J Bus Psychol (2011) 26:205212
DOI 10.1007/s10869-011-9222-9
Performance Management at the Wheel: Driving Employee
Engagement in Organizations
Edward Mone Christina Eisinger
Kathryn Guggenheim Bennett Price
Carolyn Stine
Published online: 13 May 2011
 Springer Science+Business Media, LLC 2011
Abstract Based on a study conducted in a large corpo-
ration (XINC, a pseudonym) and other research, it appears
that performance management can be used to increase
levels of employee engagement. We begin this article with
a discussion of employee engagement, define engaged
employees as those who feel involved, committed, pas-
sionate, and empowered, and demonstrate those feelings in
work behavior. We then discuss an expanded view of
performance management, conceptualizing it as five major
activities that serve to organize relevant behaviors shown
to be either direct or indirect predictors of employee
engagement in the study at XINC. These major activities
include setting performance and development goals, pro-
viding ongoing feedback and recognition, managing
employee development, conducting mid-year and year-end
appraisals, and building a climate of trust and empower-
ment. In turn, we briefly discuss how each of these major
activities contributes to employee engagement, suggest
which activities benefit from further research, and recom-
mend possible studies. Although there is evidence for
performance management as a driver of employee
engagement, we conclude there is a need for additional
E. Mone (&)
Edward Mone Consulting LLC,
6 Sands Court, Port Washington, NY 11050, USA
e-mail: emone@optonline.net
C. Eisinger
K. Guggenheim
C. Stine
CA Technologies, Islandia, NY, USA
B. Price
PepsiCo, Incorporation, Purchase, NY, USA
research that clarifies for managers which of these activi-
ties have the strongest impact on employee engagement.
Keywords Employee engagement
Burnout

Performance management
Performance appraisal

Goal setting
Stretch goals
Feedback
Recognition

Employee development
Coaching
Learning
Trust

Empowerment
Overview
Is performance management truly at the wheel driving
employee engagement in organizations?
There is evidence to suggest performance management
can be conceptualized as the overarching framework for
guiding managers in their efforts to increase engagement in
their organizations (Mone and London 2009); other authors
(see Introduction) who recently address the topic of
engagement (or burnout) provide support for this concep-
tualization as they suggest that certain performance man-
agement practices can lead to higher levels of engagement.
This article begins with a brief discussion of employee
engagement, setting the stage for exploring the relationship
between performance management and employee engage-
ment. Five major components of performance management
are then outlined; each component frames a set of manager
behaviors shown to drive engagement. Recommendations
are suggested for research under each component to further
clarify the specific nature of the performance management
actions managers can take to drive engagement in their
teams and organizations. We bring the article to a close
with a discussion of performance management as a set of
interrelated processes driving engagement and some con-
cluding thoughts.
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206
Introduction
Employee engagement is in the limelight today. Definitions
of employee engagement, how to measure it, and how to
drive it are found in both professional journals (e.g., Macey
and Schneider 2008) and the popular press (e.g., Macey
et al. 2009; Gebauer and Lowman 2009); the same can be
said for burnout (e.g., Leiter and Maslach 2005; Maslach
and Leiter 1997, 2008), considered the opposite end of the
engagementburnout continuum.
Macey et al. (2009) provide a working definition of
engagementthe employees sense of purpose and focused
energy that is evident to others through the display of
personal initiative, adaptability, effort, and persistence
directed toward the organizations goals. Furthermore, they
suggest that having high levels of trust and fairness in the
culture is the key to creating and sustaining an engaged
workforce, and interventions for driving engagement can
fall into the areas of building confidence, resiliency, and
social support networks; renewing or restoring employee
energy; and enhancing the motivation and freedom to
engage. Gebauer and Lowman (2009) describe employee
engagement as having a deep and broad connection with
the company that results in the willingness to go above and
beyond what is expected to help the company succeed; they
also offer a framework for building engagement based on
knowing, growing, inspiring, involving, and rewarding
employees and within that framework recommend actions
for senior leaders, managers, human resource profession-
als, and employees themselves. Maslach and Leiter (1997)
conceptualize engagement as the opposite of burnout:
Feeling energetic, involved, and effective versus feeling
exhausted, cynical, and ineffective; through the lens of the
personjob fit, they suggest building engagement through
promoting sustainable workloads, empowerment, and
control over the work, providing effective recognition and
rewards, offering community with others, providing fair
and equitable treatment, and ensuring personal values
coincide with the organizations values. Although there is
uniqueness in each definition and approach for driving
engagement, there is also some consistency.
New research (Mone and London 2009) based on a
limited study (survey research in a global organization)
defines an engaged employee as someone who feels
involved, committed, passionate, and empowered and
demonstrates those feelings in work behavior. The study
also provides evidence for an expanded view of perfor-
mance managementdefined as the interrelated processes,
including goal setting, feedback, recognition, coaching,
development and learning, and appraisal, all based on a
foundation of trust and empowerment, with a constant
focus on communicationas the primary vehicle for cre-
ating an engaged workforce. And although performance
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J Bus Psychol (2011) 26:205212
management is also an important area of focus today (e.g.,
Pulakos 2009; Smither and London 2009b), this relation-
ship between performance management and employee
engagement has not been explicitly and fully explored
elsewhere; however, Gibbons (2006) does report that a
managers decisions and practices have a strong influence
on employee engagement.
Mone and London (2009) present the results of a path
analysis citing eight direct predictors (see Appendix) that
account for 61% of the variance in the outcome variable
employee engagement and 19 indirect predictors that relate
to performance management activities in support of
engagement. Although the variance exclusively accounted
for by the performance management-related predictors in
this study was not identified, the results do show a clear
relationship between performance management activities
and engagement. For this article, we have conceptualized
the relationship between five major performance manage-
ment activities of interest to the authors and the manager
behaviors (direct or indirect predictors in this study)
associated with both performance management and
employee engagement. The five performance management
activities are listed as follows; both the performance
management activities and the associated behaviors are
shown in Table 1.
Setting performance and development goals
Providing ongoing feedback and recognition
Managing employee development
Conducting mid-year and year-end appraisals
Building a climate of trust and empowerment
We discuss each of these five major performance man-
agement activities in the following sections, including
raising research questions of concern and suggesting pos-
sibilities for further research to help provide additional
insight for managers and practitioners.
Setting Performance and Development Goals
Goal setting, of course, is a critical component of perfor-
mance management (Pulakos 2009). Research from Mone
and London (2009) suggests that when managers and
employees set goals collaboratively, employees become
more engaged.
Stretch goals can enhance personal growth and profes-
sional development, as well as improve organizational
effectiveness (Kerr and Landouer 2004). Although difficult
or stretch goals can increase employee motivation by
providing a sense of challenge and recognition (Latham
and Wexley 1994), which might lead to engagement, it is
not clear if having stretch goals increases engagement. If
so, it is important to understand if the degree of stretch
J Bus Psychol (2011) 26:205212 207

Table 1 Conceptual framework: performance management activities, manager behaviors and employee engagement
Performance management activity Manager behaviors associated with both performance management and driving
employee engagement

Setting performance and development goals Jointly setting goals

Providing ongoing feedback and recognition
Managing employee development
Conducting mid-year and year-end appraisals
Building a climate of trust and empowerment
with employees
Helping employees understand how their work supports the overall company strategy
and direction
Providing a satisfactory amount of recognition
Providing feedback that helps improve performance
Providing sufficient opportunities for training
Supporting career development efforts
Conducting career-planning discussions
Conducting an effective performance appraisal discussion
Encouragement to be innovative and creative
Encouragement to improve work processes and productivity
Valuing ideas and opinions
Fair and respectful treatment
Listening to and acting on needs and concerns
Being trustworthy
Providing the resources and decision-making authority to perform effectively
Providing control over the quality of work

affects the level of engagement. Managers would probably
assume the greater the degree of stretch, the greater the
level of engagement, but they might be wrong and their
actions could lead to burnout (see, e.g., Maslach and Leiter
1997).
Similarly, goal alignment and cascading of goals is seen as
important to organizational success (Labovitz and Rosansky
1997; Kaplan and Norton 1996). Schiemann (2009) cites a
number of studies showing the positive impact of alignment,
including increases in employee satisfaction, but not neces-
sarily engagement. From Mone and London (2009), we know
that communication about organization strategy and direction
and helping employees understand how their efforts align to
the companys efforts promotes engagement. We need to
better understand the impact that timing, frequency, and depth
of communication have on engagement.
One way to empirically examine the relationship
between engagement and stretch goals is through a study
that engages different participants in tasks that have vari-
ous degrees of difficulty, and then measuring the extent to
which the participants felt engaged by the demands of the
task. A simple measure might be based on how absorbed
(Macey et al. 2009) or involved, committed, passionate,
and empowered (Mone and London 2009) participants
were in completing the task. A modification to this kind of
study could allow for exploring the relationship between
communication about the importance of the task and how it
aligns with a larger purpose and its impact on engagement
levels. In a field setting, exploring the relationship between
the extent to which employees feel informed about
organizational direction and alignment and their level of
engagement could also help to better understand this
relationship.
Providing Ongoing Feedback and Recognition
An important component of the performance management
process is the effective use of feedback (London 2003), and
providing ongoing feedback to employees that helps
improve performance is a key driver of employee
engagement (Mone and London 2009). In fact, Catteeuw
et al. (2007) also highlight the connection between pro-
viding honest feedbackthat helps ensure employees
understand their performance strengths and areas of
developmentand greater employee engagement. Consis-
tent with this notion, research from Mone and London
(2009) suggests that managers drive engagement when they
provide ongoing feedback and recognition to direct and
improve performance and have career-planning discussions
with their employees.
Receiving feedback on performance is generally con-
sidered a positive and motivating experience, especially in
the context of constructive feedback (London 2003;
Smither and London 2009a). What remains unclear, how-
ever, is the exact relationship between constructive feed-
back and employee engagement. For example, does
constructive feedback minimize feelings of engagement or
does it provide additional motivation to become engaged?
These questions are important because managers might

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assume that an increased reliance on constructive feedback
may make employees more engaged, when in fact the
feedback could actually lead to the employee experiencing
burnout (Maslach and Leiter 1997).
Recognition can be viewed as a form of feedback rooted
in positive reinforcement and tied to an employees behavior
or accomplishment of a specific goal or task. Research from
Mone and London (2009) suggests that recognition and
reward are critical to employee engagement and they
enhance satisfaction, motivation, and morale. In addition, as
reported in Brun and Dugas (2008), beyond sending a
positive message to employees in terms of value, research
shows that recognition links to employee performance and
company success; however, if employees are not recognized
for their efforts, they could experience mental and emotional
distress and burnout (Maslach and Leiter 1997).
Clearly, managers need to ensure they are providing
their employees with feedback and recognition, but what
are the best answers to the questionswhat, how, when,
and how oftenwhen it comes to promoting higher
levels of employee engagement? According to Mulvey and
Ledford (2002), managers should provide timely and
ongoing feedbackthat is, both positive and constructive
(Seijts and Crim 2006)to employees about their obser-
vable behaviors and performance and areas for improve-
ment, and recognition of optimal performance. We can
speculate that too much recognition could adversely affect
an employees intrinsic motivation (Deci 1980; Deci and
Flaste 1995), so perhaps the best approach is for managers to
get to know each individuals needs and wants to determine
the appropriate answers to these questions (Brun and Dugas
2008; Mone and London 2009). Gostick and Elston (2007)
and Mone and London (2009) offer managers practical best-
practice suggestions for how to recognize employees.
Further research could focus on understanding the impact
of constructive feedback, the timing and frequency of feed-
back, and the frequency and amount of recognition on
employee engagement. In a field setting, a survey (given of
course, the inclusion of an engagement measure) could
contain questions asking employees about the extent to
which their feedback was largely constructive, considering
as well the timing and frequency of the feedback. A similar
survey approach could focus on questions about how varia-
tions in recognition practices affect employee engagement.
Finally, given the research cited above, other questions could
examine the extent to which the form of recognition was
tailored to meet the individuals unique needs and wants.
Managing Employee Development
Development, in the context of performance management,
is the accumulation and application of new knowledge and
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skills over time, including the capacity to view the world
through a more-informed inclusive perspective (Mone and
London 2009). Development focuses on the integration and
application of learning. Therefore, development depends
on the ability to learn which can be influenced by a number
of factors, including employees learning styles (Honey
and Mumford 1989, 1990; Kolb 1984) and characteristics
(Kolb 1984; Mone and London 2009; Sessa and London
2006).
In the context of employee engagement, Mone and
London (2009) demonstrate that when managers provide
sufficient opportunities for training and support regarding
career development efforts, they help foster employee
development and drive employee engagement. Bakker
et al. (2008) report that employees need more than learning
opportunities alonethey need motivational support and
the resources to accomplish their development goals.
Consider, also, that opportunities for training and devel-
opment can be incidental, informal, or formal (Marsick and
Watkins 1990), and it might be inferred that informal and
incidental learning, which lead to greater learning in the
workplace (Rowden 2002), can also enhance employee
engagement. Jacob et al. (2008) support this notion that
employee engagement is enhanced when managers offer
their employees on-the-job learning opportunities as well as
the autonomy to pursue those learning opportunities.
Mone and London (2009) also found that a direct pre-
dictor of employee engagement is the extent to which
employees are satisfied with their opportunities for career
progression and promotion, a finding supported by Seijts
and Crim (2006) who suggest that employees will feel more
engaged if managers provide challenging and meaningful
work with opportunities for career advancement.
From our perspective, managers like to know the kinds of
training and development opportunities they should offer
employees that meet both learning needs and foster
engagement. As previously discussed, evidence suggests
that informal learning can promote engagement. However, it
remains unclear if any informal learning methodologies
reading books or journals, watching videos or webcasts,
being mentored, learning from colleagues, etc.have a
greater or lesser impact on engagement. And to what extent
do formal learning opportunities affect engagement? An
empirical approach to answering these questions might
involve providing a complex task to individuals that could
only be completed with additional learning, with different
groups of individuals provided a different way to learn about
the task, and then measure their levels of engagement. If the
groups are large enough, interaction effects from learner
styles, characteristics, etc., should be mitigated.
Coaching, which can occur throughout the performance
management process, provides another informal learning
opportunity for employees. Although coaching is often
J Bus Psychol (2011) 26:205212
viewed as a personal and professional developmental
experience, few studies appear to have been published on
its effectiveness (Kampa-Kokesch and Anderson 2001).
Although a handful of studies do attempt to address this
gap (e.g., Evers et al. 2006), most research centers around
the use of external or executive coaches instead of man-
agers acting as coaches for employees. Mone and London
(2009) discuss effective coaching as a way for managers to
support employee learning and growth and suggest three
areas of coaching focus: helping employees adapt,
improving performance, and developing potential. What
we do not know about the manageremployee coaching
relationship, however, is whether a focus in one area or the
other will lead to greater employee engagement, although
previously discussed findings might suggest the latter
developing potential for future jobs.
One area of study researchers may want to explore is the
link between coaching focus and engagement to help
managers determine how to best use the time they have
available for coaching. For example, a possible field study
could have three groups of individuals receive coaching
one whose focus is on learning how to adapt, another
whose focus is on improving performance, and the last
whose focus is on developing potentialand then measure
the level of employee engagement among the three groups.
One could hypothesize that there might be higher levels of
engagement across all the groups after the coaching then
before, even if no significant differences between the
groups regarding their levels of engagement are found
based on the focus of the coaching.
Conducting Mid-Year and Year-End Appraisals
Research by Mone and London (2009) finds that being
satisfied with the overall quality of appraisal discussions,
particularly year-end appraisal discussions, is important to
fostering engagement. We also know from Maslach and
Leiter (2008) that it is important for employees to perceive
fairness in organizational processes, such as perfor- been a popular management topic for some time, as evi-
mance appraisal evaluations, so that they are more likely to
remain engaged (not burned out), even if the process out-
come is less favorable than desired; in fact, the perception
of unfairness can lead to burnout.
The good news is that research exists which points to the
kind of appraisals that are perceived to be the most fair
(Greenberg 1986; Nurse 2005; Roch et al. 2007; Smither
and London 2009a). In summary, the more that appraisals
are objective, transparent, solicit the employees input,
promote two-way dialog between managers and employ-
ees, contain clear performance criteria and metrics, have
a transparent linkage to administrative outcomes such
as promotion and compensation, and are aligned with
209
overarching corporate or departmental objectives, the more
they tend to be perceived as fair.
Furthermore, according to Roch et al. (2007), the format
of the appraisals rating systemabsolute versus relative
affects an employees perception of the appraisals fairness.
Specifically, they found that absolute appraisal formats are
perceived to be fairer than relative formats. They also dis-
cuss how perceptions of fairness have been linked to a
variety of organizational outcomes: organizational com-
mitment, job satisfaction, questions over the legitimacy of
organizational theories and policies, organizational citi-
zenship behaviors, disobeying authorities decisions, and
turnover. One important organizational outcome that is
missing from this list is employee engagement. Given
strong advocates in the popular business press either
favoring relative or forced distribution (Welch and Welch
2005) or absolute (Lawler and Worley 2006) rating systems,
further research in this area would be of interest.
Because most organizations typically use either a rela-
tive or absolute rating system, and not both at the same
time, we suggest a laboratory study. The study could
involve two groups, each perhaps with a task that is com-
plex and challenging to arouse sufficient motivation. Those
evaluated under the absolute rating system would be told in
advance how different levels of outcomes lead to different
levels of evaluation and reward; those evaluated under the
relative system would be told that their overall level of
evaluation and reward is based on their performance
against others performing the same task. We suggest that
the overall levels of engagement in the task and perception
of fairness of the evaluation and rewards should be mea-
sured after the individuals involved are provided with their
overall evaluation and reward.
Building a Climate of Trust and Empowerment
Empowerment and trust are intimately relatedtrust forms
the basis for empowerment. Of course, empowerment has
denced, for example, by the works of Block (1987) and
Kanter (1977); it is also important to the concept of
employee engagement more recently discussed by several
authors (e.g., Macey et al. 2009; Gebauer and Lowman
2009); and feeling empowered to do my job is specifi-
cally included in the employee engagement index measure
as discussed by Mone and London (2009).
Seijts and Crim (2006) suggest that an open book man-
agement style involving employees in decision making has a
positive effect on engagement. Mone and London (2009)
also found that having a manager employees can trust is a
primary driver of engagement (see Table 1), and that there
are a number of manager actions associated with creating a
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climate of trust and empowerment. Mone and London (2009)
further review and discuss other key drivers of trust, for
example, the effective use of position power, acting with the
propensity to trust, and demonstrating managerial trust-
worthy behaviors, such as being an advocate for, displaying
an interest in and showing confidence in employees, acting
with integrity, demonstrating openness, acting as a trusted
coach, and managing the performance of employees.
Additionally, Mone and London (2009) report that
employees having the resources to perform their jobs
effectively and being encouraged to be innovative and
creative to improve their work processes and productivity
are both primary drivers of employee engagement.
Although most management experts agree that trust and
empowerment are important concepts, and a number of
actions that managers can take that drive trust and
empowerment and increase engagement were suggested
above, managers become faced with the challenge of
determining which trust-building and empowerment
behaviors are more crucial to driving the overall level of
employee engagementand avoiding burnout (Maslach
and Leiter 1997, 2008). As a result, we propose that a field
study could help managers better face this challenge. Using
a survey, employees can evaluate their managers on the
extent to which they demonstrate the range of behaviors (as
suggested here) that demonstrate trustworthiness and
empowerment; the survey would also incorporate a mea-
sure of employee engagement.
Performance Managementan Interrelated Set
of Processes, Activities, and Behaviors
It is logical to pose the question at this point that if per-
formance management is typically defined as a set of
processes, activities, and behaviors (Mone and London
2009; Pulakos 2009; Rotchford 2002), and each activity
contributes to explaining the variance in employee
engagement, how much additional variance does each
activity explain in relation to the others? Practically
speaking, how much extra effort should managers put into
certain performance management activities if the impact on
employee engagement might not be worth the effort? In
some ways, this can help answer the question for managers:
Does the whole of performance management have a greater
impact on employee engagement than the sum of parts?
In the previous sections, we discussed the key perfor-
mance management activities, such as setting performance
and development goals, raised questions about how each
affects engagement, and suggested avenues for further
research. These suggestions hopefully will inspire others to
provide more insight into the what, how, when, and how
often aspects of each of these activities in relation to
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J Bus Psychol (2011) 26:205212
employee engagement. Insight, for example, into what is
the appropriate degree of stretch in a goal, the impact of
constructive feedback, the type of learning opportunity, etc.
A final recommendation for further studyunderstand-
ing the impact (and variance explained) by each key per-
formance management activity on engagementcould be
survey-based in an applied setting. Included in the survey
would be a measure of employee engagement, high-level
questions about each performance activity (e.g., setting
performance and development goals), and then questions
targeting the what, how, when, and how often aspects, as
appropriate (e.g., the degree of stretch involved). The latter
set of questions could take the form of the following: I feel
most engaged at work when my performance goals:
(a) require very little effort for me to achieve, (b) require a
moderate amount of effort for me to achieve, and (c) will
require a substantial amount of effort for me to achieve.
Structural equation modeling (e.g., Blunch 2008) can be used
in the analysis to identify the high-value relationships for
managers and help them focus their efforts proportionately
on the performance management activities and behaviors
that contribute the most to driving employee engagement.
Concluding Thoughts
Is performance management truly at the wheel driving
employee engagement in organizations?
Yes, this is the same question we asked at the opening of
this article, and we do believe that an expanded view of
performance management can serve as a useful framework
for managers, one that guides them in the day-to-day
management of their employees performance while also
fostering high levels of employee engagement and avoid-
ing burnout.
Yet, we realize that there is more to learn to capitalize
on the research to date. As a result, we have suggested
some avenues for further exploration and ideas for possible
studies about the manager behaviors associated with per-
formance management and employee engagement. In the
end, we need to understand more clearly the extent to
which each performance management activity explains the
variance in employee engagement, and the specific nature
of the behaviors associated with those activities so that
managers can better determine what to do and how to focus
and maximize their time and effort when it comes to using
performance management to drive employee engagement
in their organizations.
Appendix
See Table 2.
J Bus Psychol (2011) 26:205212
Table 2 8 Direct Predictors of Engagement (Mone and London 2009)
8 Direct Predictors of Engagement
I am encouraged to look for ways to improve my work processes and productivity
The company communications I receive help me to understand XINCs strategy, vision and direction
Overall, I have the resources I need to do my job effectively
XINCs leadership acts with the best interest of employees in mind
I am satisfied with my opportunities for career progression and promotion
I consider the total value of my compensation, benefits and work experience when I think about what XINC offers in exchange for my
employment
My manager is someone I can trust
My manager provides me with ongoing feedback that helps me improve my performance
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