Strategic Performance management is a retention tool. If you came across this being stated as a fact, you might wonder how that could possibly be true.  Isn’t performance management a process to track and measure performance as against pre-set goals and KPIs?

Yes, at a very fundamental level that is what it is. But the strategic purpose of performance management is that it should be leveraged to retain the right set of employees. If you want your performance management system to go beyond being just a measurement tool, and become powerful enough to motivate the high potential employees, you need to use it strategically. Here are some tips on how to do that.


  1. Use the Feedback Sharing Sessions Effectively – When you give performance feedback for great work and also on areas of development, in your one-on-one interactions, use those discussions effectively. Try to get a deeper insight into what your team member is keen to work on, some roles that he or she is aspiring for, how they have been conducting informal mentoring for new joiners in the team and so on. It will help you to determine the employees who have potential. Many employees are great performers, but in terms of potential one needs to observe and understand them better.
  2. Performance Management is not About the Rating – A lot of managers get fixed on the rating and that is a mistake. When you manage performance, you need to look beyond the rating specifically at the behavioural traits that the person is exhibiting. For example, would you prefer a person who is the most highly rated individual when it comes to individual sales targets to become a team leader or a person who is a good performer with excellent mentoring abilities? More importantly, how should you ensure that both stay? For one, you may need to provide higher variable pay or sales commissions to motivate and for the other people management responsibility. So your performance feedback on quantitative and qualitative factors will need to include that.
  3. Clear linkage between Performance Management and other processes – There needs to be a clear linkage between performance management and other processes such as learning & development, career growth, compensation planning and so on. Only when the link is evident will the employees be motivated to remain with the company. A performance management system that operates in silos can create resentment.

So remember to work on your performance management system as though it is a retention tool. It should not be viewed as a process to be completed annually, just to calculate the salary increment. Enrol into an online course in Strategic Performance Management to build a more effective PMS for your organization.


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