Understanding Performance Management

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Understanding Performance Management

The mandate to operate at an optimal performance level and meet financial and organizational expectations are transforming the way organizations do business. This evolution is driving higher standards of competence in day-to-day operations and adding new pressure to increase stakeholder value. In today’s rapid-paced business climate, the agility with which a company manages performance can determine market position and company profitability. Defining Performance Management

Performance management is the integrated process of defining, assessing, and reinforcing employee work behaviors and outcomes (Cummings and Worley 2005). Performance management focuses on understanding, optimizing, and aligning action and decisions and ensuring the collaboration and empowerment of all individuals across the business network. It includes practices and methods for goal setting, performance appraisal, coaching, employee development and reward systems. More than ever, organizations need broader measures of employee performance to ensure that (1) deficiencies are address in a timely manner through employee development programs that meet the needs of the organisation and its market, (2) employee behaviours are being directed toward performance of specific objectives that are consistent with the work unit and the organization strategy, and (3) employees are provided with proper and timely feed back to assist with their career development. These practices jointly influence the performance of individuals and work group, and enables them to work across strategic, tactical, and operational levels to align actions to ensure optimal performance. In order for effective performance management to take place, the process must utilize information from three time periods to do so. It makes use of data from the past in order to gather information form past performance. This information is then utilized in the present for the establishment of work plans, goals and the setting of development opportunities. These objectives therefore allow for high levels of performance in the future.

The Purpose of the Performance Management System

The main purpose of performance management is to make sure that employee goals, employee behaviours used to achieve these goals and feedback information about employee performance are all linked to the corporate strategy. However there is no one way to manage performance. What ever system is adopted needs to be congruent with the culture and principles that pervade the organization. Most systems of performance management has three purposes- Strategic, Administrative, and Developmental. The strategic purpose- Defining Performance

One of the ways in which strategies are implemented is by management defining the desired results, behaviours and employee characteristics necessary for carrying out strategy. They can then develop measurement and feedback mechanisms which will show hoe effectively results are being achieved and what to do to produce results. The organization can achieve this strategic purpose if it is flexible and amendable to changes in the goals and strategies which can occur, and also to recognise that if such changes occur, then there needs to be change in results, behaviours and characteristics of the employees, which must of necessity change to correspond with such organizational changes.

The Administrative Purpose-Measuring Performance
Performance appraisal information is one of the main instruments used by organizations for making administrative decisions, for example, salary administration, in terms of pay raises; promotions, retention or termination, recognition of individual performance and identification of poor performance.

The Developmental Purpose- Feedback and coaching
This aspect of performance management seeks to develop further, employees who are good at their jobs. In instances where employees are not performing up to standard,...
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