Attracting skilled employees is expensive, and being able to retain them is important for efficiency and sustained profitability. A successful performance management plan plays an unparalleled role in preventing the loss of valuable employees. 

Finding, attracting and retaining top talent is vitally important for business, yet is a continual challenge. The ongoing war for talent—coupled with a high level of employee disengagement—is enough to cause valid concern among executives and HR leaders. 

According to the Society for Human Resource Management, 90% of performance appraisals are painful and don’t work. But it doesn't have to be that way. There are strategies and technology that can help you excel at managing the performance of your valuable talent. 

Employees need performance reviews that take into consideration what they've learned and their contributions to multiple teams, rather than just individual performances. They also need feedback early and often so they can help your business grow.

Building an engaged, productive workforce with performance management plans

As businesses continue to put the recession in their rearview mirror, it is important for business leaders , managers, and HR teams to play active roles to help rebuild performance levels in order to retain top talent. While transformation happens at the local level, it only takes place when the tone is set at the top level. Today, effective performance management plans must allow for social feedback and regular check-ins. It should also link performance to goals, learning, and peer recognition. And you need all this in real time.

To develop a successful performance management plan at your organization, you must formulate a strategy that can meet both the needs and wants of your employees and evolving company goals. 

To improve performance management, commit to consistent communication that keeps employees in the loop on what needs to be done and who is responsible and update them on what happens. Additionally, your business should offer a recognition program that encourages employees to go the extra mile; this will foster a positive work environment. If you listen to the needs and values of your employees, you'll ensure you're providing the right incentives for a job well done.

Companies need to actively and continuously demonstrate commitment to their workforce—in ways that are meaningful to employees. Surprisingly, money is not a top driver for performance; instead, empowerment, development, and self-direction are seen to be more important in the eyes of employees.

How to create a performance management plan

To create a performance management plan:

• Define what success looks like for the role
• Establish the competencies of the person being evaluated
• Set clear goals or objectives
• Establish a next-action for each goal or objective
• Identify any required supports or dependencies
• Clarify how often involved parties will review this plan
• Set dates for these reviews

Strategy and performance management

Successful businesses have a clearly defined strategy and the managers within these businesses understand how their team and direct reports will meet deliver these strategies. To this end, strategic and performance management helps you, your colleagues and other managers agree on key goals and ensure that these goals are achieved.