Best Practices in Performance Management

18 Best Practices in Performance Management for Start-Ups [With Examples]

Best Practices in Performance Management For Start-Ups

Implementing correct Performance Management practices inside an organization can be difficult. In this blog, we have shared 18 best practices in Performance Management followed across the globe by successful startups.

Increasingly, startups are understanding that in this hypergrowth environment the performance review systems of the 20th-century won’t work and it has to be more complete and continuous to stand strong in this competitive market.

According to research done by Forbes old school methods of performance reviews like yearly appraisals, are outdated and have a negative impact on employee engagement and motivation. In light of this, more startups are focusing on performance management and looking for best practices of performance management relevant to a hypergrowth environment.

In this blog, we have listed 18 practices of performance management relevant to startups. 

But before let’s understand a few basics of performance management.

What is Performance Management?

Best Practices in Performance Management

‘Performance Management refers to the methods and techniques that a company adopts to assess and improve the productivity of employees. It focuses on creating an environment that can bring the best out of the people.’

This system is especially useful in helping start-ups to assess their work culture. It can mean reviewing and revising practices such as selection and training programs. It may also be beneficial in suggesting improvements, as per the desired results. 

Good Performance Management practices help in bringing out the true potential of an employee. It may also suggest measures to sustain similar performances in the future. 

By following these practices the Managers or Supervisors can frame standardized protocols. These protocols can be used as workbooks while dealing with employees. 

The work pattern of a company can be improved using Performance Management practices. This can help in making better decisions. Thus, making tasks like Project allotment, setting deadlines, and achieving goals, easier. 

The Performance Management Cycle is traditionally an all-year-long process and has four steps. They are planning, monitoring, developing, analyzing, and rewarding.

Best Practices in Performance Management

5 Reasons why Performance Management system is important

When organizations successfully engage their customers and their employees, they experience a 240% boost in performance-related business outcomes compared with an organization with neither engaged employees nor engaged customers. Gallup

So it is clearly visible that more and more companies are adopting performance management for employee appraisals and reviews.

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Benefits of performance management


      • Understanding the needs of employees: Regular checks can help to identify fundamental issues. A manager can easily understand if an employee needs extra support or just a push to work better.

      • Boosts performance & engagement: Regular interactions with employees make them feel valued. This helps boost their regular work performances as well as their engagement and devotion towards the Company.

      • Developing bond: Communication is the soul of any relationship. The routine discussions help develop a connection between an employee and his superiors. This encourages the employees to accept their mistakes, face their fears, and improve their performance.

      • Reducing differences: Conflict management inside a start-up is very crucial. It helps to address and resolve the issues at an initial stage. Regular group discussions help employees to understand and respect the perspectives of others. This reduces the frequency of differences. 

      • Quick redressal: Routine tracking can help pinpoint the issues, as well as their source and cause. This makes problem-solving very easy.

    Know the relevance of the performance management bell curve method

    18 best performance management practices 

    Below are 18 best Performance Management practices to be followed by any start-up for better results. 

    1Identification of purpose

    For the best performance management practices, it is important to identify the desired final outcome. The managers must identify what they want to achieve through these practices.

    This will provide a clear direction to proceed. If the goal is to increase productivity, consistently hard-working employees can be recognized. Similarly, if the goal is to develop leaders, the employee with maximum team spirit should be appreciated and presented as an example.

    2Supple goals

    It is difficult to differentiate goal setting from performance expectations.

    The goals should be specific and measurable yet, supple and flexible. Setting smart goals is crucial. Instead of one big goal, it is better to break it into small tasks. This also makes the tracking process easier. 

    3Objective & Key Results (OKRs)

    Employees should be asked to set their own OKRs. Post that there should be an open discussion regarding the objective and key results. Feedback from the employees must also be valued and if possible included as a part of goal setting. 

    4Assigning explicit roles

    Having clarity about the work and the designated responsibility is very much important. While setting the goal the role of every member of the team should be described explicitly. There should be no room for doubt.

    5Changing goals as per performance

    A performance plan must go alongside the work plan. Having a big goal broken into small tasks has great advantages. It gives the leverage of revising the terms as per the need of the project and employees.

    6Regular interactions and discussions

    18 Best Practices in Performance Management For Start-Ups

    Discussing progress and difficulties in real-time help in achieving better performance. Regularly scheduled discussions are important to make sure that everything goes as per the plan. 

    7Routine checks

    Reviewing performances through regular use of metrics and analytics is important. It assures that the employee understands his role in the project and is able to perform up to his potential.

    8Actionable feedback

    Providing random feedback can confuse the employees. The feedback must be on-time, clear & descriptive, and practically applicable. It is the responsibility of the senior to resolve the issues with minimum hassle. 

    9SOP or guidelines for improvement

    Standardized protocols can be framed to deal with the frequently encountered problems. The guidelines can be structured based on research and experiments. The results of previous Performance Management practices can also be used.

    10Regular Training Sessions

    Training is not only meant for employees. The managers also need to learn new methods of management. Therefore, regular training is vital for the overall improved performance of your start-up. The gap between training sessions should be decided considering the requirements of the employees.

    11Multiple feedback sources

    Multiple feedback sources

    Instead of relying on a single source for feedback, it is better to have multiple sources. The different sources can be performance management software, feedback from seniors, peer reviews, etc.

    These help in a better understanding of challenges and get a broader outlook about the performance of an employee. Also, confidentiality must be maintained throughout the process.

    Further, feedback cannot just be one way. There must be 360° feedback that should be viewed under a holistic lens.

    12Moving to another side of the table

    A problem must also be analyzed from the perspective of the employee dealing with it. There can be several external factors responsible for a problem. Doing this helps in knowing the actual reason for the problem, instead of blaming it on a person. 

    13Open & frequent rewards

    An employee must always know that he is recognized for his hard work. Also, his work must be presented as an example in front of other employees. Rewarding the outstanding performers openly and frequently helps in setting benchmarks for others to follow.

    14Motivating low performers

    It is equally important to motivate low performers. It is better to avoid discussing mistakes publicly. Also, a gap should be maintained between pointing out professional errors and finding personal flaws.

    15Re-evaluation of targets using KPIs

    The key performance indicators can be used to re-evaluate the targets assigned to an employee. For example, if the work profile of an employee includes getting a targeted number of customers, his KPI can be the “number of customers added per month”.

    A book by David Parmenter named Key Performance Indicators: Developing, Implementing, and Using Winning KPIs talks about a six-stage implementation plan for the selection of befitting KPIs.

    16Building Trust

    The employees must trust their company for its honest evaluation processes. This can be done by making the employees part of the Performance Management plans.

    It should be clear that each one of them is an indispensable part of the process. 

    This would help make the Performance Management process more effective and reliable. 

    17Inviting opinions

    The outcomes of the analysis & results of Performance Management must be shared and discussed with the employees. It is equally crucial to invite their opinions and take them into account. This will help them understand their needs and develop better practices. 

    18Performance Management Software

    There are performance management softwares available in the market that will help you ease your Performance Management process through their features like goal setting, goal review, surveys, and feedback processes. 

    5 real-world examples of best practices in performance management

    best examples of Performance Management

    The Performance Management practices may appear easier said than done. Yet there are companies that are doing a wonderful job. Let us see a few examples from the real world:


    The well-reputed software company “Valve Corporation” is also known for its Performance Management system. ‘Kudos’ a Performance Management tool released by the company helps employees to recognize each other.

    The company focuses on goal settings, employee recognition, and employee feedback as parameters for Performance Management. ‘Kudos’ allows the employees to leave their ideas on the software project as notes. These notes are later read by team leads who, if needed, may modify the project plan.

    2General Electric

    The company is on 8th rank in the Fortune 500 list. They have been maintaining a formal Performance Management team for decades. The company expects the managers to guide and coach the employees. Although the meeting is held once every year, the framework is flexible and the goals are supple. Further, the company is also in the process of launching its Performance Management app.


    It is one of the leading and most reputed pharmaceutical companies in the world. They have employed some of the most amazing Performance Management practices. This includes job sharing, family assistance perks, etc. The company sticks closely to the “trust” theme. The company believes that a healthy and strong partnership must exist between employees and superiors. 


    Google is known to have the most creative and informal set of techniques for Performance Management. They actually use OKRs methodology to help their employees. The company continuously works to guide its employees toward achieving goals. 

    John Doerr has quoted that “It took a couple of iterations, but we figured out the right cadence and model, and to this day [at Google], Larry [co-founder of Google and now CEO of Alphabet] writes his own personal OKRs and Google’s corporate OKRs every quarter.”


    For years Facebook has maintained its number one position in the list of ‘world’s best places to work.’ Alongside the regular manager-to-employee review, Facebook also conducts peer-to-peer and employee-to-manager reviews.

    Further, internal software for Performance Management allows the employees and managers to give and receive real-time feedback.


    Every employee wants to give their best. It is majorly the responsibility of the management to help them discover their true potential. This can be accomplished by incorporating the Best Practices in Performance Management mentioned above in your organization. The right mindset of management combined with the right set of technology can help achieve desired goals. 

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    18 Best Practices in Performance Management for Start-Ups [With Examples]