One of the leaders in employee engagement is David Zinger and his employee engagement pyramid of engagement building blocks demonstrates the relationship between performance management and employee engagement. I especially like the building block titled "Build Relationships" because it focuses on the fact that we have tasks to do however we don't actually manage the tasks our people do, we lead and manage the people doing the tasks. And that requires a good work relationship that fosters respect and in order to gain or keep employee respect the manager must be accurate, honest and organized. All of those qualities point toward an objective performance management evaluation based on predetermined goals and job duty metrics.
An organization must be able to identify key performance indicators for employees in order to be successful at performance management and thus be able to increase employee engagement. When performance management is left by itself standing alone as a single entity not tied to the goals of the organization (which should include increasing employee enagagement ) then it becomes the anti-employee engagement tool, in which case you should go to a rating that uses 666.
Organizations that successfully cascade down goals by using appropriate metrics not only acheive goals, they also improve employees which brings us back to the building blocks in David Zinger's pyramid and the two blocks directly underneath and supporting the top block of "Results", those two are "Maximize Performance" and "Path Progress". Employee engagement is easily increased when the employee has had an accurate and impartial performance review. The employee has energy when approaching job duties and the job has meaning to the employee when goals are achieved by an increase in performance. My highest energy days are when my manager had delegated a new task to me and let me handle the details and execution. Trusting an employee to perform to the maximum necessary brings an energy that increases the energy of those around him and that's one of the ways you increase employee engagement.
I have read many articles on the problems businesses are confronting in trying to use performance management evaluations. Some have just stopped using it, they say it is only good for a few years and then get rid of it. However, the middle managers lower the coaching and communicating they were barely doing during performance management years to an almost non existant level because performance management is gone. Some companies try to just "make it work" with the old subjective form and suffer the consequences. The successful ones have turned to using performance measurements that the employees agree they have control over, this in turn brings meaning to the employee's job. And WOW that happens to be another building block in David Zinger's pyramid on employee engagement. I see only one way to go if you've already started a performance management program and that's to use key performance indicators and a rating system that supports success.