What Is A Performance Management Plan?


What Is A Performance Management Plan? 

Performance management plans are used by a supervisor or manager to identify areas of improvement by an employee. A performance management plan will also outline the required action items for the supervisor to use in order to meet the desired benchmarks for the employer.

A performance management plan is likely to be used when:

  • you would like to communicate the purpose of a Performance Management Plan;
  • you need to communicate areas of improvement to an employee;
  • an employee is not meeting the expectations of their role and needs further guidance on these;
  • you want a written record of the actions an employee needs to take to satisfactorily perform their role; or
  • a written record of the performance management process is needed.

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Key Components of A Performance Management Plan

In order to be legally compliant, it is important to wrap your head around the key components that should be mentioned when drafting a performance management plan.

Below are some key components that you should ensure to include.

Purpose of The Performance Management Plan

The purpose is likely to outline the overarching goal the employer wants to achieve when putting the plan into use. Purposes may include to employee and review period details, the necessity to monitor employees, or assess their overall performance.

Areas of Improvement Identified and Actions Needed

A plan will also have a section dedicated to areas of improvement which have been identified by the employer, and the actions needed to be imposed on the employee to rectify these areas of improvement.

Key Expectations of Employee’s Role

The document will also have clear and explicit descriptions of what the expectations are from the employee. This can vary depending on the job, however examples may include specific financial targets they must meet, number of output they must achieve or overall milestones that must be met.

Outcome of Performance Management Plan

Employers will also include a section framed around the outcome of implementation of the performance plan on the employee. This may include discussion of whether or not the employer feels there is a requirement for improvement or areas in which the employee should perfect as a prerequisite to achieve more in the future. Other examples may include the verdict that the employee is actually over-performing and should take on more tasks.

Common Mistakes to Avoid

Unclear Performance Expectations

Not clearly defining or outline performance the expectations and objectives you have as an employer can lead to uncertainty for the employee. It is vital employees have a clear understanding of what their own expectations are so that they are able to achieve them whilst working. Without communicating these expectations, employees are unlikely to do well in the performance management plan.

Inadequate Communication and Feedback

Central to implementing a performance management plan is the communication of feedback throughout the performance management plan process. Without ongoing dialogue between managers and employees, issues may go unaddressed until formal evaluations, leading to missed opportunities for improvement and growth. Providing timely, constructive feedback enables employees to course-correct and align their performance with expectations, fostering a culture of continuous improvement and accountability.

Overlooking Employee Development and Recognition

Not allowing opportunities for skill-building, career advancement, and recognition of achievements can lead to disengagement and turnover. You should ensure you build a work environment that orbits around employee satisfaction as it is likely employees will be more driven to achieve their own goals. Incorporating development goals, training opportunities, and regular recognition into the performance management plan reinforces a culture of learning, growth, and appreciation, enhancing employee satisfaction and retention.

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    Performance Management Plan vs Performance Management Policy

    You may be wondering what the difference between a performance management plan and a performance management policy is. There is a difference between the two.

    A performance management plan will be used as a guideline by employers to monitor their employees in regards to how well they are performing or if they are underperforming. It is a proactive and planned mechanism utilised by employers to manage if extra tasks are needed, larger milestones are required, or is any adjustments should be made.

    A performance management policy deals will the policies and procedures businesses will follow in relation to employee performance management. A performance management policy will clarify how businesses manage their performance reviews, unsatisfactory performance and employee progression. Essentially, a performance management policy will provide the framework for performance management plans and how they are streamlined.


    In conclusion, a performance management plan serves as a vital tool for supervisors and managers to identify areas of improvement in employee performance. It outlines actionable steps necessary to meet desired benchmarks, crucial for communication, guidance, and record-keeping. Avoiding common pitfalls like unclear expectations and inadequate feedback ensures effectiveness and fosters a culture of growth. Remember, distinguishing between a performance management plan and policy clarifies roles and streamlines processes, essential for organizational success.

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