Performance management is a process bringing together many of the elements that make up the successful practice of people management in a business in order to achieve high levels of organizational performance. As such, it establishes shared understanding about what is to be achieved and an approach to leading and developing people which will ensure that it is achieved.
Here are some elements that can be included in an effective system.
In an effective organization, work is planned in advance. This includes setting performance expectations and goals for individuals or departments. It helps channel employee efforts towards achieving organizational objectives. Getting employees involved in the planning process will help them understand the company’s goals, what needs to be done, and why it needs to be done, and how well the job needs to be done to meet expectations.
Reviewing performance regularly allows the company to receive feedback from all employees. Managers can identify and resolve employees' concerns, problems and ideas for improvement. Reviews ensure all members of the organization are held accountable for personal performance. It is important also to operate in a "no surprise" developmental-oriented employee performance review, with significant employee input, to ensure employees see the fairness of the practice.
An organization can be strengthened when employee needs are evaluated and addressed. Development means increasing the capacity to perform through training, assigning new functions that introduce new skills or higher level of responsibility or improving work processes. Providing employees with training and development opportunities encourages better performance, enhances moral, and helps employees grow. This improves the company’s bench strengths and facilitates organizational succession planning.
The elements outlined strengthen the ability of the organization to achieve results and attain overall goals to grow and sustain profitability. Highly motivated employees who understand performance expectations, achieve panned goals, should enjoy improved compensation and promotion to positions of greater responsibility. The payoff is that management can focus on larger strategic issues that can improve profitability and growth.