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Performance Management – A Link to Employee Engagement

Strong Connections Link Employee Engagement, Retention and Performance Management.

Performance Management – A Link to Employee Engagement

Strong Connections Link Employee Engagement, Retention and Performance Management.

The connections between Employee Engagement, Retention and Performance Management are well documented, but not necessarily well understood by most organisations. The method of implementation of any Performance Management initiative needs to consider each element to ensure that the initiative will achieve the desired Engagement and Retention outcomes sought by the business.

While HR can facilitate these outcomes, the real driver is the Line Manager – they are the ones that need to do most of the work with their staff.


Some of the most critical factors that contribute to Engagement include:

  1. ‍Clear Mission for the employee (What do you want me to do?)
  2. Why is what you are asking the employee to do important? (How am I connected to the mission of the organisation?)
  3. How will I know if I am achieving the mission as you wanted me to? (Give me some feedback)

The process of Performance Management provides a framework to drive Engagement and Retention of valuable employees. The employee and manager should regularly discuss objectives (therefore providing a mission for the employee & the importance), the manager should provide feedback on performance (is the employee achieving the required outcome) and the employee should then be more engaged. A number of studies suggest that higher Engagement leads to better on the job performance, lower staff turnover & associated expenses, as well as management time in retraining replacement staff.

Or at least, this is the theory.

The real question to ask is what goes wrong? The contribution from the HR department needs to be primarily focused at keeping the initiative on track, not in doing the line managers job.

Following is an outline of the major failings in implementing a Performance Management framework.
a) Managers are not clear on why Performance Management is important, so they just don’t do it.

Without an understanding of the relationship between Performance Management, Engagement, Retention and the associated issues, Managers see Performance Management as “another thing I have to do”. Managers need to be very clear of the consequences for conducting or not conducting Performance Management, the associated expenses and the long term impacts on the business unit

When conducted correctly, Performance Management increases Engagement, reduces employee turnover and drives outcomes for the business.


The HR team can educate managers as part of a Performance Management Training program. Very few managers have been formally trained on the importance of Performance Management, the link between Performance Management, Engagement and employee turnover. No Australian business school teaches this subject.

b) Managers set objectives but fail to provide the employee with context for the mission.

In this scenario, managers set objectives but do not link these objectives to the business unit strategy or the organisational strategy. Employees are not clear on how their mission (summary of objectives) is important to the organisation, therefore engagement is still low and the problems associated with low engagement still exist. They don’t have any context or meaning for their daily contribution of effort.

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