Performance management plays a pivotal role in organizational growth by driving employee development through goal setting, coaching and mentoring, monitoring, and feedback. The concept has been a cornerstone of Human Resource (HR) and People Management practice for at least a century, with the first recorded instance of “performance appraisal” reportedly dating back to a 1920, at a firm in Sydney, Australia called WD Scott & Co.

While the concept of performance management hasn’t changed all too much since then, the way that organizations put it into practice certainly has. As the nature of work continues to shift, so too, does the approach toward performance management. Companies are moving away from the rigid, goal-based, hierarchical assessments of the past, toward more holistic, continuous, and multi-directional processes that prioritize linking performance and business goals, dynamic manager-employee coaching, and continuous feedback, according to McKinsey. measures employee growth. Advances in technology also mean that measuring employee performance for regular reviews has become more complex, and – let’s face it – more daunting!

For managers, establishing individual employee goals, tailoring training and coaching to address unique skills gaps, monitoring the progress of one or more employees, and continuously gathering feedback, can be a huge lift. HR and L&D leaders can team up to provide tools and resources that make the process easier and more scalable. One of the best tools for improving performance management is the Learning Management System (LMS), since it provides a centralized platform for training, reporting, and feedback within an organization. In this blog post, we’ll outline how HR and L&D leaders can leverage LMS features to enhance their performance management approach.

Benefits and challenges of performance management

Performance management practices benefit employees by increasing satisfaction and performance. McKinsey found that companies with effective performance-management systems outperformed their peers in the past three years, with 60% of respondents confirming this. In contrast, only one-third of respondents reported outperforming peers when their company’s performance management was rated ineffective. For businesses, having an effective and continuous performance management program can bridge critical skills gaps, and reduces employee churn.

However, challenges arise when HR leaders struggle to establish organization-wide performance management goals and implement initiatives across different functions. Scaling performance management can also be time-consuming and resource-intensive. Inconsistent reporting and lack of proactive feedback from managers can further hinder the effectiveness of performance management programs.

Improving Performance Management with Learning & Development’s Help

To enhance performance management outcomes, it is essential to integrate learning solutions into the employee review process. Here are some ways in which L&D can contribute to your organization’s performance management approach:

Goal Setting: By conducting learning needs assessments, L&D leaders can help managers analyze the strengths and opportunities within their teams. This analysis helps in aligning learning and business goals while addressing skills gaps through appropriate training programs. Ultimately, the findings from a learning needs assessment could give managers the insights they need to build a performance management plan that helps employees build the skills they need to meet your business’s goals.

Coaching: Scaling 1:1 coaching and instructor-led training in globally distributed or remote-first workplaces can be challenging. To supplement coaching and mentoring opportunities, organizations can provide targeted, just-in-time resources and online training through an LMS or learning platform. Implementing individualized learning paths based on job function, seniority, or upskilling needs can also complement costly and time-consuming instructor-led training and coaching sessions.

Monitoring and Continuous Feedback: Monitoring employee progress and establishing a continuous feedback loop are crucial for effective performance management. Moreover, the frequency and consistency of reporting and feedback practices within an organization may impact employee recruitment and retention. In fact, organizations with continuous performance review processes are reportedly 39% better at attracting top talent, and 44% better at retaining talent than organizations that only conduct annual reviews.

By choosing a learning management system (LMS) with robust custom reporting functions, HR leaders can automate reporting that helps managers gauge the strengths and needs of their employees and focus on driving performance results. An LMS that includes features like automated alerts, forums, chat, and email can facilitate easy access to feedback mechanisms.

Performance management plays a vital role in enhancing employee satisfaction, retention, and overall business performance. Aligning performance management strategies with learning goals, supplementing coaching with targeted resources, and utilizing a comprehensive LMS for monitoring and feedback could help your organization unlock the insights they need to drive better business outcomes.