Employee Engagement

The critical role of performance management and employee engagement in the workplace

Employee engagement is inseparable from performance management. In this article, we break down how to increase employee engagement through each phase of your performance management strategy.

Ryan Carruthers

Published on 

October 3, 2022

Updated on 

Time to Read

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Successful companies understand the critical role of employee engagement and performance management. In doing so, they experience the advantages of having a strong and positive workplace culture. 

In this article, we’ll discuss how performance management and a better employee engagement process affect the growth and success of an organization.

How does performance management impact employee engagement?

Without effective performance management and employee engagement, you might run into some serious problems in your business. However, if you’re able to get both performance management and employee engagement right, your business will work better than a well-oiled machine.

But what is performance management? And how do you know if your business is doing it right? Performance management is a process of monitoring and evaluating employee work performance based on a set of objectives.

Managers communicate these objectives with employees so expectations are clear and employees know what they have to do to perform their best. Performance management is beneficial for any organization that wants to maximize its staff’s potential and produce the highest quality output.

We want our employees to perform at their highest. But they need to be motivated to bring the necessary energy. This is where employee engagement comes in.

Employee engagement is the practice of supporting and recognizing your employees so that they feel more connected with your business. Engaged employees are more productive, healthy, and have higher morale. They also take their work more seriously compared to disengaged employees.

As people leader, how do you drive both performance and improve employee engagement in your workplace? What essential strategies can you do to increase both of these important key aspects at work? Let’s unpack these questions in the next section.

Why does performance management matter?

Performance management is an important business process that helps your company standardize objectives, goals, and work competencies needed to gauge employee skill and performance on the job. The right execution of it leads to leadership development and better succession planning.

It’s also a measurable project management plan that enables employees to achieve maximum work performance. However, to achieve better output from your team, you need to treat performance management as a systematic process that’s part of your overall business workflow. Think of it as a tool that helps both you (as the manager) and your team to successfully work on goals together.

The phases of performance management cycle

What are the four phases of performance management cycle?
Image from Valamis 
  • Planning: This first stage is where managers discuss with employees their current performance and future goals. Having a definitive set of goals is vital because it makes the entire process measurable, which then provides room for improvement.
  • Monitoring: In this stage, managers track their team’s performance to make sure they’re staying on top of their goals and objectives. This is often accomplished using HR tools such as BambooHR or monday.com.
  • Reviewing: This stage is where both managers and employees review their performance through feedback, self-assessment, and interview. During feedback sessions, managers evaluate employee performance. While self-assessment is done by the employee to reflect on their own performance. Interviews are also important so that both the employee and manager talk about their experience during the whole process.  
  • Rewarding: After the performance is reviewed, the manager decides to reward employees if the desired outcome is achieved. 

Employee engagement is critical to retaining talent

The battle for winning top talent and the challenge to retain them have made organizations rethink how they deal with employee engagement. Companies are recognizing how important it is to customize their approach when it comes to offering training, career path opportunities, and flexibility at work. 

For too long, employees have settled in companies that don’t pay them well or give them work-life balance. Now that they have the power to choose where to work and leave if the company doesn’t value them—it’s up to businesses to build a culture and workplace where every best candidate wants to work in. 

How are companies increasing their retention rates by rethinking their employee engagement strategies? Here are a several tactics:

  • They’re starting retention mentoring programs that help employees fast-track their growth and development.
  • They’re interviewing those employees who have decided to leave to narrow down why they weren’t happy and improve.
  • They’re committed to continuous training. Everyone has a more positive view of companies that engage in regular employee training programs. Helping your workers gain and sharpen new skills will go a long way in increasing their commitment to stay with you.
  • They reward employees and publicly recognize them. Recognizing employees who excel is a great way to encourage them at a very little financial cost. It not only helps them feel appreciated but can also help other team members feel motivated to work harder.
  • They offer flexible hours. Allowing employees to have a flexible work schedule is a crucial way to improve employee retention. This simple policy can give workers a work-life balance that will help them see the value of working with your company. It can also prevent them from accepting offers from other companies that are less understanding.

How to Improve Employee Engagement

Today, it’s hard to imagine a successful business without a happy and strong team. For that reason, seeing how engaged employees are is a clear marker of an amazing workplace. So, how can you materialize the perfect environment for work, be it remote work or at the office, by engaging your employees? Below are ways you can improve employee engagement: 


Effective communication is at the heart of any good engagement strategy. Creating an environment where everyone is invested in the company’s success starts with efficient workplace communication. There are many ways you can improve workplace communication. The most common is through investing in popular HR management software solutions. But, if you’re looking for ways that don’t involve tech or software. Here are some of the easiest and most effective: 

  • Communicate expectations, goals, and objectives clearly
  • Foster healthy team communication
  • Encourage constructive feedback 


Another way to improve employee engagement is by presenting them with a clear path for growth. This allows them to see how their work values their company and what skills can they learn if they decide to stay. With a rapidly evolving market, employees now seek professional development as much as financial stability. Aside from promotions, here are ways you can offer growth to your employees:

What do employees consider most important for success?
Image from Zippia


Employee recognition is one of the most effective ways to boost employee engagement. A recent study on employee recognition shows that only 1 in 4 employees feel connected to their culture. Additionally, only 1 in 3 strongly agrees that they belong at their current organizations. To maximize your recognition strategy, here are things you can do:

  • Recognize team contributions in team meetings
  • Hold morale-building meetings to celebrate success 
  • Craft personalized notes or messages expressing gratitude for your employee’s recent good performance
  • Quality employee appreciation emails to your team can boost morale and send employee engagement through the roof, don’t forget to add a CEO email signature to make it more formal.


How does appreciation differ from recognition? While many people use the terms interchangeably, there’s an important distinction. Recognition is positive feedback based on results and performance. Appreciation is an acknowledgment of the person’s inherent value. It’s not conditional to the work they do or their output. Here are examples of ways people show appreciation at work:

  • Checking in with them and showing you care about their well-being
  • Giving them time to talk and practicing active listening
  • Celebrating birthdays and sending gifts


The last important way to engage employees is through establishing trust. Cultivating a trusting relationship with your employees is a true mark of good leadership. When employees feel like they aren’t trusted by their managers, they feel disengaged and more stressed. On the contrary, employees who feel trusted are compelled to go the extra mile and work hard for their company. So, how can you establish trust in your workforce? Here are some tips:

  • Stop micromanaging and give employees space to work
  • Be transparent and encourage honest conversations
  • Honor commitments and follow through with promises
  • Don’t be afraid to admit mistakes 

Performance management and employee engagement are key to a culture of success

Both performance management and employee engagement are important in fostering a positive and healthy work culture. Since employee retention proves to be the most challenging problem in modern workplaces, focusing on both performance management and employee engagement is imperative for businesses that want to grow and thrive. 

Therefore, understanding how these two concepts truly affect your workplace and making sure you’re solving issues is necessary for long-term success.

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