Performance Management: What Good Looks Like in a Growing Business

Performance management works when people know what is expected of them, managers address progress and problems early, and performance reviews are part of an ongoing conversation rather than a once-a-year event. For a growing business, the strongest performance management process is usually simple: clear expectations, regular feedback, good manager judgement, useful records, and a fair route for dealing with problems when informal conversations are no longer enough.

The commercial consequence is easy to recognise. When employee performance is discussed properly, you can correct problems earlier, develop strong people faster, make better promotion and reward decisions, and give managers a consistent way to lead. When the process exists mainly as an annual form, difficult conversations tend to happen late, good performance can go unrecognised, and managers start handling similar situations in very different ways.

The CIPD describes performance management as creating a culture that encourages continuous improvement in people’s skills, behaviours and contribution to the organisation. Its current guidance also reflects a broader shift away from relying heavily on annual appraisals and towards regular performance conversations.

That distinction matters. A performance appraisal is an event. Performance management is what happens between the events.

What is performance management in practice?

Performance management is the way you set expectations, monitor employee performance, give feedback, support development, recognise contribution, and address concerns. It is a continuing management responsibility rather than a form that HR asks people to complete once or twice a year.

A good performance management process usually connects five things: what the employee is responsible for, what good performance looks like, how progress will be discussed, what support or development the employee needs, and what happens when performance remains below the required standard.

The process should also connect individual contribution to the priorities of the organisation. Someone can be extremely busy and still be working on the wrong things. Equally, someone can hit a numerical target while causing problems elsewhere through poor behaviour, weak collaboration, or decisions that create additional work for colleagues.

That is why performance management needs judgement. Measures are useful, but numbers alone rarely tell you everything you need to know about performance.

The CIPD includes objective setting, performance ratings, performance reviews, feedback, Learning + Development, and performance-related pay among the tools organisations may use when managing performance. The right combination depends on the organisation rather than on adopting every available tool.

For a business that is growing, we would normally start with a more practical question: can every employee explain what good performance in their role looks like, and can every manager explain how they know whether it is happening? If the answers differ significantly, redesigning the appraisal form is unlikely to fix the real issue.

Why does performance management become harder as a business grows?

Performance management becomes harder as organisations grow because expectations that once lived in the founder’s head have to become clear enough for other managers to apply consistently.

At 15 people, the founder may know what almost everyone is working on, problems surface naturally and feedback happens across a desk.

At 50, 100 or 200 people, that closeness disappears. There are more managers, different functions, hybrid working arrangements, specialist roles, and competing priorities. Two employees doing comparable jobs can have completely different experiences depending on who manages them.

This is usually where a performance management process starts earning its place. The objective is not to create more HR administration. It is to make good management repeatable as the organisation becomes too large to depend on informal knowledge.

We regularly see the difference manager confidence makes here. One manager will address a concern after the second missed deadline, explain the gap clearly, agree what needs to change, and follow up. Another will compensate for the problem for four months before raising it because they are worried that mentioning performance will immediately turn the situation into a formal HR process.

The underlying employee performance issue may be identical. The organisational experience is completely different. A good performance management framework gives both managers enough structure to act earlier while preserving the judgement to treat people and situations individually.

What should a good performance management process include?

A good performance management process should make expectations, feedback, development, evidence, and escalation clear without turning everyday management into an administrative exercise. For most growing businesses, we would look at six connected components.

1. Clear expectations from the beginning

Performance management starts before the first performance review. A person needs to understand what they have been hired to achieve, which responsibilities matter most, what standards apply to the role, and how their contribution connects to the wider business.

Job descriptions help, but they are rarely enough. They describe a role. They do not always describe what successful performance looks like six months after somebody joins. Objectives can close that gap when they are specific and proportionate.

Acas advises that objectives should be specific, measurable, achievable, relevant, and time-bound. Its current performance management guidance also stresses that objectives should reflect an employee’s normal duties and workload, while potentially stretching them in appropriate areas.

The exact format matters less than the quality of the conversation. “Improve client relationships” leaves two people with potentially different interpretations of success. “Take responsibility for the monthly client review, identify delivery risks before the meeting, and agree actions with the relevant lead for the next three months” gives both parties something much clearer to work with.

2. Regular conversations about employee performance

Employee performance should not first become a discussion when a formal performance review appears in the diary. Managers need opportunities to discuss priorities, progress, feedback, obstacles, development, and concerns during the year. The frequency will depend on the role and business, but the principle is consistent: the conversation should happen close enough to the work for the feedback to still be useful.

Acas recommends informal performance discussions alongside formal reviews, including regular feedback, coaching, check-ins, and one-to-one conversations.

That does not mean every one-to-one becomes a performance meeting. A short conversation can be enough: “The last two reports have arrived after the client deadline. I need them with me by midday the day before so we have time to review them. Is anything preventing that from happening?”

The manager has identified the gap, stated the required standard, and created space for the employee to explain anything relevant. Compare that with waiting until December and adding “time management needs improvement” to an appraisal form. One gives the employee a chance to change something. The other records that something happened months ago.

3. Performance reviews that have a clear purpose

Performance reviews remain useful when everyone understands what the conversation is for. The CIPD notes that structured performance reviews still have an important place within the performance management cycle, even as organisations place greater emphasis on regular conversations rather than depending entirely on an annual appraisal.

A performance review should create a useful point of reflection. It can bring together objectives, contribution, feedback, development, career direction, and priorities for the next period. It should not become the only occasion on which any of those subjects are discussed.

In practice, a strong review should contain very few surprises. If an employee discovers during their annual performance appraisal that their manager has been concerned about their work for six months, the review process has exposed a management problem rather than solved a performance problem.

Formal performance reviews can still provide valuable structure. They give managers and employees protected time to look beyond this week’s workload and discuss patterns that daily conversations can miss. The balance is what matters: regular conversations for course correction, structured reviews for reflection and direction.

What can the BBC teach us about performance reviews?

The BBC provides a useful UK example because its performance management redesign started with a problem many growing organisations will recognise: the process technically existed, but the experience was inconsistent.

According to a CIPD case study published in 2023, the BBC had a flexible annual appraisal system in 2020. It worked well in some parts of the organisation, but performance was not consistently part of everyday conversation. The BBC wanted a system that supported high performance and employee development rather than simply increasing completion of appraisal activity.

The important decision was not to solve low engagement by requiring people to complete the existing process more often. The team recognised the risk of doing the same thing badly more frequently.

Instead, the BBC introduced six-monthly conversations between employees and team leaders centred on three areas: job goals, performance feedback, and career development. Employees were encouraged to take greater responsibility for setting goals, discussions looked more closely at recent successes and current challenges, and standardised performance ratings were removed.

The CIPD reports that 85 per cent of employees participated in the first round of the new approach, rising to 91 per cent later. Employee survey results also showed increases in people reporting clear goals, useful feedback, and career development discussions.

The lesson for a smaller organisation is not that you should copy the BBC’s six-monthly model or remove ratings. It is that process frequency is not a substitute for conversation quality. Before adding another performance review, ask whether the current conversations are worth having.

How often should performance reviews happen?

There is no single review frequency that works for every organisation. Formal performance reviews may happen annually, six-monthly, or quarterly, while feedback and performance conversations should happen throughout the year.

Acas recommends regular performance reviews for employees and suggests at least once a year as a sensible baseline, alongside ongoing informal conversations.

For a growing business, we would decide frequency by looking at the work. A salesperson operating against monthly targets may need a different rhythm from a senior creative leader whose contribution becomes clearer over a longer period. A new starter in probation needs closer conversations than an experienced employee with a stable role and strong track record.

The mistake in the process is usually trying to make the calendar carry too much responsibility. Four quarterly performance reviews will not improve performance if the manager avoids the difficult issue in all four.

One formal annual performance appraisal can still add value if there are good one-to-ones, clear goals, direct feedback, and development conversations happening throughout the year. The question is not simply, “How many reviews should we have?” It is: what conversations need to happen, and which of them genuinely benefit from formal structure?

What makes performance feedback useful?

Useful performance feedback is specific enough for someone to understand what happened, why it matters, and what they should continue or change.

“Great job” may be encouraging, but it gives the employee little information. “You kept the client focused on the decision when the meeting started moving into implementation detail. That meant we left with approval rather than another meeting” explains the behaviour and its value.

The same principle applies when performance needs to improve. “You need to be more commercial” is difficult to act on. “Before recommending additional work to a client, I need you to explain the cost, expected outcome, and why it is a priority now” creates a visible standard.

This is where managers often need more support than the performance management policy assumes. Giving useful feedback requires observation, judgement, clarity, and enough confidence to say something when it matters. A beautifully written performance management process cannot compensate for managers who do not know how to have the conversation.

For that reason, we usually look at manager capability alongside process design. If most managers cannot use the system confidently, the system is unfinished.

How should you deal with underperformance?

Underperformance should normally be addressed as soon as there is a clear gap between the required standard and what the employee is delivering.

The first task is understanding the gap accurately. Is the expectation clear? Is the employee capable of meeting it? Have they received the right training? Is workload affecting delivery? Has something changed? Is the concern actually about performance, or is it conduct? Those questions matter because the response changes with the cause.

A manager can still be direct without deciding the explanation in advance. A useful first conversation identifies the specific concern, gives examples, states the standard required, listens to the employee’s response, agrees what needs to happen next, and sets a time to review progress.

Good documentation matters too. Acas advises employers to keep written records of performance review discussions and share them with the employee afterwards.

In our experience, the value of documentation is often misunderstood. The purpose is not to create a file against somebody from the moment a concern appears. A clear record helps both sides remember what was discussed, what support was agreed, what standard is expected, and when progress will be reviewed. If the employee improves, the record shows the process worked. If they do not, the manager is not trying to reconstruct three months of conversations from memory.

What can Novartis teach us about redesigning performance management?

Novartis offers a different lesson: test assumptions before redesigning a performance management process.

A CIPD case study describes how, after more than 30,000 employees participated in a 2018 crowdsourcing event, Novartis tested a new approach to performance management with more than 16,000 employees across eight countries and seven business units. The organisation used employee data and external evidence to examine objectives, feedback, recognition, and reward rather than simply replacing one appraisal form with another.

The results were strong enough to influence the final design. Fewer than 5 per cent of participants wanted to return to the previous system. In the post-experiment results reported by the CIPD, agreement increased by 33 per cent on contribution and objectives, 29 per cent on receiving quality developmental feedback, and more than 22 per cent on timely and transparent recognition.

A business of 80 people clearly does not need a 16,000-person trial. The principle still travels well. Before changing your performance management process, find out what is actually wrong with the current one.

You might discover that employees understand the process but managers lack confidence. You might find that managers have good conversations but objectives are inconsistent. You might find that performance reviews are working, while the connection between performance and career development is weak. Those are three different problems. They need three different responses.

Should you get rid of annual performance appraisals?

Removing annual performance appraisals is not automatically more modern or more effective. The better question is whether the appraisal is doing something useful that is not already happening elsewhere.

The CIPD describes a shift towards more regular and flexible performance conversations, but it also states that structured performance reviews remain an important part of the performance management cycle.

Adobe is one of the better-known examples of an organisation that moved away from its traditional annual review system. Adobe says it replaced annual reviews and ratings with its Check-in approach in 2012 after employees found the previous system cumbersome and bureaucratic. The model moved towards ongoing conversations between managers and employees about goals, performance, development, and feedback.

Adobe later added greater digital structure because employee feedback showed that frequent conversations still needed a consistent place for goals, progress, career discussions, and feedback to be recorded.

That second stage is particularly interesting. Removing bureaucracy does not mean removing structure. A performance management process can become so informal that managers and employees no longer know what has been agreed. Conversely, it can become so structured that completing the process matters more than improving performance. The aim sits between those extremes.

How do you know whether your performance management process is working?

A performance management process is working when it improves the quality and consistency of management, not simply when the organisation records a high completion rate for performance reviews.

We would look at whether employees can explain their current priorities, whether managers can describe what good employee performance looks like, whether concerns are raised early, whether employees receive useful feedback during the year, and whether performance discussions connect to development and career progression.

We would also check whether managers document important conversations consistently, whether comparable performance issues are handled broadly consistently across teams, whether strong performers can see how to progress, and whether managers can distinguish an informal performance concern from the point where a formal capability process may be required.

Completion data can still help. The BBC example shows that review participation can be a useful indicator when combined with evidence about goal clarity, feedback, and development conversations. What we would avoid is treating a 96 per cent appraisal completion rate as proof that performance management is effective. It proves that people completed the appraisal. You still need to know whether anything useful happened in the room.

Where does performance management commonly go wrong?

Performance management tends to become ineffective when the organisation designs a process that assumes good management will happen automatically.

Delayed feedback is a common problem, with managers waiting for the performance review because it feels like the authorised place to mention a concern; by then, the employee may reasonably ask why nobody said anything earlier. Unclear standards create a similar difficulty when managers know intuitively that something is not good enough but cannot describe the expected outcome, making the conversation feel personal when it should be about work. Processes can also become overengineered, with organisations adding ratings, competency grids, calibration meetings, forms, objectives, review cycles, and dashboards before deciding what managers actually need to do differently, while removing all structure in the name of continuous feedback can create inconsistency, particularly as the business grows.

We also see problems when organisations treat performance management and formal capability as though they are the same thing. Most performance management should never become a formal capability process. Managers should be setting expectations, coaching, discussing priorities, and giving feedback every week without employees feeling that every conversation is disciplinary.

Formal processes have a place when concerns persist or become serious. Everyday management should create plenty of opportunity for performance to improve before you reach that point.

What should you change first?

If your performance management process feels heavier than the value it creates, start with the management conversation rather than the form. We would usually work through the following order:

1. Define expectations: Make sure managers and employees can describe what successful performance looks like.

2. Review objectives: Remove goals that are vague, outdated, duplicated, or disconnected from current priorities.

3. Set a sensible conversation rhythm: Decide what belongs in regular one-to-ones and what belongs in structured performance reviews.

4. Develop managers: Give them practical support on feedback, difficult conversations, objective setting, documentation, and development discussions.

5. Clarify escalation: Managers should know when an informal concern needs HR input or a formal capability process.

6. Simplify the paperwork: Record what matters and remove fields that nobody uses to make a decision.

7. Review the evidence: Ask employees and managers whether the process is helping them perform better, then adjust it.

The order matters. Changing the form first is attractive because it is visible and relatively easy. Changing the quality of management takes more work, but that is normally where the commercial return sits.

How JourneyHR can help

Performance management often reaches us as a process question: should reviews be quarterly, do you need ratings, what should the form include, or how should objectives be written? We start slightly earlier.

We look at what you need the performance management process to achieve, where managers are currently finding it difficult, how employee performance is being discussed now, and how much structure is appropriate for your size and stage of growth.

That might lead to a new performance review framework. It might lead to clearer objectives, manager training, better one-to-ones, a revised capability process, or a clearer connection between performance and career development.

Sometimes the process itself is broadly sound and the bigger opportunity is manager confidence. In that situation, replacing the paperwork can create work without changing much. Practical Management Development can make a greater difference because it gives managers the judgement and language to use the process properly.

Where underperformance has already become difficult, we can also work with you on the employee relations side: helping you establish the facts, distinguish informal management from a formal capability process, support the manager, and make sure the next steps are fair and properly documented.

The aim is a performance management process your managers can actually use and your employees can understand.

Get in touch to talk through your performance management approach with JourneyHR

Final thought

Good performance management should make work clearer. People should know what is expected, where they stand, what they are doing well, what needs to change, and where they can develop. Managers should have enough structure to make fair decisions without spending their time administering a process.

If your performance appraisal is doing all the work, there is probably too much happening once a year and not enough happening in between.

FAQs

What is performance management?

Performance management is the ongoing process of setting expectations, discussing employee performance, giving feedback, supporting development, recognising contribution, and addressing concerns. It includes tools such as objectives and performance reviews, but it is broader than an annual appraisal. The CIPD describes it as part of creating continuous improvement in people’s skills, behaviours, and contribution to the organisation.

What is the difference between performance management and a performance appraisal?

A performance appraisal or performance review is a structured conversation held at a particular point in time. Performance management is the wider, continuing process around it. It includes expectations, objectives, regular feedback, coaching, development, recognition, and conversations about performance concerns. A good appraisal supports performance management, but an annual meeting cannot replace good management throughout the year.

How often should employees have performance reviews?

Formal performance reviews should happen at a frequency that suits the organisation and the type of work. Acas recommends holding them regularly and suggests at least annually, while also encouraging informal performance conversations throughout the year. Many organisations choose six-monthly or quarterly reviews, but more meetings do not automatically create better performance management. The quality and timing of feedback matter more than review frequency alone.

What should be included in a performance management process?

A practical performance management process should cover clear expectations, objectives, regular feedback, structured performance reviews, development, documentation, and a route for addressing underperformance. It should also tell managers when they can handle something informally and when HR involvement or a formal capability process may be appropriate. The process should be proportionate enough that managers use it consistently rather than seeing it as additional administration.

How can you improve performance management in a growing business?

Start by checking whether employees understand what good performance looks like and whether managers have the confidence to discuss it. Then review objectives, one-to-ones, performance reviews, documentation, development, and escalation. Do not assume the appraisal form is the problem. Evidence from organisations including the BBC shows that improving the quality and purpose of performance conversations can matter more than simply requiring them to happen more frequently.