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.
What is 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?
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.
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.