How Performance Management Can Be Improved Through Leadership Development
The effectiveness of performance management is crucial for an organization’s success. Performance management involves a comprehensive, ongoing process to align employee performance with organizational goals. However, many organizations face persistent challenges, such as unclear expectations, insufficient feedback, and inadequate employee development. While leadership development focuses on building the skills and abilities of future leaders, it also plays a critical role in enhancing performance management systems. This blog will explore how robust leadership development programs can address common performance management issues, transforming potential obstacles into opportunities for organizational growth.
Performance Management vs. Leadership Development
Performance management
Performance management is a comprehensive, ongoing process that seamlessly blends multiple strategies to ensure employees’ performance aligns with the organization’s goals. It includes setting clear objectives, providing regular feedback and coaching, and creating development plans to enhance skills and competencies. Effective performance management ensures that employees have a clear understanding of their roles, receive constructive feedback, and have well-defined development plans. This alignment is vital for achieving organizational goals and maintaining a motivated and high-performing workforce.1
Leadership development
Leadership development, on the other hand, focuses on enhancing the skills, knowledge, and abilities of employees through various programs and initiatives. It involves structured learning opportunities, career development paths, leadership training, and continuous feedback mechanisms. While performance management ensures that employees meet organizational goals, leadership development prepares them to take on new challenges and grow within the organization.
What is the Difference Between Performance Management and Performance Appraisals?
Unlike performance appraisals, which are periodic reviews of past performance, performance management is a holistic approach that encompasses much more than annual evaluations. Performance appraisals are just one component of this broader system, focusing on formal assessments and reviews. In contrast, performance management involves continuous goal setting, feedback, and development, ensuring that employees receive the support and guidance they need to succeed throughout the year, rather than being assessed only at specific intervals. This dynamic and proactive approach helps organizations cultivate a high-performing workforce and achieve long-term success.
The Relationship Between Performance Management and Leadership Development
To fully understand the impact of leadership development on performance management, it’s essential to examine how these two concepts complement each other. Effective performance management provides the framework for setting expectations and evaluating outcomes in an organization, while leadership development offers the tools and opportunities for employees to meet and exceed these expectations.
For example, an organization may implement a performance management system that includes regular feedback sessions and goal-setting meetings. Concurrently, leadership development programs can offer training in critical skills, such as strategic thinking, team management, and effective communication. An employee who receives continuous feedback on their performance can use leadership training to develop the necessary skills to improve. This integration ensures that employees not only know what is expected of them but also have the capability and confidence to achieve and surpass their performance goals.2
Common Performance Management Challenges and Leadership Development Solutions
Through our extensive work with clients, SIGMA has identified several common challenges that organizations encounter in their performance management efforts. One powerful solution to these challenges is to invest in comprehensive leadership development. Studies show that organizations that invest in leadership development programs:
- Improve bottom-line financial performance.3
- Enhance their ability to attract and retain talent. 4
- Drive strategic execution.5
- Increase success in navigating change.6
We will explore four of the most frequently occurring performance management issues and demonstrate how leadership development solutions can effectively address them:
Challenge 1: Unclear Goal Setting and Expectations
Many employees struggle with understanding their roles and what is expected of them. This lack of clarity can lead to confusion, decreased productivity, and misaligned efforts.
The solution: Leadership development programs
Leadership development programs help managers set clear goals and expectations for their teams. By using structured frameworks and templates, such as SIGMA’s Critical Role Identification Questionnaire, leaders can ensure that employees understand their roles and what is expected of them. This clarity reduces confusion and enhances productivity.
Challenge 2: Inadequate Feedback and Intermittent Development
Performance management is often treated as an annual event rather than a continuous process. Without regular feedback and ongoing development opportunities, employees may feel disconnected from their goals and undervalued in their roles.
The solution: Regular Feedback and Development Opportunities
Effective leadership development includes regular feedback and continuous development opportunities. Providing employees with ongoing support and guidance helps them improve their skills and stay aligned with organizational goals. This approach to leadership development fosters a culture of continuous improvement and engagement.7
Challenge 3: Difficulty Identifying and Addressing Skill Gaps
Organizations often struggle to identify skill gaps and areas for improvement within their teams. Without this insight, it is difficult to tailor development plans effectively, leading to underdeveloped employees and unaddressed performance issues.
The solution: Leadership Development Assessments
Comprehensive assessments help organizations identify skill gaps and areas for improvement. By using tools like SIGMA’s Leadership Skills Profile – Revised™ (LSP-R), organizations can uncover potential, identify strengths, pinpoint development needs, and make informed decisions about their leadership development strategies. This targeted approach ensures employees receive the training and support they need to excel in their roles.
Challenge 4: Low Employee Engagement
Disengaged employees can significantly impact an organization’s performance, leading to lower productivity, higher turnover rates, and decreased morale.8 Engaged employees are more likely to be motivated, perform better, and stay with the company longer.9
The solution: Leadership Development Solutions
Leadership development programs play a critical role in boosting employee engagement.10 By investing in employees’ growth and development, organizations show that they value their workforce. Common leadership development solutions to improve employee engagement include:
- Career development paths: Providing clear and attainable career paths helps employees envision a future within the organization, which increases their engagement and motivation.11
- Regular training opportunities: Offering ongoing training helps employees develop new skills and stay updated with industry trends, making them feel more competent and valued.12
- Leadership development programs: Investing in leadership development ensures that managers have the skills to engage and motivate their teams effectively.13
- Recognition and reward systems: Implementing systems that recognize, and reward employee contributions fosters a positive work environment and enhances engagement.14
Ready to Get Started?
Investing in leadership development can effectively address performance management issues by ensuring that your employees have the necessary skills, knowledge, and support they need to succeed. With SIGMA’s range of leadership development solutions, your organization can improve performance, drive strategic execution, and achieve long-term success. Let SIGMA help you navigate the complexities of establishing a customized and effective performance management system.
For more information about how SIGMA’s leadership development solutions can support your organization, complete the form below and one of our consultants will contact you shortly.
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1 Armstrong, M., & Armstrong, M. (2009). Armstrong’s handbook of performance management: an evidence-based guide to delivering high performance (4th ed.). Kogan Page.
2 Northouse, P. G. (2022). Leadership: theory and practice (Ninth edition.). SAGE Publications, Inc.
3 Stawiski, S. (2024). Driving Performance: How leadership development Powers success. Center for Creative Leadership. https://www.ccl.org/articles/white-papers/driving-performance-development-success/
4 Stawiski, S. (2024). Driving Performance: How leadership development Powers success. Center for Creative Leadership. https://www.ccl.org/articles/white-papers/driving-performance-development-success/
5 Stawiski, S. (2024). Driving Performance: How leadership development Powers success. Center for Creative Leadership. https://www.ccl.org/articles/white-papers/driving-performance-development-success/
6 Stawiski, S. (2024). Driving Performance: How leadership development Powers success. Center for Creative Leadership. https://www.ccl.org/articles/white-papers/driving-performance-development-success/
7 Tenney, M. (2022, August 2). Why a learning culture is so important for success. Business Leadership Today. https://businessleadershiptoday.com/why-is-a-learning-culture-important
8 Hultman, K. (2020). Building a Culture of Employee Optimization. Organization Development Journal, 38(2), 35–48.
9 Hultman, K. (2020). Building a Culture of Employee Optimization. Organization Development Journal, 38(2), 35–48.
10 Bailey, C. (Catherine T., Delbridge, R., Alfes, K., Shantz, A., & Soane, E. (2014). Employee engagement in theory and practice. Routledge.
11 To keep employees, focus on career advancement. (2023). MIT Sloan https://mitsloan.mit.edu/ideas-made-to-matter/to-keep-employees-focus-career-advancement
12 To keep employees, focus on career advancement. (2023). MIT Sloan https://mitsloan.mit.edu/ideas-made-to-matter/to-keep-employees-focus-career-advancement
13 To keep employees, focus on career advancement. (2023). MIT Sloan https://mitsloan.mit.edu/ideas-made-to-matter/to-keep-employees-focus-career-advancement
14 McAdams, J. (1996). The reward plan advantage : a manager’s guide to improving business performance through people (1st ed.). Jossey-Bass Publishers.