Performance management policy template
A structured framework for managing employee performance fairly and consistently. Covers goal setting, reviews, feedback, improvement processes and documentation aligned with Australian workplace standards.
Performance management policy
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Why you need a performance management policy
Effective performance management is essential for business success and employee engagement. Without a clear framework, managers apply inconsistent standards, employees feel unsure about expectations, and underperformance goes unaddressed until it becomes a serious problem.
A performance management policy creates clarity for everyone. Employees understand what's expected, how they'll be assessed, and what happens if they're struggling. Managers have a consistent process to follow, reducing bias and ensuring fair treatment across the organisation.
Under Australian workplace law, you also need documented processes if you ever need to terminate someone for poor performance. A policy that's been consistently applied demonstrates procedural fairness and protects against unfair dismissal claims.
Key elements your policy should cover
Essential components of effective performance management
Performance standards
Clear expectations for job performance and outcomes.
Review cycles
When and how performance reviews are conducted.
Feedback processes
How ongoing feedback and coaching work.
Performance metrics
How performance is measured and assessed.
Improvement plans
Process for addressing underperformance.
Documentation
What records are kept and how they are used.
What's included in this template
A complete framework for managing performance consistently
Purpose & scope
Why performance management matters and who it applies to.
Policy statement
Core principles of fair and consistent performance management.
Performance expectations
How job expectations and goals are set and communicated.
Review process
The formal performance review cycle and timeline.
Ongoing feedback
Regular check-ins, coaching and informal feedback.
Performance ratings
How performance is assessed and rated.
Performance improvement
Steps when performance falls below expectations.
Recognition and rewards
How good performance is acknowledged.
Training and development
Link between performance and development opportunities.
Documentation and records
What is recorded and how records are maintained.
Common performance management challenges
How your policy should address typical scenarios
Underperforming employees
When an employee isn't meeting expectations, your policy should provide a clear pathway. This typically includes informal feedback first, then a formal performance improvement plan (PIP) with specific goals, support, and timeframes. Document every step to demonstrate you gave the employee a fair opportunity to improve.
Inconsistent manager assessments
Different managers often have different standards, leading to unfair comparisons and grievances. Your policy should include calibration processes, clear rating definitions, and training for managers on how to assess performance objectively. This ensures employees are treated consistently regardless of who manages them.
Lack of ongoing feedback
Annual reviews alone aren't enough. Employees need regular feedback to improve and stay engaged. Your policy should establish expectations for ongoing check-ins, informal feedback conversations, and coaching. This prevents surprises at formal reviews and gives employees time to course-correct.
Linking performance to outcomes
Employees need to understand how their performance affects their career. Your policy should clarify how performance ratings connect to pay reviews, promotions, development opportunities, and continued employment. This transparency motivates good performance and sets clear consequences for persistent underperformance.
Who should use this template?
Any business wanting fair, consistent performance management
Legal disclaimer
This template is designed to reflect Australian workplace standards and Fair Work principles at the time of publication. It is provided as a general guide only and does not constitute legal advice.
Performance management processes must comply with procedural fairness requirements. You should review and tailor this template to suit your business, industry, modern award, enterprise agreement and specific workplace circumstances. For complex situations or disputes, seek independent legal or HR advice.
Regulatory sources
This template is aligned with Australian employment and performance management requirements.
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Related guides
Learn more about implementing this policy
How to conduct a performance review
Step-by-step guide to running effective performance reviews.
Read guideHow to terminate an employee fairly
Fair employee termination covering legal requirements.
Read guideHow to onboard a new employee
Complete onboarding checklist for Australian businesses.
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View templateDisclaimer
This document is a general HR template provided for informational purposes only. It is not legal advice and may not reflect the latest changes in legislation or apply to every workplace situation. RosterElf Pty Ltd and the template provider accept no liability for any loss arising from reliance on this document. Users should seek independent legal advice and customise the template to ensure it complies with all relevant laws, awards and workplace requirements.