As your company and headcount grows, managing employees through spreadsheets and templates doesn't cut it anymore.
You need a systematic performance management process so your people reach goals and targets, feel engaged, and get the full support and training they need to advance in their careers.
But introducing a new process into your organization is a huge undertaking.
You’ll need to get buy-in from senior leadership, get a budget approved, choose the best performance management software, and draw up an implementation plan.
Is it worth it? Does performance management actually lead to better performance and productivity? How can you convince senior management to agree to the idea?
To help you build a solid case for performance management, we dug through research, case studies, and expert recommendations and highlighted 11 key benefits of implementing it in your organization.
Read on for:
- Why Modern Performance Management Should Be Continuous and Two-way
- 11 Research-backed Benefits of Performance Management
- Performance Management FAQs
Before you invest in performance management, read this.
Not all performance management systems and software are created equal. You need to make sure you pick the right one that will withstand the test of times.
In fact, in a recent Gallup poll, 98% of CHROs admitted that their performance management system doesn’t work. Why?
Another Gallup poll showed the biggest weaknesses in these systems are:
- Providing meaningful, regular feedback for each team member
- Delivering recognition in a way that motivates outstanding performance
- Effectively coaching and mentoring employees
At Mesh.ai, we believe that performance management only works if it’s continuous and two-way.
In fact, we call this performance enablement—because it’s not just about “managing” performance but proactively enabling high performers.
This looks like:
- Co-creation of goals and core competencies needed to excel in a particular role between the employee and the manager
- Development plans led by employees and supported by managers
- Continuous feedback exactly when and where employees need it
- Regular 1:1 coaching conversations with each team member held at least once a month
- 360-degree feedback compiled from peers, line managers, and senior leaders informing performance reviews
There’s a lot of evidence that this type of performance enablement actually works.
At Mesh.ai, we’ve seen 15% higher performance density in client organizations who adopted our performance enablement software.
One study by Forrester Consulting found that “those with monthly or ongoing performance check-ins are up to 1.5 times more effective at engaging and retaining employees than those with an annual process.”
Another study by Gallup reports:
- 80% of employees who received meaningful feedback in the past week are fully engaged
- Employees who received daily vs. annual feedback were 4 times more likely to be “motivated to do outstanding work”
And when managers and employees co-create specific goals, it can increase the performance of an average team or individual to the 80th percentile of performance, MITSloan reports.
Mesh.ai is a performance enablement software designed to empower employees and managers to become high performers.
With Mesh, managers and employees can easily co-create goals and competencies, plan and hold regular 1:1s, and provide instant feedback—be it praises or constructive advice—directly through Slack or Microsoft Teams.
Mesh sends AI-powered ‘Nudges’ to managers when it's time to give feedback, schedule a 1:1, or address team goals that need attention. This means managers never miss an opportunity to support and coach employees when and where it matters.
Mesh also prompts employees about off-track or at-risk goals and tasks to make sure nothing falls through the cracks.
Finally, Mesh keeps track of past feedback and important notes from 1:1s, so everyone has a clear picture of performance and a guide for more meaningful future conversations.
Want to see Mesh in action? Schedule a personalized demo here.
Let’s dive into 11 research-backed benefits of investing in not just performance management, but performance enablement.
📖Related read: 4 Best continuous performance management software in 2024
Benefit 1: It gets everyone aligned on goals
Performance management and enablement plays an important role in aligning goals across an organization, according to a study published by Oxford University Press.
As companies grow, they often lose sight of their goals, causing teams to work towards different objectives or forget the company’s overarching purpose.
A formal performance enablement system lets you ditch the spreadsheets in favor of a more simplified, transparent, and streamlined approach to performance tracking.
However, the study highlights that these systems must be implemented purposefully and incorporate elements like setting clear goals and regular feedback to increase productivity (which follows our case for performance enablement).
In doing so, these systems can unify teams and ensure employees are rewarded fairly for their contribution toward common goals.
On Mesh, managers and employees can co-create goals and competencies together so they’re always aligned on what needs to be achieved and why.
Here’s how it works:
Mesh.ai is proven to help teams achieve 22% more of their goals compared to their legacy performance management systems.
📖 You might also like: 6 Best SMART goal software for 2024 (Achieve more, faster)
Benefit 2: It humanizes the relationship between employees and their organizations
A study by the State University of Londrina looked at the benefits of performance management in companies across the IT industry, which is known for its complex and uncertain nature.
The study noted that IT employees often face increased workplace pressure due to performance metrics centered on goals and competitiveness, rather than the individual behind the work.
With a performance enablement system in place, businesses can humanize their relationships with employees by:
- Regularly checking in
- Promoting consistent communication
- Offering genuine feedback that goes beyond impersonal metrics.
This approach supports employees throughout their careers and creates a more open relationship between them and the organization, ultimately boosting both efficiency and satisfaction.
Mesh makes it incredibly easy for managers to regularly check-in with employees by setting up recurring 1:1s in a few clicks. Managers can:
- Choose who they want to go on a call with
- Select date, time, and duration
- Select frequency (e.g. Weekly on Friday)
- Add agenda points and get AI recommendations for agenda points
- Add meeting notes
Mesh automatically syncs these 1:1s with Google/Outlook Calendars.
Benefit 3: It makes your company more competitive
Using a performance enablement system can improve both organizational and employee performance, giving companies a competitive advantage.
In fact, a 2024 study by McKinsey and Company showed that when companies prioritize employee performance, they are 4.2 times more likely to outperform their peers.
The study, which observed 30+ global businesses, found that effective systems develop a more productive workforce, increase revenue, and reduce employee turnover.
However, the system must align with the business's specific needs, incorporating key design choices and elements like performance reviews, goal setting, and rewards, to promote continuous growth and competitiveness.
As new technologies for workplace improvement emerge, companies must strategically implement these tools to differentiate themselves.
The study cautioned that organizations that neglect agile performance management may struggle to keep up with innovative competitors.
Benefit 4: It can turn poor performance around
A Performance Improvement Plan (PIP) developed based on feedback gathered through a continuous performance management system can help employees meet performance standards through ongoing check-ins and goal progress discussions.
Consider the case study of “Joe,” as described in a Forbes article by Jen Patterson of Patterson Consulting Group.
After facing some personal challenges, Joe’s company implemented a structured PIP that included flexible hours, mentorship opportunities, and a predetermined timeline tailored to his needs.
By using PIP to align individual and company goals, optimize performance reviews, and set realistic and attainable objectives, Joe gained the motivation to improve his productivity and performance.
A solution like Mesh.ai can help transform the “Joes” in your business into high performers, too.
Benefit 5: It can help managers address employee burnout
A study by Clear Review found that over half of UK-based employees would leave their jobs for a company that offered better support for stress and burnout.
A performance enablement system can help your managers identify the signs of burnout before they escalate and intervene when it matters most.
These systems help you monitor and discuss employee performance issues continuously, rather than waiting for yearly performance reviews to come around.
Early recognition of burnout and employee exhaustion is critical for preventing performance issues and voluntary turnover.
Mesh helps with this by facilitating regular, recurring 1:1s where managers can check-in with the mental state of their team members and provide resources or suggest remedial plans.
One key thing to note is that even if recurring 1:1s weren’t set up initially, Mesh notifies managers on the main dashboard when it’s time to check-in with an employee based on lifecycle events like:
- Goal completion
- Work anniversaries
- Time elapsed since last 1:1
Benefit 6: It drives employee engagement
Receiving meaningful feedback significantly increases employee engagement, which is key to increased productivity and performance.
Research from Gallup found that 80% of employees who receive such feedback say they are fully engaged in the workplace.
Performance feedback tools like Mesh give managers access to employee insights and metrics so they can give timely feedback that’s truly tailored to each employee.
This data allows your management team to effectively become coaches who guide employees toward improvement and drive success.
When employees have what they need to grow, they’re more likely to be engaged and eager to learn, as the company demonstrates a commitment to their future success.
Benefit 7: It allows you to address performance issues quickly and fairly
A performance enablement system enables leaders to address issues as they arise by providing real-time insights into performance and goal progress.
These systems ensure fairness by setting consistent benchmarks and assessing employees based on standardized performance metrics, rather than arbitrary criteria set by each manager.
Take Whitebox Real Estate, for instance.
They use individualized feedback and data from ongoing conversations to guide quarterly performance review conversations.
This approach has allowed for improved two-way feedback that helps managers identify areas for improvement and provide more specific feedback to help employees grow.
As a result, Whitebox Real Estate has seen higher employee satisfaction, improved retention rates, and more motivated employees.
Benefit 8: It increases the number of high performers in your organization
Performance management plays a big role in empowering employees and driving accountability.
In fact, according to a study by Gartner, companies that focus on performance management saw a 14% increase in employee engagement and a 24% jump in workforce performance.
These companies also have 7% more high-performing employees than those that don’t make performance management a priority.
When companies focus on performance management and make sure employees are well-supported in their roles, they encourage employees to push themselves in a healthy, sustainable way without causing burnout.
This emphasis on collaboration and continuous improvement can, in turn, lead to a more effective workforce of high performers.
Benefit 9: It makes employees more productive
According to a 2024 study by Betterworks, aligning employee goals with company objectives results in a 35% increase in highly productive employees.
These employees are also 5 times more likely to feel a sense of belonging than those who don’t see a connection between their individual goals and the company’s.
Performance enablement systems help to align business goals with employee performance through structured, timely, two-way feedback.
When managers have ongoing performance discussions, they can equip employees with the information they need to do their jobs more effectively and efficiently and avoid lingering performance issues.
Benefit 10: It creates better managers
A manager’s job is to translate organizational goals and guide their teams to achieve the strategic vision.
Without a good performance enablement process in place, managers may struggle with this, leading to an overwhelmed workforce and a lack of direction.
The same Betterworks study found that two-thirds of people managers currently lack the support and clarity needed to be effective in their roles, but a performance management system can change that.
When managers have the support, tools, and continuous employee performance insights they need to lead their teams more effectively, businesses can create a more cohesive workforce that drives better results.
Benefit 11: It makes employees feel supported and see a path for advancement
While 86% of employees want career and skill development, only 54% actually receive it, according to the Betterworks report.
Employees who receive feedback and set goals through strategically implemented performance management software are 3 times more likely to feel they consistently receive the support necessary for skill development. They are also twice as likely to see a clear path for career advancement within their company.
A performance enablement software like Mesh helps managers better support their employees in their path to advancement by facilitating continuous feedback and performance discussions when they’re most useful.
Get a demo of Mesh and learn how our solution can help your workforce thrive.
Benefits of performance management - FAQs
Have more questions about performance management? We answered them here:
1. What are the 3 purposes of performance management?
Performance management can achieve a lot for an organization, but there are three things a good system does really well:
- Aligns goals. Performance management helps align individual goals with your organization's strategic objectives. This keeps everyone on track and motivated to reach their targets.
- Promote continuous improvement. When you create an environment of continuous, two-way feedback for ongoing improvement, you help employees grow their skills, advance their careers, and ultimately perform their jobs better.
- Evaluate performance thoroughly and fairly. A good performance management system provides a structured, multifaceted approach to evaluating employee performance. This makes it easier to recognize achievements, address issues, and make informed decisions about compensation and promotions while giving employees a voice in their own goals and development plans.
2. Why is performance management important in an organization?
When done correctly, performance management is a huge driver of employee engagement and productivity. Regular performance discussions with bi-directional feedback and clear, co-created goals can help employees better understand how their roles contribute to the company's success and continuously improve their skills.
In short, performance management keeps your workforce motivated and on track so you can meet your big organizational goals efficiently and effectively.
3. What are the pros and cons of a performance management system?
Like any organizational system, performance management has advantages and disadvantages that HR teams and leaders should consider before implementing it.
Pros:
- Improved engagement and productivity. Continuous, two-way feedback and collaborative goal setting keep employees engaged and motivated while maintaining momentum on company-wide objectives.
- Better employee-manager relationships. Modern performance management systems help employees and managers forge stronger professional relationships built on trust and open, frequent communication. This makes it easier to get everyone on the same page and work toward common goals.
- Smarter, more data-driven decisions. Performance data helps managers make informed decisions about promotions, compensation, and employee development needs. There’s also more
Cons:
- Initial setup and implementation can be time-consuming. Depending on the software you choose, it may take some time to import manually-tracked historical data into your new system. As with any new tech solution, it will also take time to get everyone trained on and accustomed to the new software.
- Can be difficult to make the cultural shift. Employees and managers accustomed to traditional performance evaluation methods may resist adopting new continuous performance management practices, especially if they perceive it as “more work.”
- Requires ongoing participation from HR and management. If you want to see results from a performance management system, you and your company’s leadership team need to set an example by participating in it and encouraging employees to give feedback. Otherwise, you’ll be paying for software that nobody uses and won’t see the benefits described in this article.
The pros of a well-implemented performance management system far outweigh the cons. Consider an all-in-one performance enablement solution like Mesh.ai to ease the challenges and start reaping the benefits quickly.
