Performance Management in Contemporary Business

Performance Management is a hot topic in business today.  Many companies now understand that unless you develop goals and an associated Performance Management process it is difficult to;

1. succeed (as the entire company is not aligned in what it is trying to accomplish) and
2.  provide the corporation with a long-term focus that is achievable

In today’s competitive business environment, achieving organisational goals is highly challenging irrespective of the nature of the organisation be it private, public or non-profit organisation. In meeting these challenges, organisations are spending a considerable amount of time, energy and resources in setting goals and objectives, developing strategic plans, formulating strategies and devising strategic control mechanisms. The idea is to clarify the organisation’s goals and objectives, prepare a road-map for achieving those objectives, be able to monitor the organisation’s progress on a periodic basis, compare the actual results with the planned targets and take any managerial action if necessary. However, many organisations struggle with this process. For example, developing an acceptable performance measurement system is not an easy task as it gets confronted with a large number of intricacies from different interest groups. Some of these issues include what to measure whether inputs, outputs or income, how to measure, and the difficult of the quantification of performance measures. (Julian & Sharma, 2005)

According to (Dransfield, 2007), Performance management is an HRM process which is designed and concerned with getting the best performance from individuals, teams and the organisation as a whole. This is owned and driven by line managers. Effective performance management therefore involves sharing an understanding of what needs to be achieved and then managing and developing people in a way that enables such shared objectives to be achieved.

A well-developed performance management system should include the following:

        i.            A statement containing the organisation’s values

      ii.            A statement of the organisation’s objectives

    iii.            Individual objectives which are linked to the organisation’s objectives

    iv.            Regular performance reviews throughout the year

      v.            Performance related pay

    vi.            Training and counselling

With such a system in place it becomes possible to establish for a period of time the key result areas that an individual will be judged against. The results individuals achieve can then be judged against expected standards. A reward system can then be tailored to the way in which the individual enables the organisation to achieve its results.

Performance Evaluation is a multi-purpose tool which can be used to measure actual performance against expected performance, Provide an opportunity for the employee and the supervisor to discuss job performance, Identify employee training and development needs, and plan for career growth, Identify skills and abilities for purposes of promotion, transfer, and reduction in force, Support alignment of organization and employee goals, Provide the basis for determining eligibility for compensation adjustments based on merit and Provide legal protection against lawsuits for wrongful termination. The primary purpose of Performance Evaluation is to provide an opportunity for open communication about performance expectations and feedback. Most employees want feedback to understand the expectations of their employer and to improve their own performance for personal satisfaction. Employees prefer feedback that is timely and given in a manner that is not threatening. (Dossett & Greenberg, 2015).

Why Go For Performance Management?

You may ask yourself, what benefits would I derive from employing performance management in the work place? A few of them are listed below.

 Performance Management focuses on results, rather than behaviours and activities.
A common misconception among supervisors is that behaviours and activities are the same as results. Thus, an employee may appear extremely busy, but not be contributing at all toward the goals of the organization. An example is the employee who manually reviews completion of every form and procedure, rather than supporting automation of the review. The supervisor may conclude the employee is very committed to the organization and works very hard, thus, deserving a very high performance rating.

Aligns organizational activities and processes to the goals of the organization.
PM identifies organizational goals, results needed to achieve those goals, measures of effectiveness or efficiency (outcomes) toward the goals, and means (drivers) to achieve the goals. This chain of measurements is examined to ensure alignment with overall results of the organization.

Cultivates a system-wide, long-term view of the organization.
Richard A. Swanson, in Performance Improvement Theory and Practice (Advances in Developing Human Resources, 1, 1999), explains an effective performance improvement process must follow a systems-based approach while looking at outcomes and drivers. Otherwise, the effort produces a flawed picture. For example, laying off people will likely produce short-term profits. However, the organization may eventually experience reduced productivity, resulting in long-term profit loss. 

Produces meaningful measurements.
These measurements have a wide variety of useful applications. They are useful in benchmarking, or setting standards for comparison with best practices in other organizations. They provide consistent basis for comparison during internal change efforts. They indicate results during improvement efforts, such as employee training, management development, quality programs, etc. They help ensure equitable and fair treatment to employees based on performance.

Talk to us today and let us help get your organization focusing its energies towards the same goals.