What is Performance Management?
Many employers ask: what is performance management?, and how does it benefit my business? I’m John Bloor from EBS Law, and in this article I explain the meaning of performance management, why it matters, and how UK employers can implement it effectively to improve staff performance and reduce legal risk.
Understanding Performance Management
Performance management is the structured approach employers use to monitor, guide, and improve employee performance. It is not just about annual appraisals; it is an ongoing process of setting objectives, giving feedback, and supporting staff development. When done properly, it ensures employees understand expectations and feel motivated to achieve them.
Why performance management matters
Without it, businesses risk inconsistent performance, lower productivity, and disengaged staff. A structured process helps align employee goals with organisational objectives. It also provides clear evidence if disciplinary action becomes necessary, reducing the risk of unfair dismissal claims.
What is performance management in practice?
In practice, performance management includes several key activities:
- Setting clear and measurable performance objectives
- Providing regular feedback, both positive and constructive
- Identifying training and development needs
- Recognising and rewarding good performance
- Addressing underperformance promptly and fairly
This structured approach ensures consistency across teams and helps managers lead effectively.
Legal considerations
Employers must handle performance management fairly to avoid tribunal claims. For example, if underperformance is linked to disability, failing to make reasonable adjustments may amount to discrimination. Similarly, inconsistent application of procedures can lead to allegations of unfair treatment. Guidance on good practice is available from CIPD: performance management.
If you would like free advice, John Bloor and the team are here to help. Call John today on 01625 874400 or email enquiries@ebslaw.co.uk for tailored support.
The role of managers
Managers play a central role. They must communicate expectations clearly, give feedback regularly, and address concerns quickly. Training managers in coaching and communication skills helps them guide employees more effectively. When managers avoid difficult conversations, issues are left to escalate, making formal action more likely.
What is performance management process for underperformance?
Where employees underperform, a structured process should be followed:
- Identify the issue clearly and provide evidence
- Discuss concerns openly with the employee
- Offer support such as training or mentoring
- Set clear targets for improvement within a timescale
- Review progress and decide on next steps
If improvement is not achieved, employers may need to move into formal capability or disciplinary procedures. However, documenting the process provides strong evidence that the employer acted fairly.
Link to employee development
Performance management is not only about addressing poor performance; it is also about supporting growth. Employers who invest in training and career development benefit from more motivated and engaged staff. Recognising achievements boosts morale and reduces turnover. It therefore becomes a positive tool for both employers and employees.
What is the benefit to employers?
Employers benefit from:
- Improved productivity and efficiency
- Stronger employee engagement and retention
- Clear evidence to support management decisions
- Reduced risk of disputes and tribunal claims
- A culture of accountability and improvement
These benefits demonstrate why it is essential for businesses of all sizes.
Common mistakes in performance management
Employers sometimes make mistakes such as:
- Failing to document meetings and feedback
- Only giving feedback during annual appraisals
- Not linking objectives to business goals
- Allowing bias or inconsistency in performance reviews
- Avoiding underperformance conversations
Avoiding these mistakes ensures your process is fair, consistent, and defensible.
Checklist for employers
- Do you have a written performance management policy?
- Are managers trained to carry out appraisals and reviews?
- Is feedback given regularly, not just annually?
- Are objectives measurable and linked to business strategy?
- Is underperformance addressed promptly and fairly?
Link to disciplinary procedures
Performance management sometimes overlaps with disciplinary action. If informal support fails to improve performance, employers may need to follow formal procedures. Having clear evidence of attempts to support the employee helps defend against unfair dismissal claims. Integrating this with your disciplinary policy ensures consistency and fairness.
What is performance management culture?
PM is not only about process; it is also about culture. Employers should build an environment where feedback is normal, expectations are clear, and achievements are recognised. A positive culture reduces disputes, improves engagement, and makes formal procedures less likely. Ultimately, performance management should feel supportive, not punitive.
Contact John Bloor today for expert support at EBS Law. We’re here to ensure your business stays protected every step of the way. Call 01625 874400 or email enquiries@ebslaw.co.uk.
You may also find these EBS Law resources helpful:
- HR Advice for Employers
- Managing Poor Performance at Work – Guide for Employers
- Legal Considerations for Remote Working (includes performance management guidance)
Disclaimer: This article provides general guidance only and does not constitute legal advice. For tailored advice on your specific circumstances, please contact us directly.