The Role of Performance Management in Employee Engagement

By Olivia Kotowski

Employee engagement is the cornerstone of a thriving business. Without engaged employees, it will be difficult to succeed in the world of PEOs and SMBs—or in the workforce at all. 

Employee engagement is defined as “a human resources (HR) concept that describes the level of enthusiasm and dedication a worker feels toward their job.” When employees feel a connection to their place of work, they typically work harder and motivate others to do the same. With solid morale among employees, you are building a strong foundation for your business.

On the other hand, lower engagement of employees impacts overall business outcomes. So, how do we not only increase, but drive employee engagement?

Targeting Employee Engagement Pain Points

Increasing employee morale may seem like an easy feat, but it will take more than a few office perks like free snacks or a Keurig in the breakroom. Today our workforce faces more than one challenge when pursuing employee engagement.

The Great Resignation

Almost 50 million American employees voluntarily quit their jobs in 2021, prompted by COVID-19, according to the U.S. Bureau of Labor Statistics. Many refer to this nationwide development as The Great Resignation. However, this wasn’t wholly prompted by the pandemic; rather, it is simply a continuation of a longer-running trend. 

The Great Resignation came to light for a number of reasons, the largest being unhappiness in the workplace. Burnout, increasing inflation and poor work-life balance spurred many people to reconsider their role at work and how it plays into their life. 

Quiet Quitting

The phenomenon of quiet quitting has been quite the rage lately. Mostly present in younger generations in the workforce, quiet quitting is pretty simple: employees show up to work, do the bare minimum required, and not much else.

Quiet quitting is especially prominent in employees who do not view their work or role as important. When employees see their work as having little purpose, they are more likely to work indifferently, exuding little effort. 

Impacts of a Hybrid Workforce

A hybrid work environment grew exponentially in popularity due to the pandemic. It is a great, flexible option for employees, especially those looking for a better work-life balance. Companies with a hybrid work option can actually save approximately $11,000 a year on every employee that works remotely half of the time.

However, companies can face issues with the rise of hybrid work environments, especially if they are slow to adapt. If your company is stuck in old-fashioned ways, finding and retaining quality employees will become a real struggle. A hybrid work environment is an incredible way to boost morale and offer flexibility to your employees. 

New Generations Entering the Workforce

The rules of the workplace are ever-changing, even more so as we see younger generations entering it: demanding more and putting up with less. Generation Z will make up almost 30% of the workforce by 2025, so they significantly impact how our workforce will evolve. In their lifetimes, Gen Z has faced rigorous challenges regarding their mental health and well-being; so it makes sense that these are going to be top priorities as they enter the workforce.

Increasing Employee Engagement Through Performance Management

All of these employee engagement pain points can be difficult to manage, but it is not impossible. If you want to engage your employees, you have to prioritize your employees. By investing in your employees and their growth, you are giving importance to them and their role. You are actively engaging your employees. 

So, how do you do that, you may ask? The answer is simple: through performance management

Performance management can have different meanings for different organizations. Competencies, goals, coaching, continuous feedback—all of these methodologies have value. Like many development approaches, not every style works for every organization. It is most important to find the method that works best for your organization.

Our workforce has a heightened need for tools and continuous engagement. Whether your employees are on-site, remote or working in a hybrid environment, a strong performance management strategy is necessary to foster growth and employee engagement. 

Continuous performance management (also known as continuous feedback), or having frequent check-ins and providing feedback all year, is a great way for employers to start. Annual performance reviews are a thing of the past; how can you correct errors, track progress and discuss goals only once a year? Continuous conversations, praise and offering opportunities for learning and development are much more beneficial to employees and employers. In fact, 85% of employees that receive weekly feedback are more engaged. 

A 2022 Clear Review report revealed that performance management was not a top priority for almost 70% of companies. Performance management trends also revealed that only 31% of businesses focused on employee development this year. Ignoring performance management and lacking employee engagement is nothing but detrimental to businesses. 

Performance management addresses all these issues in one strategic process. By putting time and effort into your employees and their growth in their roles, they are much more likely to be engaged. Performance management encourages retention, growth, efficiency and engagement. These are key factors in building—and maintaining— a successful organization.

Final Thoughts

Employee engagement is difficult to stimulate by itself; it is even more difficult without an effective performance management strategy. In an age where employee engagement seems to be few and far between, employers must prioritize what matters most: their employees, through performance management.