Blog Post

The unbreakable link between performance management and employee engagement

Stacie Grasberger

Manager at Educe

The concept of employee engagement, around since the early nineties, was first introduced in “Psychological Conditions of Personal Engagement and Disengagement at Work” in the Academy of Management Journal.

Today, there are hundreds of definitions and synonymous terms (e.g., employee experience, employee journey, workplace engagement, employee pulse, etc.) to explain exactly what we mean by employee engagement — the degree to which employees invest their cognitive, emotional and behavioral energies toward positive organizational outcomes. As it focuses on employee satisfaction, well-being and engagement, traditionally, we measured employee engagement by metrics such as retention, turnover and productivity.

On the other hand, there is performance management. Performance management is “the ongoing process of communication between a supervisor and an employee that occurs throughout the year in support of accomplishing the strategic objectives of the organization.” Organizations have traditionally measured it as employee performance to previously established goals.

Why linking performance management and employee engagement is so important

While historically, employee engagement and performance management have been measured and tracked separately, there is a growing trend within organizations to link the two as the significance of employee engagement on the performance of businesses and individuals has become increasingly apparent.

Employee engagement surveys have traditionally helped companies gain and keep a pulse on key indicators to better understand what is important to employees, what engages them and what keeps them motivated. However, what has changed in recent years is the evolution of the performance management process.

Organizations are shifting away from the laborious annual rating and review cycle to regularly scheduled performance check-ins and conversations between employees and managers. These more frequent interactions provide the space for real-time feedback, employee adjustments as well as an opportunity for employees to establish and build a relationship of trust with their manager.

Why is the relationship between employee and manager increasing in importance?

As we have adjusted to more agile ways of working and communicating, the real-time connection between employees and managers has led to more meaningful goals that support broader organizational objectives.

This increasingly important relationship provides an improved line of sight to the employees' direct impact on organizational goals and the bottom line while at the same time empowering them to adjust as they share perspectives and feedback, identify and leverage strengths and celebrate successes along the way. This empowerment gives employees the opportunity to both feel connected and responsible for business outcomes and have a better sense of where they stand from a performance perspective at any point in the year.

The result? According to a Gallup report, companies with a highly engaged workforce are 23% more profitable.

Leveraging performance management to improve employee engagement

Proper performance management directly links individual impact to company goals and builds a culture around the excitement and satisfaction of supporting that mission. Understanding what engages and motivates your employees can help you determine if your performance management process supports employee engagement or if you should consider some changes. Below are a few key considerations:

  • Do employees understand the organization’s mission? Are they invested in and motivated to be a part of the mission?
  • Does the organization support growth and development for employees at all levels?
  • Do employees have documented career development plans?
  • What makes employees stay with the organization?
  • Do employees feel supported by peers, managers and leaders?
  • Do employees feel recognized and rewarded?
  • When was the last time you evaluated your performance management process?
  • Do your managers have the training and tools to engage with their direct reports more frequently?

How to sustain employee engagement over time

The Great Resignation has highlighted the continued importance of creating and maintaining a healthy work environment to help support employee engagement. Once you have a solid foundation, how do you keep the momentum going? How do you make sure that you’re able to sustain that engagement over time? Below are five ideas:

1) Leverage an employee engagement survey

Take the time to review the questions you’re asking in your employee engagement survey. Will the answers reflect actionable results that tie to your corporate initiatives?

2) What are the outcomes/changes from your employee engagement survey?

As a company or organization, are you able to review the results and take action or make improvements based on the feedback provided? Employees need to feel they have a voice, that their voice is heard and that they matter to the organization. If employees continue to provide feedback and do not see changes or actions to support change, they can become disengaged.

3) The stay interview

Most HR professionals are familiar with the exit interview for when an employee leaves the organization; what about the concept of the stay interview? Do you know what makes employees stay with your organization? What is it that they love about their job and the company? What engages them? How can you retain employees before they consider leaving? You can accomplish the stay interview in a few ways — add key questions to your employee engagement survey, leverage your performance manager conversations or tap leadership teams to connect with employees.

4) Equip your performance managers

Performance managers are the critical link between your employees and the company. It’s key that they can build trust and relationships with employees. Performance managers need to be equipped with the tools and capacity to support employees with growth and development opportunities, share feedback with leadership, and create a connection between the employee and the organization.

5) Open dialog and conversation within the organization

Encourage open dialog in ways beyond only the survey and manager check-ins. Do you have skip-level meetings or larger company-wide meetings where employees can bring questions and get real-time responses? What other opportunities do you have for this interaction and dialog?

Linking performance management and employee engagement can help you create a culture of high performance as well as higher retention to support and build stronger organizations. A highly engaged workforce leads to higher profitability, productivity and decreased turnover.

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