Performance Enablement is the New Performance Management
Performance management must be reimagined to capture the full value of the workforce: to promote performance that is future-focused and organized around the principles of helping employees to continuously improve and enabling businesses to achieve their strategic objectives. Traditional performance management systems often fall short of meeting today’s business demands and employee expectations. They typically focus on annual or biannual evaluations, and rely on outdated metrics and incomplete data, leading to biased assessments that don’t align with the fast-paced, cross-functional nature of modern work.
There’s another disconnect, too: while leaders may view their processes positively, nearly half of employees feel these systems are failing them. According to Betterworks’ 2024 State of Performance Enablement report, 44% of employees feel their performance management systems are failing, compared to just 12% of executives and HR professionals. This gap highlights the need for inclusive, flexible strategies that empower employees and drive real impact in their work lives.
Why Performance Management Must Evolve
HR leaders are navigating hybrid work, generational shifts, geographically dispersed teams, and complex reporting structures. They are also managing shifting employee expectations, increasing demands on managers, and strategic business needs that require them to rethink how they enable workforce performance. In this environment, organizations must adopt more agile, data-driven performance management to meet these changing expectations. This requires real-time insights and continuous feedback, empowering employees and driving business success.
Putting Employees at the Center of Performance Management
Organizational success today hinges on aligning workforces with organizational objectives through agile individual and team goal-setting, ensuring that skills are matched to business needs, and enabling a talent pipeline by upskilling employees and providing pathways for internal mobility. Empowering employees to achieve performance and career development goals through meaningful work and in a positive, transparent culture fosters continual growth for both individuals and the business. Modern performance management processes enable this — and provide consumer-grade experiences that employees expect: easy-to-use tools that integrate seamlessly into their daily workflows, making performance management efficient, valuable, and frictionless.
Employees seek performance appraisals that promote continuous improvement rather than backward-looking annual or biannual reviews plagued by biases like recency and subjectivity. They want to set meaningful goals that reflect cross-functional collaboration and can be adjusted as needed to align with the evolving needs of the business. They expect to be measured by how well they meet relevant goals, rather than outdated ones.
Yet, according to the Gallup survey, 47% of employees don’t know what is expected of them at work.1 Employees want their managers to be relationship-builders and troubleshooters, capable of removing bottlenecks and enabling performance. They desire feedback and coaching to improve their performance continuously.
Traditional performance management simply can’t meet the expectations of today’s workforce or the realities of organizations’ strategic needs. Holding onto outdated processes is like working with one hand tied behind your back. Fortunately, modern performance management offers a flexible, forward-looking approach designed for organizations committed to innovation, agility, and high performance.
What is Modern Performance Management?
Modern performance management —essentially performance enablement — is a continuous process in which managers and employees discuss, evaluate, and track performance and professional growth to improve an employee’s experience, performance outcomes, and development, and align them with the organization’s strategic goals to drive better business results. It incorporates coaching from managers, peer feedback, and goal achievement to increase engagement and retention.
The Differences Between Performance Management and Performance Enablement
Traditional performance management is compliance-driven and backward-looking, focusing on assessing employee performance annually or biannually through standardized ratings. Top-down in nature, its primary purpose is to document performance for decisions around promotions, compensation, and terminations.
Many organizations are evolving this approach, transforming performance management to incorporate employee voices and emphasize both performance and development.
Performance enablement—also known as modern performance management—flips the script on traditional performance management, transforming it into a proactive, employee-centered, and forward-looking approach. It enables all employees to set and adjust goals to maintain alignment with their organization’s objectives. Performance enablement also shifts away from hierarchical control, empowering employees to align their own goals with business priorities, and driving creativity, commitment, and full potential.
Managers focus on coaching and enabling rather than just evaluating. Performance enablement becomes the engine for engagement, productivity, and greater satisfaction, often transforming organizational culture.
Latest Performance Management Resources
Explore these resources to enhance your performance management strategies and drive better organizational outcomes.
Benefits of Modern Performance Management
The advantages of modern performance management are numerous and broad and include underlying sentiments that affect bigger metrics organizations typically measure, such as retention, engagement, and productivity. These are some of the key benefits of a performance management system:
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Boosted Confidence, Focus, and Resilience:
Employees enabled by their performance management system report 6%–21% higher levels of positive sentiments, such as optimism and resilience, and show significantly reduced stress, burnout, and distraction.2
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Stronger Trust:
When employees perceive their performance management as successful, they are twice as likely to trust their managers and four times more likely to trust HR and company leaders.2
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Better Manager Support:
Modern performance management equips managers with tools to facilitate regular performance and development conversations, strengthening relationships and ensuring unbiased, professional feedback and reviews.
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Enhanced Productivity:
Agile goal-setting, regular feedback, and fair reviews boost productivity. Alignment with company goals can lead to a 35% increase in efficiency, and those satisfied with performance conversations report 40% higher productivity.¹ Employees who find their reviews fair are 29% more productive than those who perceive bias.2
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Informed HR Decision-Making:
Modern performance management systems enable HR leaders to make informed, data-driven workforce decisions by collecting qualitative and quantitative data on an ongoing basis.
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Enhanced Belonging and Inclusion:
Those who receive effective performance management are twice as likely to feel they belong and are valued at work.2
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Improved Employee Engagement:
Continuous coaching, feedback, and recognition keep employees motivated and engaged — and engaged employees are more productive and committed to their roles. Up to 71% of employees who view their performance reviews as fair are engaged, compared to just 57% who don’t share this view.2
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Increased Retention Rates:
Engaged employees are more likely to stay, reducing turnover and recruitment costs. Those with positive performance conversations are 1.5 times more likely to enjoy working for their company, while employees with flexible goals are 83% more likely to stay.3
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Better Skills Development and Succession Planning:
Performance management helps uncover hidden skills, verify skill achievement, and promote skill mastery as part of an employee’s development plan. HR leaders can identify high-potential employees traditional approaches might otherwise overlook and gain a comprehensive view of workforce capabilities. Employees are three times more likely to receive support for building skills when their companies use a purpose-built performance management system integrated with an HCM system than with an HCM alone.4
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Greater Organizational Agility:
A robust performance management system helps organizations adapt to changing needs, allowing employees to align and adjust their goals to meet strategic objectives quickly.
2 2023 State of Performance Enablement report
Performance enablement is active and aspirational
Performance enablement is all about action and aspiration. Unlike traditional performance management, which passively measures goal completion, performance enablement actively involves employees in their growth. Modern performance management empowers employees to set and align their own goals with their team and company strategies, offering the autonomy they desire. A best practice is for employees to set three to four objectives per quarter, with at least one being aspirational. This approach fuels employees to stretch beyond their comfort zones and strive for their highest potential.
When employees are given the chance to define their own objectives, their commitment grows. Modern performance management helps employees discover their purpose and reach their potential within the company, leading to greater engagement and investment in their future with the organization.
By prioritizing growth and potential, modern performance management transforms the workplace into an environment where excellence isn’t just possible—it’s a shared goal.
Explore these related resources to deepen your understanding:
The Leading Way to Do Performance Ratings
The Ultimate Guide to Managing Employee Performance
The Pivotal Role of AI in Performance Management
Tackling Unconscious Bias in Performance Reviews
Stages of the traditional performance management cycle
Traditional performance management typically comprises the following steps:
Goal setting: At the beginning of the performance period, which is typically one year, managers and employees set objectives that align with organizational goals. Individual and team goals are often static. These set-and-forget goals can quickly become outdated as the organization’s needs shift to accommodate dynamic economic, market, and industry changes.
Mid-year review: Managers conduct a formal review midway through the performance period to assess past employee and team performance and sometimes adjust goals as necessary.
Annual performance review: At the end of the performance period, managers evaluate employee performance against the set goals, often using a rating or ranking system.
Feedback and documentation: Managers provide feedback to employees and document the performance review, which may influence decisions on compensation, promotions, and development plans.
These rigid stages often fail to capture the dynamic nature of work. They can lead to meaningless goals and delayed feedback, which may not accurately reflect current needs or performance.
Best Performance Management Approaches and Models
What comprises an effective modern performance management system?
Modern performance management is a continuous improvement process that is forward-looking, employee-centered, and transparent. It is characterized by these components.
Measurable and agile goals
Employees establish a combination of performance and development goals — committed and stretch goals — that are well-defined and measurable within the performance period, such as the quarter. Employees can adjust these goals as needed to reflect changes in their roles or in their team’s or organization’s direction. Clear goals are critical to a performance management process because they promote direction and purpose. When set by the employee, they provide autonomy, heighten engagement, and promote ownership and responsibility. Transparent goal-setting also creates accountability among employees.
Learn more about goal alignment and OKRs.
Regular and frequent manager-employee conversations
Effective, frequent, and meaningful conversations between employees and their managers about performance and development build trust and can promote higher productivity, alignment, and retention. Time and again, surveys have shown that employees crave more frequent and substantive guidance, support, and encouragement from managers. Employees who receive conversations and feedback are at least 3x more likely to feel they can perform their work well, 3.4x better able to grow their skills, and 3x more likely to see a path for internal career development according to our 2024 State of Performance Enablement report.
Learn more about meaningful conversations.
Ongoing coaching from managers
Managers who coach foster employee growth, engagement, and performance. Through guidance, support, and regular feedback, they empower team members to overcome challenges, develop new skills, and reach their full potential. This approach encourages open communication and creates a culture of continuous improvement, where employees feel valued and are motivated to contribute to the organization’s success.
Learn more about managers as coaches.
In-the-moment feedback
Continuous feedback from managers and peers is essential to fostering a culture of growth, accountability, and collaboration. Ongoing feedback provides real-time insights into performance, helping employees make quick adjustments, celebrate successes, and identify areas for improvement. This frequent, constructive feedback strengthens relationships, builds trust, and keeps everyone aligned with team and organizational goals.
Learn more about continuous feedback.
Skill-based development and succession planning
Modern performance management processes should help uncover hidden skills through qualitative and quantitative data extracted from goals, conversations, feedback, and recognition. Employees can also set development goals that include skill building in their performance management system, allowing them and their managers to track and monitor skill completion. Ideally, managers are able to validate employee skills to provide HR with transparency into the available skills of the workforce. Performance management systems that incorporate succession planning can automate otherwise manual, disjointed processes and surface non-obvious candidates for leadership and internal advancement.
Learn more about skill-based development.
Specific and timely employee recognition
Recognition from peers and managers are powerful motivators that drive performance, teamwork, and collaboration. Celebrating accomplishments reinforces company values and improves engagement and retention. Recent research from Gallup shows that employees who are “well-recognized” are 45% less likely to have left their company after two years. Formal rewards, such as bonuses tied to high performance, can be important components of an employee recognition strategy.5 Informal recognition, such as recognizing employees during a meeting or via a company-wide recognition program, is also a powerful way to help them feel valued and appreciated for their contributions and to encourage all employees to go above and beyond.
Learn more about employee recognition.
Regular performance reviews
More frequent and lighter-weight performance appraisals are often more effective and far less time-consuming than a single annual performance review, which often drains tremendous resources away from an organization at once. Regular and lighter-weight performance appraisals, such as quarterly reviews, provide timely and actionable insights that drive continuous improvement and development. Managers and employees can focus on progress toward goals, challenges faced, and opportunities for growth. This cadence helps employees stay aligned with team and organizational objectives, ensures that feedback is relevant and actionable, and enables quick course corrections.
Learn more about modern performance reviews.
Performance in the flow of work
Performance management in the flow of work is about providing employees with consumer-grade experiences that are intuitive and engaging enough to help employees develop good habits. Modern performance systems enable all employees to update goals and connect with managers and peers seamlessly and within the applications they use every day. This allows employees and managers to easily communicate, track progress, and share feedback, making performance discussions a consistent, meaningful part of the workflow. It also promotes a culture of ongoing growth and engagement, making performance management more efficient, relevant, and impactful.
Learn more about performance management in the flow of work.
AI to drive efficiency, quality, and reduce bias
AI can simplify and speed performance management processes like goal development, conversation prompts, feedback summaries, and performance reviews, while also dramatically reducing bias in the evaluation process by providing objective assessments based on performance data. By streamlining processes like goal setting, feedback, and skill development, AI not only saves time but also enhances the overall employee experience, fostering a culture of continuous improvement and growth.
Learn more about the pivotal role of AI in performance management.
Easy-to-use people analytics
Analytics are a crucial component of any effective performance management system, providing data-driven insights that enable informed decision-making and strategic workforce planning. By tracking key metrics like goal progress, employee engagement, and feedback trends, analytics help identify performance patterns, uncover skill gaps, monitor DEIB efforts, and measure the impact of development initiatives. This real-time data empowers HR leaders and managers to proactively address potential problems, uncover trends, deploy resources where needed, and make timely adjustments to drive individual and organizational performance.
Learn more about people analytics.
The future of performance management
The future of performance management is dynamic, personalized, and deeply integrated into the daily workflow. It shifts away from traditional, top-down annual reviews toward a continuous, employee-centric model that prioritizes real-time feedback, agile goal setting, and ongoing development.
Advances in technology, particularly AI and analytics, are shaping this evolution, enabling more tailored coaching, fairer evaluations, and actionable insights to drive performance. Performance management systems are becoming more intuitive and adaptable, allowing employees to align personal and professional growth with organizational objectives seamlessly.
Additionally, as hybrid and remote work redefine how and where we work, performance management will emphasize flexibility, skill development, and the fostering of transparent, supportive relationships between managers and their teams. Ultimately, the future of performance management is about creating an engaging, growth-oriented environment where employees are empowered to achieve their best.
Want to learn more? See how Betterworks is rethinking performance management software.
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