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Performance Management

What is Performance Management 

Performance management (PM) includes activities that ensure that goals are consistently being met in an effective and efficient manner. Performance management can focus on the performance of an organization, a department, employee, or even the processes to build a product or service, as well as many other areas.Performance management as referenced on this page is a broad term coined by Dr. Aubrey Daniels in the late 1970s to describe a technology (i.e. science imbedded in applications methods) for managing both; behavior and results, two critical elements of what is known as performance

Performance Management


This is used most often in the workplace, can apply wherever people interact — schools, churches, community meetings, sports teams, health setting, governmental agencies, and even political settings – anywhere in the world people interact with their environments to produce desired effects. Armstrong and Baron (1998) defined it as a “strategic and integrated approach to increasing the effectiveness of companies by improving the performance of the people who work in them and by developing the capabilities of teams and individual contributors.”

It may be possible to get all employees to reconcile personal goals with organizational goals and increase productivity and profitability of an organization using this process. It can be applied by organizations or a single department or section inside an organisation, as well as an individual person. The performance process is appropriately named the self-propelled performance process (SPPP).

First, a commitment analysis must be done where a job mission statement is drawn up for each job. The job mission statement is a job definition in terms of purpose, customers, product and scope. The aim with this analysis is to determine the continuous key objectives and performance standards for each job position.

Following the commitment analysis is the work analysis of a particular job in terms of the reporting structure and job description. If a job description is not available, then a systems analysis can be done to draw up a job description. The aim with this analysis is to determine the continuous critical objectives and performance standards for each job.

Benefits of Performance Management:

Managing employee or system performance facilitates the effective delivery of strategic and operational goals. There is a clear and immediate correlation between using performance management programs or software and improved business and organizational results.

For employee performance management, using integrated software, rather than a spreadsheet based recording system, may deliver a significant return on investment through a range of direct and indirect sales benefits, operational efficiency benefits and by unlocking the latent potential in every employees work day (i.e. the time they spend not actually doing their job). Benefits may include: 

Direct Financial Gain
  • Grow sales
  • Reduce costs in the organization
  • Stop project overruns
  • Aligns the organization directly behind the CEO’s goals
  • Decreases the time it takes to create strategic or operational changes by communicating the changes through a new set of goals
Motivated Workforce
  • Optimizes incentive plans to specific goals for over achievement, not just business as usual
  • Improves employee engagement because everyone understands how they are directly contributing to the organizations high level goals
  • Create transparency in achievement of goals
  • High confidence in bonus payment process
  • Professional development programs are better aligned directly to achieving business level goals
Improved Management Control
  • Flexible, responsive to management needs
  • Displays data relationships
  • Helps audit / comply with legislative requirements
  • Simplifies communication of strategic goals scenario planning
  • Provides well documented and communicated process documentation

Performance Management Process

Performance Management is a cyclical process aimed at improving performance (eg: achievement of business objectives). Performance Management involves the following principles (illustrated by a call center example):

  • Measurement
    • You establish performance measures
      (eg: sales turnover)
    • You establish measurable behavioral goals that will improve performance
      (eg: making 30 prospective phone calls a day)
    • You measure current behaviors
      (eg: logging actual phone calls)
  • Appraisal
    • You compare the current behaviors with the behavioral goals and identify the main differences
      (eg: on average, 20 phone calls are actually being made, giving a shortfall of 10 phone calls).
  • Action
    • For each difference, you plan how to bring actual behaviors in line with the goals, in order to improve the performance
      (eg: introduce a revised telephone script that qualifies the prospect more quickly, shortening each phone call and enabling more calls to be made in the time available)
    • You implement the plan
      (eg: issue the revised script to all telesales people, perhaps with some training to support its use)
  • Monitoring
    • Check that the new plans are being followed (e.g.: review a sample of phone call recordings to determine whether the new script is being used and check that it is ‘workable’).
    • At an appropriate time, you return to the appraisal stage to assess the impact of the changes on the behavioural and performance measures
      (eg: review the average number of calls made per day and sales achieved).

The term “Performance Management” is often used in two contexts:

  1. A way of maximizing performance of an individual, team or organization
  2. A process for dealing with under performing individuals (or teams).

Whilst the underlying principles are always the same, the way in which they are implemented varies between the two contexts.

Maximizing Performance Poor Performers
Usually collaborative between management and staff Involves more confrontation
Can be informal, with written records only recording revised targets Is a formal process with each step being written down
Is a cyclical process, one of constant improvement Is a process that escalates into disciplinary proceedings, possibly concluding with termination of employment
Often involves analysis of the process Often involves analysis of one individual’s behaviors/attitudes


Performance Management is a term used to improve team performance, based on the principles of measurement, appraisal, action and monitoring. However, it can be manifest in very different forms depending on whether the aim is to further improve good performers, or deal with under performance. Performance Management can also apply to individuals, teams, groups or organizations.

Also Study:

Factors Affecting Employee Performance

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