you find an approach to performance management that really works for you. Here are some specific models and frameworks that could help you get the best out of your people.

1. The self-renewing cycle

According to Michael Armstrong, author of Armstrong's Handbook of Performance Management, employee performance management should be a continuous, self-renewing cycle that sets team and individual employee goals in line with the organization's strategic aims

Key steps in the process include:

• Planning performance to reach defined goals
• Reviewing and assessing progress
• Supporting employees in the development of skills, abilities and knowledge

The model can be visualized like this:

This is a fairly logical and straightforward system, which theoretically leads to the end result of stronger performance. However, Armstrong himself points out that the model only works if everyone involved - most notably managers and their team members - commits fully to their role in the process.

2. Management by objectives

The management by objectives (MBO) system was founded by the management consultant Peter Drucker and contains different variations. Importantly, it revolves around coming up with a list of organizational objectives which are then used as a reference by the employees to create their individual objectives.

It's important to note that the objectives don't need to be related to one another. Moreover, they can be decided upon by both managers or HR leaders and their employees. The concept behind employee participation is that it generates a sense of ownership and involvement, which in turn leads to a clearer understanding of how to achieve the desired individual and organizational goals.

The principal focus of this performance management process is the objectives. In fact, businesses that use this approach rely mostly on projects or measures instead of how those objectives will be reached. To make MBO work for your team, you need to come up with a structure that clearly makes a difference between measures and projects to avoid causing confusion.

3. Employee-driven

One of the biggest potential benefits to be gained from encouraging employees to play an active role in performance management is the increased sense of ownership and involvement people have in the entire process.

Simply asking team members for their opinions on how performance management should be conducted can have a big impact on staff engagement and awareness of company processes. This can have positive knock-on effects on individual performance and team productivity.

The responses you receive from the workforce can provide the foundations for customized training and development programs that yield the best results for individuals.

4. Software-based

Dedicated software is nothing new in the performance management space, but it's important to feel confident you're using the right tools for the business and your employees.

If you aren't getting the results you expected from your performance management programs, or employees regularly complain about flaws or inefficiencies in the system, it might be time to consider updating your software.

The pace of change and innovation in the HR software market means there's an increasingly broad range of solutions to choose from. In fact, the market's size is expected to reach approximately $US 35 billion by 2030. 

Some of the key HR software players you can choose from depending on what you need are: 

• Workday
• IBM Corporation 
• Oracle Corporation 
• Paycom Software Inc
• Monday
• BambooHR
• Employment Hero
• Our Tandem
• Bob

5. Peer-reviewed

Peer-reviewed performance management can give you a frontline view of how your workforce is functioning, based on employee feedback on where their colleagues are performing well, and where there might be room for improvement.

Asking individual team members to offer their insights into how their fellow workers and the organization as a whole is functioning can support positive collaboration, as well as help people feel more involved in the development and improvement of the business.

Furthermore, employees can raise their own standards and learn new skills by paying closer attention to what their colleagues are doing.

6. Bi-annual model

A bi-annual performance evaluation model is like the yearly model but split into two sections, where employees are evaluated twice a year. Usually, these appraisals are held in the middle and at the end of the calendar year. This model is good for teams with long-term goals but want some flexibility. Teams can use it to get back on track and adjust processes if needed.4

This model may be applicable to organizations with adaptable objectives, but rigid approaches to implementation. Furthermore, although Google has decided to remove Bi-annual appraisals due to employee criticism, this type of performance review has still received 53% approval from their 163,000 employees who consider the bi-annual system "time well spent", according to The Information.

7. Agile

Introducing agility into your performance model effectively means moving away from traditional methods - such as formal staff appraisals or twice-yearly reviews - in favor of a more flexible, ‘light-touch' approach that emphasizes regular, supportive conversations.

This can have a number of advantages, including maintaining regular engagement with staff and giving people plenty of opportunities to offer their thoughts and feedback in an informal setting.

Taking an agile, flexible approach can also prove beneficial for the business during times of change, or when specific projects are dictating your performance goals and expectations.

8. High growth based

The high-growth model is based on planning, monitoring, reviewing and rewarding. It's a new approach that is adaptable for agile teams in various industries. This model revolves around annual and bi-annual review sessions, in addition to smaller periodic check-ins, to conduct more extensive and frequent evaluations of employees.

Because of the shorter nature of the assessment periods and the fact that evaluations are more frequent, giving feedback for your employees' performance improvement becomes more feasible.

High-growth performance management models rely on SMART goals, which means that they need to be specific, measurable, actionable, relevant and time-bound and take into account various factors.

9. Project-based

The project-based performance management model involves evaluating an employee based on their performance on individual projects. In order for this model to be successful, it's necessary to establish clear project outcomes and evaluation metrics in advance. Following the completion of each project, the team conducts a thorough analysis of every phase, setback and accomplishment, allowing management to evaluate an employee's performance on that particular project.

This process is essential for keeping track of progress and ensuring that all goals are met. This approach is particularly effective for teams that work on different projects with varying client requirements. For long-term projects, the frequency of these evaluations can be increased to ensure consistent feedback. The frequent and ongoing feedback sessions through this performance management system can greatly enhance an employee's career progression and development in a timely manner. The model is both engaging and professional in its approach.

However, one potential drawback of this approach is that relying solely on project reviews may not provide a comprehensive assessment of an employee's overall performance, since the reviews only consider the employee's performance in one particular project.