How to Create an Effective Employee Performance Plan

Want to run a modern enterprise that has room for successful growth? Monitoring worker output, and keeping your team motivated to strive for the top, are critical elements of any growth strategy. An employee performance plan is one way HR managers can effectively monitor such growth.

Employee performance plans foster constructive dialogue between workers and leaders. They also establish standards for gauging progress, create a roadmap that allows employees to gradually improve their performance, and help keep all productive efforts aligned with company goals.

Read on to learn how they work, or jump straight to the steps on creating an effective employee performance plan.

What is an Employee Performance Plan?

Also known as performance improvement plans, or PIPs, employee performance plans are formalized maps designed to help individual workers understand what they need to achieve to enhance their professional output.

Although they’re commonly informed by performance records, these action-oriented strategies give workers specific pointers they can leverage to take charge of their career paths.

Employee performance plans can:

  • Clarify where workers are going wrong.
  • Give employees the insights they need to track their progression and develop better productivity habits.
  • Prevent employer-employee relationships from deteriorating to the point where actions like termination become necessary.
  • Elucidate the consequences of underperforming to show each employee how their current practices might harm the organization.

By making it easier to communicate what matters, performance plans keep leaders and their workforces on the same page.

5 Steps to Creating an Effective Employee Performance Plan

HR supervisors that want to promote employee development and engagement can get started by implementing a custom, objective-oriented plan:

1. Set SMART Goals for Employee Performance

The SMART goal-writing format helps your team come together around purposes that everyone can understand and get behind. Instead of setting vague objectives that are hard to achieve or even quantify, you can use this system to implement changes that mesh with your company’s long, and short-term, goals.

Ensure your performance planning goals adhere to the SMART acronym:

  • Specific: Each target should relate to one area. If you need to cover more domains, then set more goals.
  • Measurable: Associate each goal with a concrete numerical objective. In addition to keeping your workers honest, this strategy helps you set more reasonable expectations.
  • Achievable: Goals that are within an employee’s capabilities have higher chances of being accomplished. They also contribute to better morale and more consistent motivation than pie-in-the-sky objectives do.
  • Relevant: Keeping your goals pertinent to the overall business plan will help your employees feel that they’re striving for something useful.
  • Time-bound: Timely goals help employees realize the value of self-accountability and push them towards greater autonomy.

An example of a SMART improvement goal might be something like asking a sales representative to sign up a specific number of clients by the end of the month. Or you might give a production line manager two weeks to identify the four biggest sources of material waste on the factory floor. Actionable objectives can point your staff in a more constructive direction.

2. Determine a Process to Measure Performance

Performance measurement is essential, but there are many different ways to get the job done. For instance, you might leave periodic productivity reviews to your departmental managers, send out self-guided employee surveys or use goal-measuring software to keep tabs on progress. Some metrics to track might include

  • Customer engagement actions on social media.
  • Manufacturing or commercial process downtime.
  • Online reviews of salespeople by consumers.
  • How long it takes customer service personnel to resolve help desk tickets and complaints.

Always choose metrics and measurement practices that complement your business model.

3. Create Actionable Plans to Tackle Issues

Don’t leave your employees guessing how to improve. Giving them employee engagement action plans can keep them on track and happier, while reducing employee turnover. For instance, you might

  • Set up formal training for employees that demonstrate a lack of technical knowledge.
  • Charge managers that fail to communicate with giving their teams weekly feedback.
  • Fight subpar engagement by using corporate social media platforms to keep the company updated on what each team is doing and highlight improvements.

Including standard operating procedures, or SOPs, in your plans is a wise idea because it lets your team members know how to achieve the stated goals productively.

4. Determine Rewards for Improved Performance

According to experts, rewards are essential for inspiring workers, improving productivity and cultivating loyalty. Employees also notice their absence. One study found that only 51 percent of workers felt adequately recognized for their good work. Some good rewards may include

  • Equity, stock or other kinds of stake.
  • Simple personalized recognition.
  • Business partner discounts.
  • Pension, voluntary benefit, well-being and other programs.

Rewards not only encourage the pursuit of PIP goals but also promote healthy competition and mutual respect among professional peers.

5. Communicate the Plan

Having figured out your planning strategy, you’ll need to implement it by talking to your workers. After formally documenting everything, you might try:

  • Sharing your plan via an online onboarding system or email.
  • Having direct conversations with target employees.
  • Providing each worker with a personalized program at an all-hands meeting.

Choosing a dissemination method that’s non-confrontational and aligned to your routine can make improvement plans easier to swallow.

The Bottom Line

Performance planning is a crucial component of employee development. It can enhance productivity and make people feel like they’re part of something greater than themselves. No matter how you choose to implement the process, getting the ball rolling now may prove vital to your success as a leader.