Performance Management: an overview

Performance Management can best be described as a process which contributes to the effective management of individuals and teams in order to achieve high levels of organisational performance and productivity. It is an essential requirement for the introduction of performance management that all involved establish a shared understanding about what is to be achieved and have a common approach to leading and developing people which will ensure that goals and targets are achieved.  Effective performance management requires a strategy that will encompass every activity within the organisation and must be fully grounded in the context of the organisations human resource policies, culture and communications systems.  As every organisation is different the strategy used will be unique to that organisation.

Good performance management includes the identification of staff development needs, and ensuring that people have the knowledge and skills needed to make the organisation successful.

Because performance management is complex it will require established structures to support it and so ensure its success. These structures should provide a framework to assist the staff involved to help each other to operate in an effective and efficient manner.  In order to be most effective the structures should not impose a rigid framework but rather a flexible one that allows individuals to operate with a degree of flexibility.

The first step in the performance management process is for the organisation to determine corporate strategic goals then for these to be to be broken down into departmental goals. This approach means individual departmental managers and their staff will draw up plans to achieve the departmental goals and formal procedures will be devised for continuous performance monitoring and feedback by regular formal review meetings. These reviews often take the format of regular performance appraisals during which an employee’s manager assesses the employee’s performance, potential and development.

Organisations can achieve the best results from their employees by managing performance within an agreed framework of planned goals, objectives and standards. Organisations which have a performance management system also have staff who understand the standards required of them, staff who are able to prioritise their work and know how it fits into the overall aims of the organisation.

Employee development or continual professional development can be an effective route for improved organisational performance.  Performance development reviews are learning events, during which individuals are encouraged to think about how and in which ways they want to develop. This should result in individual employees and their managers drawing up of a personal development plan setting out the actions they propose to take to meet their development needs.

Many organisations as part of their performance management process set performance objectives or ‘goals’ to be accomplished by individuals, departments and the organisation over a period of time. These targets or goals can take the form of levels of sales, production targets or even income generated. These targets or goals can be departmental or individual related.  For performance to be managed effectively it is essential to establish a known and transparent basis for measuring individual or departmental performance fairly across the organisation.

Some organisations link performance management to performance-related pay as this can be a motivator in securing individual commitment to achieving the organisations goals and ensuring the profitability of the organisation. It is also fair that employees should be rewarded if they assist in bringing about increased profitability within the organisation.

Performance management has a significant role to play in enhancing organisational performance in both large and small organisations. It ensures that all individuals understand what is expected of them in achieving the business objectives and also equips them with the skills and support to achieve this. The process encourages managers to build positive relationships with individuals and ensures effective communication throughout the organisation and such co-operation should result in greater job satisfaction and improved productivity and profitability for the organisation.