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.
Definition of Performance Management by different authors
In the 1970s, Performance Management was first used as a term. In the late 1980s, it became known and acquainted procedure
Armstrong and Baron in 1998 claimed, Performance Management is a strategic and integrated approach to delivering sustained success to organizations by improving the performance of the people who work in them and by developing the capabilities of teams and individual contributors.
Vijay and Jayachitra in 2000 mentioned Performance Management is building performance appraisal by adding the related communication and action on the progress achieved against determined goals
Bussim in 2012 said that Performance Management can be distinct as an ongoing process of improving the individual, team and organizational performance
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.
Thus essentially, performance appraisal is an integral part of a comprehensive performance management approach.
What are the types of performance management processes?
Strategic vs operational performance management
How an executive team drives strategy and changes through the organization is quite different from the day to day management of operational performance. One is focused on local issues, managing exceptions, and incremental improvements. The other is after a significant change, longer-term across the organization. The requirements for strategic change should influence how operational performance is being managed. Many organizations operate their balanced scorecards as simple sets of operational measures in perspectives. Yet Norton & Kaplan devised the Balanced Scorecard System to manage strategy and organizational change. Both operational management and strategic change are useful but they serve quite different performance needs, interact, and should be designed together to complement one another.
Organizational vs individual performance management
How individuals (or teams) are incentivized, developed and managed is often left to the HR performance management system, yet this is a major influence on operational performance and strategic change. Change how people are developed and managed, and you change how the organization is managed. It seems easy to manage operations and teams yet the changes here can clash with the individual appraisal, development and reward systems. Beware of tackling any aspect in isolation.
What governs how we manage performance? The assumptions we make…
Sometimes we make assumptions about how we should manage performance, without looking at the impact of those assumptions, or their unintended consequences.
External Governance vs internal performance management.
How you report externally is quite different from the tools for managing performance internally. Externally, a much narrower subset of information is reported, though there are exceptions where regulation is concerned. Internally a wider set of information is needed to manage the drivers of performance rather than merely the consequences of those actions. What is needed externally is not adequate to manage internally. Recognize that different stakeholders have different needs.
Control vs empowerment
An organization approaching performance management with a mind-set of “We need to get a grip on what is going on” is primarily interested in control. This mindset is quite different from an approach that seeks to empower the front-line staff: an approach that says, “We want this information to be useful to the people who produce it, otherwise, why would we want it?” Imagine a situation where you look at performance combined with an analysis of the situations and actions that were already being taken. You are no longer asking, “How do I manage this performance?”, but rather, “Is this performance being managed appropriately?” Quite a different mind-set.