In the wake of ongoing economic challenges in 2025, businesses in the UK face increased pressure to maintain productivity while ensuring a positive, compliant, and fair working environment. One key area that directly impacts business success is effective and successful performance management. By adhering to the ACAS Code of Practice on disciplinaries and grievances and following best practice principles, employers can manage their workforce effectively, build trust, and optimise performance.

Top ten tips for successful performance management

Here are ten practical tips to help you manage employee performance successfully while staying compliant with legal requirements and supporting your team’s wellbeing:

Set clear expectations from the start

Effective performance management begins with clear expectations. Ensure that every employee understands their role, the specific objectives they need to achieve, and how their performance will be measured. Set SMART (Specific, Measurable, Achievable, Relevant, Time-bound) goals for clarity and direction. This foundation helps prevent misunderstandings and provides a clear benchmark for performance evaluations.

Regularly review performance

It’s important to conduct regular performance reviews – not just annually. Have regular one-to-one meetings to provide feedback, address any concerns, and offer opportunities for professional development. This allows you to identify areas for improvement early on and also provides an opportunity to celebrate successes.

Document performance discussions

It is vital to document all formal and informal performance discussions. Keeping accurate records of feedback, goals, and any disciplinary actions ensures that decisions are justified and transparent. Documentation also protects both the employee and employer should any disputes arise in the future.

Be fair and consistent

When managing performance, be sure to apply standards and processes consistently across all employees. Ensure that any performance-related actions—whether positive or corrective—are fair, objective, and based on clear evidence. Avoid biases, and make sure your approach to performance management doesn’t unfairly disadvantage any employee.

Provide constructive feedback

Feedback should be constructive, not punitive. When addressing areas for improvement, provide actionable advice and offer support to help employees meet performance expectations. Use the “SBI” method (Situation-Behaviour-Impact) for delivering feedback: describe the situation, the specific behaviour, and its impact. Constructive feedback should be a tool for growth, not a source of frustration.

Create an open dialogue

Open communication is essential for successful performance management. Encourage employees to share concerns, ideas, and feedback about their role, workload, or any obstacles they may face. This two-way dialogue can help you better understand challenges and work together to find solutions. Being accessible and approachable builds trust, which is essential in addressing issues early on.

Offer training and development opportunities

Invest in the development of your employees by offering training, mentoring, or coaching opportunities. Not only does this improve their skills, but it also signals that you are invested in their growth. By giving employees the resources they need to succeed, you can improve overall performance and job satisfaction, which leads to better outcomes for both the individual and the business.

Support wellbeing and work-life balance

A stressed or overworked employee is unlikely to perform at their best. Prioritise employee wellbeing by promoting a healthy work-life balance, offering flexible working options, and ensuring that mental health resources are available. Supporting wellbeing isn’t just about preventing burnout; it can also lead to higher engagement and better overall performance.

Implement and follow a clear disciplinary procedure

The ACAS Code of Practice outlines the need for a fair and transparent disciplinary procedure when performance issues are not resolved through informal discussions. Ensure that your disciplinary process is clearly documented, accessible to all employees, and consistently followed. Employees should be given an opportunity to respond to any concerns before any formal action is taken.

Recognise and reward good performance

It’s important to recognise and reward employees who consistently meet or exceed expectations. Acknowledging achievements, whether through formal rewards, public recognition, or career development opportunities, helps to motivate employees and reinforce positive performance. Acknowledgement encourages a culture of excellence, showing employees that their contributions are valued.

Why this matters

In 2025, businesses must adapt quickly to a volatile economic environment. By following these ten practical tips for managing employee performance, employers can enhance productivity, reduce the risk of legal disputes, and build a more engaged workforce. Clear expectations, regular feedback, fairness, and a focus on employee wellbeing are essential components of effective performance management.

In a challenging economic climate, businesses that prioritise performance management will not only improve operational efficiency but also cultivate loyalty and engagement. A workforce that feels supported, valued, and fairly treated is more likely to go the extra mile, leading to sustained success and competitive advantage in 2025 and beyond.

If you need any support or advice regarding successful performance management, get in touch.

As we move into 2025, UK employers face a shifting economic landscape, alongside new regulations and policies set to shape the workplace. Following the Autumn Statement by Chancellor Rachel Reeves and the upcoming Employment Rights Bill, it’s crucial for businesses to prepare for these changes. Here are the key priorities for UK employers in 2025, and what they should focus on:

Prepare for changes in employment rights

The new Employment Rights Bill will introduce significant changes that affect how businesses manage their workforce. Some key provisions include:

• Stronger protections for workers. Expect changes to enhance job security and workplace conditions, including clearer and more stringent rules around unfair dismissal claims and redundancy.
• Extended sick leave and pay. The bill may introduce more generous sick pay entitlements, so employers should review their current sick leave policies.
• Flexible working. Employers must prepare for increased demand for flexible working options, with new rights potentially making it easier for employees to request remote work or flexible hours.
• Non-compete clauses. New rules could impact the enforceability of restrictive covenants, requiring employers to reassess their contracts and policies.

Address the cost of living crisis

The UK economy is still grappling with the effects of inflation, with many workers facing rising living costs. Employers should:

• Offer competitive wages. The government is under pressure to address wage stagnation. Companies should ensure they are offering competitive salaries, or consider cost-of-living adjustments for employees.
• Support staff wellbeing. Mental health and employee wellbeing are becoming a priority for businesses. Employers can consider offering wellness programs or increasing access to mental health support.
• Consider benefits packages. Reevaluate your benefits offerings, such as bonuses, retirement plans, and other perks, to ensure they remain attractive to current and potential employees.

Be ready for economic uncertainty

The UK economy remains uncertain, with global inflation, energy prices, and post-Brexit changes creating challenges. Employers should:

• Plan for economic fluctuations. Create flexible business plans that can be adapted if the economy worsens. This might include managing cash flow more conservatively, reducing unnecessary overheads, or diversifying your revenue streams.
• Focus on business resilience. Build resilience by strengthening your supply chains, diversifying talent pools, and reducing dependence on any one market or sector.
• Engage in strategic forecasting. Regularly monitor economic trends, political developments, and changes in consumer behavior to stay ahead of potential disruptions.

Prepare for more scrutiny around workplace culture

As public and government expectations evolve, businesses are under greater scrutiny about their workplace cultures. Employers should:

• Promote diversity and inclusion. Demonstrating a commitment to diversity and inclusion isn’t just good for business; it’s becoming a regulatory and ethical necessity. Make sure your company policies reflect these values and are communicated effectively.
• Strengthen employee engagement. Engage with employees to understand their needs, concerns, and aspirations. Companies with strong employee engagement are more likely to thrive during economic challenges.

Workforce optimisation

For many organisations, optimising staffing levels will be top of the agenda in 2025. For some, the focus will centre on attracting new talent to support organisational growth plans and address skills shortages. This will involve improving recruitment processes, methods and channels. Meanwhile, other organisations will focus on recalibrating their workforce through restructures to align with changing business needs or to reduce costs. Whether hiring or resizing, employers need to ensure that workforce planning supports long-term organisational objectives.

Focus on skills and training for the future

The UK’s skills gap is a persistent challenge, and the government has indicated a focus on improving workforce skills. Employers should:

• Invest in training programs. Upskilling your employees will be crucial in 2025. Offering continuous professional development (CPD) opportunities can improve staff retention and fill gaps in essential skills.
• Support apprenticeships. In line with government priorities, consider investing in apprenticeship schemes to build a pipeline of skilled workers while supporting the broader economy.

Ensure fair pay and pay transparency

Pay transparency and fairness are expected to be high on the government’s agenda in 2025. Employers should:

• Review pay structures. Conduct pay audits to ensure equal pay for equal work, especially for gender, ethnicity, and other underrepresented groups.
• Prepare for potential reporting requirements for employers with 250 or more employees. The government may introduce pay transparency measures, be ready to disclose pay gaps and ensure your organisation is ahead of the curve.
• Be proactive on diversity and inclusion. In 2025, businesses will be under increased pressure to ensure their recruitment, promotion, and compensation practices are equitable and transparent.

Adapt to new workplace technologies

The future of work is digital, and the UK government is investing heavily in technology. Employers need to:

• Invest in digital skills. Employees will need new tech skills as automation, AI, and digital platforms become more common in the workplace. Provide upskilling opportunities, especially for employees in roles that could be affected by technology.
• Update IT infrastructure. Ensure your business has the digital tools necessary for remote working, cybersecurity, and effective collaboration. Consider investing in cloud solutions and cybersecurity measures to protect sensitive data.
• Leverage automation. Review areas where technology can automate repetitive tasks, improving efficiency and allowing employees to focus on higher-value activities.

In 2025, UK employers will face a rapidly changing landscape of regulatory and economic challenges. By focusing on these priorities businesses will be better positioned to thrive in the evolving economy. Staying ahead of these trends and taking proactive measures will help you create a strong, resilient, and future-proof business. If you need any support or advice in any of these areas, please get in touch.