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Today’s engaged workforce expects constant, real-time feedback on their performance. Is your company equipped for a new way of managing performance? Keep your employees engaged and understand how performance management can improve retention. Paylocity’s new whitepaper identifies new trends in performance discussions and tools. In this whitepaper you will find:
• Where performance management has come from and the direction in which it is heading
• Why today’s trends are essential to employee engagement
• Tips on how to get started on modernizing your performance management processes and systems
Modern Performance Management Whitepaper - Paylocity
IMPROVING EMPLOYEE ENGAGEMENT &
Employees are the life force of an organization, driving innovation, productivity,
and results. It is imperative today’s companies are devoted to developing their
workforce in meaningful and effective ways. Not only can employee development
improve organizational results, but it can ultimately improve a workforce’s
efficiency with minimal impact to the bottom line. What companies may be
unaware of is that they do not need a large budget or abundance of resources to
start making a difference.
Today’s employees want and demand more from their careers. Engaged
employees receive regular feedback, are given ownership, know their path for
career development, and understand how their role fits into organizational
. Because of this increased demand for workplace development,
organizations and their human resources departments are experiencing a
paradigm shift. Performance management was once a project or idea. Now it has
developed into a series of processes and tools that allow and enable employees
to perform to the best of their ability. Performance management can make the
difference between passive employees who keep an organization functioning
and engaged employees who move their organization forward.
Modern Performance Management | 2
 BlessingWhite Research (2013). Employee engagement research update January 2013- Beyond
the numbers: A practical approach for individuals, managers, and executives. BlessingWhite.com,
p. 2. Retrieved from https://blessingwhite.com/wp-content/uploads/2014/06/Employee-Engage-
Modern Performance Management | 3
The Society for Human Resource Managers (SHRM) defines performance management as “the process of
maintaining or improving employee job performance through the use of performance assessment tools,
coaching and counseling as well as providing continuous feedback.”
Conversely, human resources expert Susan M. Heathfield defines it as “the process of creating a work
environment or setting in which people are enabled to perform to the best of their abilities.”2
Modern performance management ideals draw from these
two definitions. While one definition discusses performance
management as monitoring activities and results through tools
and processes, the other defines it as a process that results in
enabling employees being able to perform at a higher level.
Performance management is evolving. Organizations are moving
away from formal, annual performance reviews that focus on
the past year’s activities to ongoing conversations that discuss
current performance, strengths, and goals that align with the
organization. The old way is reactive and focuses on past
performance, while the new way is proactive and focuses on
keeping employees forward-facing.
WHAT IS PERFORMANCE MANAGEMENT?
 Heathfield, S. (2015). Performance management: Quick stop learning guide to performance manage-
ment. About.com. Retrieved from http://humanresources.about.com/od/glossaryp/g/.
Modern Performance Management | 4
• PERFORMANCE REVIEWS ARE GENERALLY ONLY ANNUAL.
asking for it 50% more often than their older colleagues.3
Organizations monitor their business results
on an ongoing basis. In the same way, monitoring employee engagement and performance should be a
regular, ongoing activity. Taking time to discuss and evaluate where an employee stands in terms of their
performance, goals and contributions should happen frequently4
to help foster ongoing improvement
across the board.
• RATING SYSTEMS ARE OFTEN SUBJECTIVE.
Employees can feel like their work has been oversimplified when it is simply assigned a number. It also
can create an unwanted sense of competition between employees4
. They want to know how they
are performing in relation to their skillset and contributions, rather than how they rank against their
• COMPENSATION AND JOB PERFORMANCE ARE NOT ALWAYS SYNONYMOUS.
Blending discussions of performance and pay can blur lines, especially when market conditions do not
match how an employee has contributed or performed. Merging the conversations can lead to confusion.
Furthermore, the lack of a performance management philosophy can impact recruiting efforts. With
unemployment at its lowest point since 20095
and job openings becoming abundant through 20206
many organizations may struggle not only to fill positions, but recruit and retain qualified candidates. A
competitive work landscape puts power in the hands of employees, allowing them to ask for items like growth
potential, engagement, and transparency. Many of these are not tangible items that can be quantified in an
offer letter or promotion package. Improving performance management and creating a culture supporting it
requires higher-level buy-in from leadership and executive staff. Following this, a performance management
culture should be ignited by Human Resources.
WHERE IS CURRENT PERFORMANCE
 Oxford Economics (2014). Workforce 2020: The looming talent crisis. SuccessFactors.com, p. 2. Retrieved from http://www.successfactors.com/content/dam/
Modern Performance Management | 5
STRATEGIC ALIGNMENT: When companies align performance goals to broader
organizational goals, employees are better able to understand how their inputs
impact outputs. Simply put, when employees understand how their daily actions
matter to larger organizational goals, they find purpose in their role, feel engaged,
and appreciate what they are working towards. Employees should feel aligned to
common objectives and feel like what they do makes a difference in the grand scheme.
This helps contribute to transparency throughout an organization as well, rather than
limiting it to teams or departments.
ONGOING FEEDBACK AND COACHING: Business moves fast. When employees are unaware
of how to improve their skills and contributions, there are missed opportunities not just
for employee career growth, but for the business. Frequent conversations about how
teams and individuals are performing help employees assess where they stand. Finding
out about opportunities or weaknesses once a year limits the benefit to the company,
the individual, the team, or management. Real-time discussions and coaching can
positively impact the organization right away and long-term.
CURRENT TRENDS TO HELP IMPROVE
Management feature contains
allowing leadership to control
the organization’s key success
factors and ensure measurable
team and individual goals roll up
to larger goals.
Performance management isn’t just about checking an item off a list of office to-do’s. Organizational leadership should be held
accountable for developing their employees beyond a standard once-a-year review and pay raise. All employees at every level should
view career development as a daily activity. Performance management requires a new organizational philosophy that should be
engrained in all employee, management, and team activities and outputs.
With Paylocity’s Performance
Management feature, 360
Reviews allow employees to
obtain feedback from several
colleagues and gain a broader
understanding of their impact in
 Parent, D., Sloan, N., & Tsuchida, A. (2015). Global human capital trends 2015. Deloitte University Press, p. 51-56. Retrieved from http://dupress.com/wp-con-
 Bureau of Labor Statistics (2015). Labor force statistics from the current population survey. Retrieved from http://data.bls.gov/timeseries/LNS14000000
 Carnevale, A.P., Smith, N., & Strohl, J. (2013). Recovery: Job growth and education requirements through 2020. Georgetown University Public Policy Institute,
p. 8. Retrieved from https://cew.georgetown.edu/wp-content/uploads/2014/11/Recovery2020.FR_.Web_.pdf
Modern Performance Management | 6
DEVELOPMENT AND TRAINING: No employee or manager should ever stop learning. The
business landscape will continue to change. New skills and ways of thinking will be
introduced. Staying well-informed, educated, and trained is essential for remaining
ahead of the curve. Employees and managers should work together to identify
any performance gaps on individual and team levels. Gaps should not be viewed as
shortcomings, but areas of opportunity. When teams continue to learn, they continue
to feel empowered to drive innovation and results. Training and development can come
in the form of classroom training, online courses, or even the assignment of a mentor.
GIVING EMPLOYEES CONTROL OF THEIR FUTURE: The responsibility of performance
management shifts from manager to employee when they hand employees the
reigns. Once employees are given control over their goals and objectives, they are no
longer required to participate in tasks and steps that may make them feel more like
a spectator than a contributor. This is not to say their manager does not have a say
in employee goals and objectives. Rather, employees and their managers should be
aligned on building a career. The manager and employee can review strengths and
accomplishments, discuss stretch assignments and opportunities, and make sure the
employee is able to drive their career to a place that mutually benefits the individual
and organization. When employees are involved in identifying projects and skills that
they excel and thrive in, they have a stake in their future. Even better is when their
manager helps foster career growth as an outcome of these conversations.
Training videos and documents
can be uploaded in to
Paylocity’s solution to help you
and your employees keep track
of who is up to date with the
latest areas of expertise.
Management feature contains
goal management capabilities
allowing reviewers and
employees to define and agree
upon goals and objectives in
one central place.
Modern Performance Management | 7
Of course, the implementation of a new philosophy takes more than new processes and ideals. Tools
and systems to facilitate performance management can help bring these methods to life efficiently and
effectively. New system trends include:
• ANALYTICS: When HR systems and portals are integrated with performance management, the human
capital management process becomes not only more streamlined, but more intelligent. Data related
to performance, assessments, onboarding, and compensation can all be tied together. This integration
creates more robust data that can lead to insights and informed decision-making. HR managers and
teams can identify gaps in capabilities and skills, knowing what needs to fill. They can pinpoint the
qualities and skillsets of top performers, which can help to shape recruiting efforts. Integrated system
data can also give more insight into retention and what employee factors are helping and/or hindering it.
• AUTOMATION AND INTEGRATION: Removing the manual processes associated with managing employee
performance and HR-related tasks frees up time for leadership to focus on data evaluation, coaching,
and mentoring employees. Automated alerts and integrated functions can give managers real-time
information and data about employees. By automating these tasks, this takes the administrative burden
off the manager. Employee and manager needs can be documented and resolved quickly.
Modern Performance Management | 8
expertise through training and assessments. An integrated assessment system can
allow HR teams and management to view, track, and evaluate employee training, giving
clearer access to workforce needs. Targeting skill and capability gaps through integrated
assessment systems can produce more detailed results about teams and employees,
such as what specific training is needed.
• SOCIALIZINGRECOGNITION:Many organizations are featuring social media elements in the
workplace. By socializing recognition, employees on all levels are able to showcase
their accomplishments. Whether this comes in the form of a social site, a portal
newsfeed, or a weekly digest, recognizing employees doesn’t always have to equal an
actual reward or compensation. Simply showing gratitude for a job well done or going
the extra mile can help employees feel valued amongst management and their peers.
Paylocity’s solution allows HR
personnel and managers to
easily track, store and manage
Paylocity’s Impressions social
recognition tool encourages
and feedback across
Modern Performance Management | 9
While it may seem daunting, a new philosophy and performance management system
doesn’t need to be a huge, time-consuming, and costly overhaul. It should invigorate
your workforce and breathe new life into how performance is managed. A few steps on
where your organization can start7
• BUILD A PHILOSOPHY THAT SUPPORTS YOUR BUSINESS STRATEGY: Not sure where to begin
with a performance management philosophy? Look to executive-level strategies
as a starting point. Business goals are met through the daily work of employees, so
employee performance goals should align to or at least roll up to these objectives. If a
larger goal is to become an employer of choice, create employee goals that help meet
• ELIMINATE AND SIMPLIFY: Where possible, remove needless, arduous tasks. These can be
ones that take up large amounts of paper, administrative activities, time, and resources.
Are performance reviews currently only documented on paper? Find out if your existing
system allows for electronic filing, reducing filing and printing. Many solutions, such as
Paylocity’s Performance Management modules, help reduce the burden.
WHERE TO BEGIN
Management feature includes
goal management, allowing
leadership to define goals related
to the business strategy.
Modern Performance Management | 10
• MAKE PERFORMANCE AND COMPENSATION CONVERSATIONS SEPARATE AND DISTINCT:
Making performance discussions about compensation can block an employee from
understanding and retaining the real information about what they need to do to grow
and improve as a worker. Career improvement conversations should be about more
than money; put job motivation, engagement, development, and satisfaction at the
• INVEST IN MANAGERS AND LEADERS: Empower those who pave the way for employees.
Leadership development, whether from outside resources or from internal training,
can help managers and team leads feel enabled to coach and mentor their employees.
Software tools like dashboards and analytics will give them added insights on how to
help their direct reports. The drive to improve will catch on. Eventually, all members of
the organization will benefit from this new culture of performance management and
you’ll find your colleagues living the new philosophy every day.
Give employees visibility into
sharing success with tools such
as Paylocity’s Impressions or
 Parent, D., Sloan, N., & Tsuchida, A. (2015). Global human capital trends 2015. Deloitte University Press, p. 51-56. Retrieved from http://
Modern Performance Management | 11
Ultimately, empowering employees to feel in-control of how they contribute to organizations can lead
to loyal and engaged employees. As mentioned previously, this cannot simply begin with one manager
or small tweaks in a process. Building a culture around nurturing employee skillsets and capabilities
gives organizations and their human resources departments the opportunity to strengthen retention,
satisfaction, and growth.
With the right methods and tools, any organization can begin instilling performance management ideals into
its culture. Paylocity offers human resources modules that help you manage goals and facilitate reviews in
a streamlined and integrated system. Easy self-service setup gives you the control to design performance
management tasks and processes to fit your organization’s needs. You can promote employee engagement,
influence job satisfaction, and impact productivity all from one Performance Management feature. Start
building effective business intelligence solutions today with Paylocity.