Performance Management

What is Performance Management?

Performance Management is the process or system by which an organization measures and improves performance within its workforce. An organization may use performance management to monitor performance on an organizational level, a departmental or team level, and an individual level, although the term most commonly refers to individual performance. Common elements of a performance management system include:

Performance reviews - Manager one-on-ones - Peer feedback - Performance improvement plans - Goal-setting and tracking - Rewards and recognition programs

Within a typical performance management system, managers are responsible for tracking and developing performance with their own team members and then reporting to the higher leadership team. In the past, the process often consisted of a round of annual performance reviews for each employee. However, as research reveals the effectiveness of frequent feedback more and more, many companies have dropped the annual review model and adopted a system of regular manager check-ins and informal feedback sessions. This type of management can help employees understand and align with company goals and objectives regularly, making small adjustments over time instead of trying for one larger course correction at the end of every year.

Also read : The Modern Guide to Performance Management Process


What is the importance of Performance Management?

Now that we know what is performance management, we can know the importance of performance management, the Per­for­mance Man­age­ment process com­bines infor­ma­tion gath­ering through mon­i­tor­ing goal com­ple­tion, feed­back, and dis­cus­sions. By analyzing suc­cess­es, strengths, learn­ing from mis­takes and exam­in­ing poten­tial for growth and devel­op­ment, busi­ness­es can devel­op tal­ent, enhance indi­vid­ual per­for­mance and weed out prob­lems. This makes it a vital aspect of any firm.

Encour­ages Employ­ee Reward and Recognition

A third of com­pa­nies believe reward and recog­ni­tion sys­tems result in bet­ter staff reten­tion, while half also attribute greater moti­va­tion to offer­ing incen­tives.

Helps to Boost Employ­ee Engage­ment and Productivity

Improv­ing lev­els of employ­ee engage­ment is key to boost­ing pro­duc­tiv­i­ty and max­imis­ing ROI. Per­for­mance man­age­ment, done well, is a vital tool for hav­ing engaged employees.

Helps to Cre­ate Employ­ee Devel­op­ment Strategies

Con­tin­u­ous per­for­mance man­age­ment means you are proac­tive­ly devel­op­ing employ­ees by cov­er­ing their devel­op­ment needs

Allows for the Exchange of Feedback 

The impor­tance of feed­back in per­for­mance man­age­ment can­not be over­stat­ed. Employ­ees want feed­back — and they want it reg­u­lar­ly. They need (and deserve) to know how they are per­form­ing and how they can improve.

Cre­ates Clar­i­fi­ca­tion Con­cern­ing SMART Goals 

The right per­for­mance man­age­ment process­es can elim­i­nate ambi­gu­i­ty and con­fu­sion about goal set­ting. Hav­ing reg­u­lar, future-focused con­ver­sa­tions through con­tin­u­ous review helps to ensure employ­ees are clear on every­thing they are sup­posed to be doing and what is expect­ed of them.

What are the objectives of Performance Management?

Performance Management aims at building a high-performance culture for both the individuals and the teams so that they jointly take the responsibility of improving the business processes on a continuous basis and at the same time raise the competence bar by upgrading their own skills within a leadership framework

The major objectives of Performance Management are discussed below:

  • To enable the employees towards the achievement of superior standards of work performance.
  • To help the employees in identifying the knowledge and skills required for performing the job efficiently as this would drive their focus towards performing the right tasks in the right way.
  • Boosting the performance of the employees by encouraging employee empowerment, motivation, and implementation of an effective reward mechanism.
  • Promoting a two-way system of communication between the supervisors and the employees for clarifying expectations about the roles and accountabilities, communicating the functional and organizational goals, providing regular and transparent feedback for improving employee performance and continuous coaching.
  • Identifying the barriers to effective performance and resolving those barriers through constant monitoring, coaching and development interventions.
  • Creating a basis for several administrative decisions strategic planning, succession planning, promotions, and performance-based payment.
  • Promoting personal growth and advancement in the career of the employees by helping them in acquiring the desired knowledge and skills.

What is the difference between Performance Management and Performance Appraisal?

Performance Management:

It is the process of managing and developing employee performance throughout the organization. It aims at planning, tracking and assessing employee performance for a specific period. The end result of performance management is to motivate employees and further increase their efficiency and effectiveness.

Performance Appraisal:

The process of evaluating employee performance on a regular basis is called as performance appraisal. Although, unlike performance management, it is restricted to evaluating past performance and conducted once or twice a year, depending upon the organization’s policies.

Thus essentially, performance appraisal is an integral part of a comprehensive performance management approach.

Types of Performance Management in HRM

The types of performance management are based on the vertices present in the performance review or evaluation system, the categories of performance are established. It can range from an employee's own evaluation to feedback from colleagues and supervisors in the business, as well as occasionally checking feedback from clients and investors.

A. General Appraisal:

In this style of performance management, manager and employee are in constant contact on performance throughout the year. They discuss the previously established goals, the objectives, the performance reviews, and they define new goals.

B. 360-Degree Appraisal:

Peers and the employee's management offer input regarding the performance and behaviour of the employee in a 360-degree appraisal.

C. Employee Self-Assessment:

The worker contrasts their own performance with the minimum level required of them. Employees and the management talk about their successes and failures in the workplace.


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