Performance management encompasses two different categories of management. In one category the performance of the company is analyzed as whole, on the other hand the employee’s performance is analyzed, or in more explanatory terms an analyst views the complete performance of a company along with evaluating the efficiency of managers as well as the heads of companies in achieving goals on the other hand a system is created to evaluate employee performance to assist them in reaching rational objectives to ensure that the organization executes tasks in a better way. Performance management consist activities that ensure that organization goals and objectives are being met in an effectual and proficient way.
It focuses on the routine of work of the organization, different departments, the process in building products/service and employees. The different activities concerned with performance management are discussed in this article. Experts say that: “Employee performance management works best when work is planned and goals are consistent. This may mean having a clear way to communicate regarding work expected at the moment and upcoming work. Planning also includes defining expectations of the employee so that he or she is not broadsided by evaluation criteria not included in planning.” Basically performance management of individual employees is varied; it usually consists of the following:
• Setting goals
• Planning work
• Offering Feedback/reviews
• Offering opportunities to learn more in a particular field
• Rewarding employees who perform well.
The application of Performance Management
The principles of performance management are required wherever people interact with their surroundings to generate the desired outcomes. The performance management approach is regularly used in the workplace but it can apply wherever people network for instance, society as a whole, schools, community meetings, sport teams, governmental organizations, political settings, parties etc. The laws of behaviour are same everywhere in the world in spite of the cultures being varied. Authors Armstrong & Baron (1998) define performance management as “A strategic and integrated approach to increasing the effectiveness of organizations by improving the performance of the people who work in them and by developing the capabilities of teams and individual contributors.”
Performance management makes it possible to get all employees to reunite individual goals with organization goals. It helps to convert any secondary business into a profitable organization as well as increasing its productivity. It can be used by large organization, single departments or by sections inside an organization as well as by individuals.
The most known performance management system is known as the Self-Propelled Performance Process (SPPP) It is a self-inspired performance process and has the following characteristics:[sky]
• It is the fastest known method for career promotion
• It is the quickest way for career advancement
• It is the surest way for career progress
• It is the best ingredient in planning careers
• It ensures career success
• The complete application of performance management
• It is the best way to incorporate human behavior research findings with organizational, management and leadership development values
• It is a way to increase motivation and productivity
• It helps improve performance and increase profitability for the individual as well as the organization
• It helps to inspire employees to get things moving
• It helps employees to utilize their own talents
Besides being the most popular method for performance management it is also the most neglected, when it comes to teaching about management and leadership principles. Any how, before starting a performance management process it is essential to conduct commitment analysis deriving information from the strategic plans of the organization, where the job mission statement is drawn for each job needed to be done.
The job mission statement is actually a definition of the job, in terms of the purpose of the job keeping in view the product, scope and customers. The objective of this analysis is specifically to determine the standards of employee performance and key goals for each work position.
After the commitment analysis is the work analysis of a specific job, in terms of the structure of the job along with reporting and job description. In any case that a job is not available, then an analysis of the system can be done to draw up a description of the job. The aim of this analysis is to establish the constant critical objectives as well as the performance standards of all the jobs.
The Benefits of Performance Management
“Planning and setting goals in performance management also creates a system of predictable rewards for good performance, and consequences for poor performance. This way the employee can reasonably assume the consequences of work performance, whether good or bad.” The management of systems performance or employees smoothes the process in the successful delivery of operational and strategic goals; there is a visible and instant connection that links the use of performance management programs or software’s and the organizational results and improved business.
The usage of integrated software’s rather than spreadsheet based recording systems proves to deliver better and significant returns on investment when calculating employee performance. These results can be derived through a range of direct as well as indirect sales benefits along with operational efficiency benefits. These results also help in unlocking the dormant prospective in each employee’s work day, that is the time that each employee spends in the office, not doing their assigned work/job. Such benefits include the following:
“(Direct) Financial gains:
• Reduction in costs
• Growth in sales
• Discontinuing project overruns
• Decreasing the time it takes to construct operational or strategic changes, by communicating the changes via a set of goals & objectives.
• Supports the organization to directly follow the CEO’s aim/purpose.
• High confidence in bonus payment process
• Improving employee engagement because everyone understands how they directly contribute to organizations high level aims and objectives
• Creates transparency in the achievement of goals
• Professional development programs work better when aligned directly with achieving business level goals
• Optimizing incentive plans to particular goals for over achievement and not just standard business.
Improving Management Control
• Helps comply with legislative requirements
• Simplifies communication of strategic goals through scenario planning
• Provides well documented and communicated process documentation
• Displays data relationships
• Flexible and responsive to management needs”
Performance Management for the Development in Organizations
When talking about organizational development or (OD), performance can be considered as “Actual Results vs. Desired Results.” Any inconsistency where Actual is seen less than Desired might represent the performance improvement zone; however it is easier to understand if performance management and performance improvement are thought of as a cycle. This presumption is explained in the following points:
• Performance Planning: This is the point where the goals and objectives are recognized
• Performance Coaching: This is where a manager intervenes, to give feedback and amend performance
• Performance appraisal: This is where individual performances are formally documented and the feedback is delivered.
[adsense1]A performance problem is any gap that is between the Actual Results and the Desired Results whereas performance improvement is any effort that is targeted at closing the gap between Desired Result & Actual Result. However other organization development definitions are somewhat dissimilar; the Government Office of Personal Management (US) signify that, “Performance Management consists of a system or process whereby: Work is planned and expectations are set, Performance of work is monitored, Staff ability to perform is developed and enhanced, Performance is rated or measured and the ratings summarized and Top performance is rewarded.”
Performance Management & Employee Feedback
The purpose of performance management is basically to improve quality of work, but it also involves giving feedback to employees; however this feedback is given on a much more consistent basis than that of the annual review (performance appraisal). However the ability of an employee in meeting goals or their failure in meeting goals can be monitored on a monthly basis rather than on annual basis. This process gives the employee’s an opportunity to receive compliments and fair rewards on a regular basis or to make any changes in behavior soon enough, in any case it is not up to par.
It also happens that employees tend to feel that end of the year reviews/performance appraisals consist of criticisms of the work done in the past year, which was not candidly discussed with the employee’s. Employees are considered to benefit more from consistent models of performance management assessments as these give people time to take in hand any issues and change them.
[linkunit]On the other hand, “employees must also be given ways to grow and develop in their field. This means giving opportunities to work on harder projects, pairing less-skilled employees with expert employees, and offering team models where employees can direct and make decisions. Greater responsibility and opportunities to advance in one’s field are essential to maintaining happy and productive employees.” Rewards are a big component in performance management. However, the greatest rewards are in the monetary form that could be either in salary raises or even bonuses when the employee’s perform well. Also employees who are considered qualified to work in a higher level of their work field should also be placed in such positions, that are higher in rank and have a greater share of responsibility, with an increase in the share of pay of-course.
Organizations should make sure while conducting a performance management process that they focus as much on the positive performances as they do on the negative ones. The rewards announced for positive performances should be tangible; otherwise the organization runs the risk of being known as a “negative action” organization only.