Performance Management is a continuous and systematic approach that ensures the achievement of organizational business goals by streamlining employee performance and efforts to match the set goals efficiently. Performance Management builds a communication system between a Manager and an employee that occurs throughout the year, in support of accomplishing the strategic objectives of the organization.
Performance management is an important aspect in HRM. It is used to create a work environment where people are motivated to provide their best performance and do quality work.
In the existing business scenario, the role of Performance Management in HRM is very huge and important. The Performance Management compiles all the functions such as Goal Setting, regular performance review in accordance with the set goals, set instant communication amongst the team member for coaching, providing performance feedback and its report for creating better employee training and development programs, and finally connect performance with reward and recognition
Managing the Performance of the employee is the most important function of Human Resource.. Performance management is defined as an ongoing process of identifying, measuring, and developing the performance of the employees in the organization. Its main objective is to focus on employee performance and direct their efforts towards achieving the business goal of the organization.
Performance management is a tool that is widely used by managers to monitor and evaluate the work performance of employees.
The tools start working from Job design followed by coaching, training and development and connect performance with reward and recognition and ultimately result to achieve the organization's goals and objectives
Please find below that how these eminent authors have defined “Performance Management”
Armstrong and Baron “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”
Lockett "Performance Management is – ‘The development of individuals with competence and commitment, working towards the achievement of shared meaningful objectives within an organization which supports and encourages their achievement’
Mohrman and Mohrman ‘Performance Management is managing the business’
Walters "Performance Management is the process of ‘Directing and supporting employees to work as effectively and efficiently as possible in line with the needs of the organization’
Ronnie Malcom ‘Performance management may be defined as a planned and systematic approach to managing the performance of individuals ensuring their personal development and contributing towards organisational goals.’
John Storey ‘Performance management includes the whole cycle of agreeing goals and objectives (which may vary in their degree of specificity), providing feedback, offering coaching and advice and motivating staff to perform at a high level.’
Dr. T. V. Rao ‘Performance management involves thinking through various facets of performance, identifying critical dimensions of performance, planning, reviewing and developing and enhancing performance and related competencies.’
Manuel Mendonca and R. N. Kanungo ‘Performance management refers to the process of setting and communicating performance targets, defining evaluative criteria to be employed at different levels of performance, monitoring performance, reviewing performance, providing feedback and taking corrective measures to remove performance snags.’
Brumbrach 'Performance management is a process for establishing a shared understanding about what is to be achieved, and how it is to be achieved; an approach to managing people which increases the probability of achieving job-related success.'
Bates and Holton 'Performance management can be defined as a strategic and integrated approach to delivering sustained success to organizations by improving the performance of the people who works in them and by developing the capabilities of terms and contributors.'
Often people misconstrue performance management with performance appraisal. However, performance management is quite different than performance appraisal. It is an extension of performance appraisal after the feedback or review of the performance.
The three additional steps in performance management are:
a) Performance interview
b) Archiving performance data
c) Use of appraisal data.
The types of performance are determined based on the vertices included in the performance appraisal or review system. It can range from the self-assessment of the employee to the review from different members of the organization such as managers, peers as well sometimes extend to check the review of customers and investors.
The advantages of the performance management are mentioned below pointwise :
The following are the disadvantages of the performance management :
Performance feedback is the most important part of the performance management system. It is used by the organization in the following ways:
Areas to Improve: On a timely basis the management and the supervisor provide information to the employee about the areas in which they can improve their performance. It includes tips, ways, and coaching for performance improvement.
Game Plan for Improving: Motivation and direction is provided through feedback in order to create a game plan to improve performance.
Achievements and Accomplishments: In a performance management system, the feedback includes both positive and negative information about employee performance. Managers can declare the achievements and accomplishments of the team member in public meetings or on the common communication platform to motivate the performing employee. A one-to-one meeting is suggested to convey the negative feedback to the employee.
Attitudes and Behaviors: The attitudes and behaviors of the employee are also addressed during performance management. Through performance feedback, the managers put forward the favorable behavior expected from the employee to make a teamwork success. The upbeat attitude of the employees keeps the organization thriving and inspired.
Goals for Next Year: In the yearly feedback meetings the managers discuss with the employee about the upcoming challenges and work responsibilities. New goals and objectives are set for the employees for the next financial year. The standard performance expected of the employee is also conveyed in the performance feedback meeting.
The regular performance management system sometimes does not provide the expected results. Thus there is a need to innovate in the approach to performance management. Cargill Inc is one such company that used a creative way to effectively use organizational performance management for the betterment of the company. Cargill Inc is a food producer company in Minneapolis. It was very difficult for the company to motivate and engage its 155,000 employees located worldwide. In 2012, the company introduced the ‘everyday performance management’ system which acted as a turning point for the organization. The system is used for on job conversation which is a part of the feedback and daily work encouragement for the employees. The principles of the ‘everyday performance management system are:
a) Effective performance management is not an annual thing it is an ongoing process
b) the quality of the performance can be predicted using day to day activities and not feedback forms
c) the most important factor of an effective performance management system is the relationship between employee and their manager
d) It is essential to design a flexible performance management system to meet the different business needs of the organization.
The leadership team of Cargill recognized that in order to see the visible difference in the performance dedicated efforts of several performance management cycles are required. The process of performance management was implemented with the involvement of senior leaders and the participation of the employee. The HR team of Cargill kept special focus on :
a) Encouraging the managers who carry out day-to-day performance management by regular rewards
b) Documentation of tips and experiences of implementation of a new performance management system in the organization
c) The teams were accountable for the implementation of day-to-day performance management in the organization.
d) Special efforts were taken to build up the skills required to implement the new performance management system such as skills to deliver feedback and develop effective two-way communication and coaching.
Here is the way the ‘everyday performance management system
How often to communicate?
Not prescribed; ongoing; based on the needs of managers and employees.
Who initiates/is accountable for feedback communication?
What are the topics of communication?
Goal alignment, goal adjustment. goal progress and feedback,
How much documentation?
Documenting each conversation and comment is encouraged.
Use of technology
Simplified, normal notes, e-mails or memos.