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All businesses face the difficult challenge of managing their employees. But not all businesses do this well.
In this guide, you can delve into the world of performance management and learn how a policy can support your employees to be more effective.
What is a performance management policy?
A performance management policy outlines a company's policies and procedures in regards to assessing employee performance. It includes how a company monitors, reviews and tracks employee performance and addresses what happens when an employee underperforms or overperforms in their role.
A well-curated performance management policy allows you to:
- Monitor and track your employee's professional development
- Identify signs of underperformance in your team
- Provide feedback for your employees
- Improve the company's overall productivity
- Understand who deserves a promotion or pay rise
- Take disciplinary action when necessary.
Download this template at Lawpath
When should I use a performance management policy?
It's not mandatory for a company to implement this policy, but it is generally seen as good practice. Performance management is an ongoing process that takes place continually throughout the course of the year.
So, a performance management policy and procedures should be referred to whenever necessary. For example, when performance reviews take place, or when you're taking steps to improve the performance of an underperforming employee.
Performance management policy vs performance review
Generally speaking, performance management is used as an umbrella word to describe the process of monitoring employees' performance during the year. It encompasses a performance review amongst other procedures that allow managers to monitor and review employee performance.
A performance review is a document that is used as part of a regular appraisal to track and log an individual employee's professional development.
What does a performance management policy include and not include?
What's included in a performance management policy?
To be effective, a performance management policy should address the following:
Performance management process
To provide clarity for both management and employees, you should include a clear outline of the steps your company takes in its performance management process. This includes performance appraisals, tracking processes and disciplinary procedures.
Managing unsatisfactory performance
A large part of performance management is recognising when an employee is underperforming in their role. Your performance management policy gives you an opportunity to spell out exactly what happens when an employee's performance is unsatisfactory. This should include a warning process, improvement plan and the grounds for possible termination.
Should an employee fail to improve their performance, your company needs to have a clear set of rules and procedures for dealing with this situation.
What's not included in a performance management policy?
You do not need to include employee-specific details in your management policy. Instead, this should be a document that outlines the companies overall approach to performance management including the processes and procedures involved. To track a specific person's performance, use regular appraisals and a performance review document.
How effective is a performance management policy?
Monitoring employee performance is an effective way to improve productivity across the board. By implementing fair and streamlined procedures using a performance management policy, it's easier to identify who is underperforming or excelling in your team. Then, you can put into place the relevant steps to improve performance or grant well-deserved promotions.
In the worst-case scenario when you need to fire a member of staff, you can prove you've taken the correct steps and course of action by following your policy and procedures.
Do I need to use a lawyer?
As it's not a legally binding document, you don't strictly need a lawyer to review your performance management review policy. However, as with any business document you may decide you want to use a legal advice service to get extra peace of mind.
It can be useful, also, to use online legal templates and working examples to make sure you're along the right lines with your draft.
Get access to customisable performance management policy templates online
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How do I write a performance management policy?
No two performance management policies are the same. That's why it's important to involve all management personnel when it comes to writing up an effective policy. Here are a few questions to consider before you put pen to paper:
- How do we effectively monitor performance across our employees?
- Do we have a way to track and record employee performance?
- What steps do we want to take if an employee is underperforming?
- How can we help an underperforming employee to improve?
- What happens if an underperforming employee doesn't improve their performance?
- Is our disciplinary procedure fair?
- What happens in the case of an employee who is excelling in their role?
- What are the necessary steps for a promotion or pay rise?
Where else can I get free legal documents and templates?
Referring to a performance management policy example is a great way to pick up ideas as to how to write your own. We've found a few places you can find, customise and downland templates.
- Lawpath. An online legal resource featuring plenty of free templates. You can browse their performance review template for free, but you'll need to pay to download and edit it.
- Fair Work. An Australian government website with information and advice about rights and rules in the workplace.
- LegalVision. Users can access unlimited legal templates for a monthly membership fee.
- Wonder Legal. Browse through hundreds of legal templates on Wonder Legal and download templates for a one-time fee.
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