Team Performance Management and Why It’s Important for HR

The highest-performing teams don’t become this way overnight, and they don’t happen by mistake. While teams left to their own devices might be able to “get the job done,” there is a big difference between teams that accomplish necessary tasks and top-tier teams that disrupt their industries and vastly outperform their competition. To reach that level of high-performance culture, leaders can focus on team performance management practices and techniques, which are specifically designed to optimize their teams.

What exactly is team performance management, and how can it have such a powerful impact on teams? Team performance management is the process of tracking, directing, and coordinating the efforts of a team, in order to understand how the team is performing today, and where its performance can be optimized and improved. It allows leaders to measure performance, evaluate success, find and correct missed opportunities, and allocate resources to training and development to help further their team’s success. 

While teams might be fine on their own, they can be far more powerful with team performance management practices. Studies tell us that 70% of the variance in a team’s engagement is related to management because of the way managers “create the conditions” in a team dynamic. When leadership deploys these techniques, teams can reach their true potential and maximize their successes and accomplishments. 

Why Team Performance Management is Essential

Why exactly is team performance management essential for the highest-performing teams? A team performance management system works to improve employee performance through individual and team goals. It also seeks to improve company performance by aligning team goals with overarching business goals. 

Team performance management is vital because it gives teams valuable insight into how they’re performing, where they are excelling, and where there is room for improvement. It also has other trickle-down benefits for teams and organizations. For example, leaders that utilize team performance management can experience better employee retention because motivated, focused, and productive employees are more likely to want to stick with an organization. Team performance management can also be used to measure and improve employee engagement, which is a powerful contributor to employee morale.

What can you expect a performance management system to entail? Your company’s performance management system will likely include tools, such as software and procedures, that are designed to work with your unique organizational structure. With continuous team performance management, company leaders can improve the frequency and value of feedback and ensure a fair performance appraisal process. 

Your team performance management program should begin with a clear plan outlining success objectives. With methods in place to track progress and identify obstacles, your system can continually improve for success. Furthermore, the process has a cyclic effect that builds continued engagement and improved performance review processes. To measure and begin improving team performance quickly with a distributed team, check out our Team Success Metrics Playbook for Virtual & Remote Teams.

Understanding the Team Performance Management Cycle

Team performance management isn’t designed to be a “set it and forget it” solution. It’s a continuous cycle used to encourage ongoing professional growth that needs to be addressed and revisited. A carefully planned team performance management cycle leads to improved team performance and better job satisfaction and employee engagement. While the team performance management cycle has distinct stages, it’s not necessarily a step-by-step process. Some stages are continuous actions that offer results for continued planning and data collection. 

It’s also important to note that while the team performance management cycle is a measurement of the entire team, the performance of each team member plays a critical role in that equation. Looking at the entire team’s performance is an excellent way of gauging group efforts, successes, and where there is room for improvement. This means leaders need to understand how each team member is stacking up, and where they fall in the equation. 

With that in mind, the team performance management cycle is typically composed of the four following stages: 

1. Plan

As the process’s foundation, the team performance management planning stage lays the groundwork for future success. Planning a successful management system requires creating a business strategy and individual and/or team goals for employees. By utilizing SMART goals (Specific, Measurable, Achievable, Relevant, and Time-Bound), employee and team goals will be more likely to align automatically with the company. It’s common for performance management cycles to span short periods for more frequent feedback. Your plan should reflect objectives for a specific period.

2. Monitor

Once planning is in place and SMART objectives are set, it’s time for all involved members to take action. As employees and teams work toward structured goals, consistent monitoring will give insight into the actions that are leading to the most progress and those that aren’t working. Regular communication through formal and informal conversations keeps all parties up to date on progress. These conversations can also provide opportunities for timely feedback. Additionally, taking notes to document progress leads to more accurate and fair yearly performance reviews.

3. Review

If SMART goals were set during the planning phase, and discussions were ongoing as part of the monitoring phase, the yearly performance review should be productive and fruitful. Management and employees will have the opportunity to review if goals are achieved. During the review meeting, employees and managers can consider ways to improve processes and achieve even more impressive goals.

4. Reward

Rewarding good performance is the final stage of the performance management cycle. Employee and team recognition is a vital way of keeping your team motivated and engaged throughout the year. Rewards should reflect your employees’ interests and provide incentives for improved behavior. These may include bonuses, increased compensation, vacation or flex time, and promotions.

How a Performance Management System Improves the Review Process 

An effective performance management cycle naturally leads to a more productive review process. When SMART goals are created through a collaborative process, they’re more likely to be attainable and aligned with company goals. Furthermore, when employees have a hand in creating goals, they’re more likely to be engaged and motivated to achieve high performance. Two-thirds of Millennial and Gen Z employees say autonomy is important in the workplace. When these employees can collaborate with managers about who they work with and what tools they use, productivity and creativity can increase, leading to stronger performance.

The increased communication built by the team performance management cycle leads to a transparent review process that acts as a coaching session for employees. An effective team management system improves the review process in these ways:


KPIs, or key performance metrics, are intrinsically connected to the team performance management process. With this process, KPIs are tied to business goals and outcomes in an ongoing fashion, and teams are aligned on what their KPIs are. During the review process, these KPIs will already be familiar to all employees, and can be measured and discussed. 


Continuous team performance management offers feedback for ongoing collaboration and improved behavior. This means that during the review process, feedback will already be expected, standardized, and comfortable. Think about it this way: when employees only receive feedback once a year during their review process, it can be an intimidating ordeal. But when leaders set expectations and give feedback regularly, it can be more honest, productive, and natural. 

Fair Performance Appraisal

Team performance management practices standardize expectations, goals, and KPIs across the team as a whole, and measure ongoing efforts. This means that during the review process, there are already standardized markers for success that all team members will be appraised with. 

Improved Employee and Team Tracking

With the team performance management process, the efforts of employees and teams are continuously tracked in an ongoing fashion. Instead of simply trying to measure progress during a once-yearly review process, leaders have a rich and continuous pool of employee and team data to refer to during the review process. 

Identify Training and Growth Opportunities

Team performance management allows leaders to identify clear opportunities for improvement, including where training can be helpful and where there is room for growth. Because this information is already clear and known, the review process can be used to strategize specific plans for training and growth. 

Accurate Ratings and Scores

The review process is most beneficial when it is measurable and accurate. With the team performance management process, leaders have concrete data that reveals factual information about employees and teams. This hard data can be used during the review process to ensure score and ratings are as accurate as possible. 

Collaborative Reviews and Coaching

The team performance management process is not one-sided but a collaborative process between individual team members and leaders. Because of this, there are already excellent collaboration practices and processes in place that can benefit the review process. Instead of a one-sided review and coaching process, these experiences can be collective and shared.

Builds Employee Engagement Through Rewards

Team performance management systems include rewards for efforts, which can be excellent for employee engagement. This improved employee engagement can result in more helpful and productive review processes where everyone is engaged and invested in improving.

Transparent Communication

Team performance management systems require a culture of open communication and transparent standardized communication practices. Because of this, the team communication style will already be well-poised for a transparent review process. 

How to Choose the Right Performance Management System

An effective team performance management system evaluates both qualitative and quantitative aspects of performance. By only measuring quantity, there is the potential that a high volume of low-level work gets done. This results in a work environment with less opportunity for learning and advancement. Conversely, a performance management system that neglects quantity can lead to low production volume.

Team performance management software can help you track, analyze, and evaluate the performance of a single employee, team, or entire company. Leaders rarely can invest as much time as they want to work with their teams, which leads to limited visibility into team performance. Employees can recognize this limited visibility. In fact, 50% of Millennials and Gen Z employees believe management does not recognize strong job performance. This is why the right performance management system is vital. 

Team performance management software provides easy-to-use tools that diagnose, measure, and improve collaborative behavior for improved performance. By using measurable data, employers can easily track employee and team performance for more accurate reviews and incentive programs. 

When choosing an effective system, it’s important to recognize how the software interacts with your current environment. Here are steps you can take to ensure that you choose a system to help you reach your company’s performance goals.

Identify the Strengths and Weaknesses of Existing Processes

Do you have a team performance tool in place already? These processes and systems might include evaluation processes, goal setting, and feedback systems. If there are already systems in place, leaders can work to identify where they’re working and where they’re not. If processes are lacking, leaders can look for where they need to be added.

Create Company Goals

Next, identify the goals of your team performance management system. These can include better employee retention, improved morale, or better employee performance. Identify company goals around your chosen system, and determine how this system can help teams and individual employees reach them. 

Select Software

Find software that integrates with your current systems and procedures.

After determining your goals, it’s time to find a team performance management software system to help you achieve them. It’s important to look for software that integrates with your current systems and procedures and that can help you meet your needs.

Choose software that uses measurable data to track employee and team performance.

In order for team performance management to be successful, it needs to be backed by data and measurements. With that in mind, look for software that uses data, analytics, and tracking, so you can easily measure results. 

Seek user-friendly software that will be easy to adopt and use frequently.

If team performance management software is confusing to use and non-intuitive, it’s not going to stick. Be sure that the software you choose is user-friendly, easy-to-understand, and that it encourages frequent use. 

The Right Tools Make the Difference

As Millenials and Gen Z workers become the most populous group of employees in the workforce, it’s important to consider how they work together. Utilizing tools and procedures that allow these employees to collaborate with managers about their careers and build autonomous teams that naturally fit together can improve engagement, loyalty, and performance. By integrating software that uses measurable data into your performance management system, you can create a fairer and more accurate rewards system to motivate employees further.

An effective performance management system works continuously to improve company performance. Using reliable tools for this process will allow you to build a long-term system that always improves as your company grows and changes.

RallyBright provides organizations with easy-to-use tools that rely on proven behavioral science to track and improve employee and team performance over time. By integrating these tools into your performance management system, you can create more accurate performance reviews and incentive programs. Schedule a demo to learn more about how RallyBright can help you create a customized performance management system.