Performance Management

Definition

Performance management is the process of ensuring that an organization's employees work towards the achievement of its goals and objectives. It involves setting performance standards, monitoring and evaluating employee performance, and providing feedback and support to help employees improve their work.

5 Must Know Facts For Your Next Test

1. Performance management helps organizations align employee performance with strategic goals and objectives.
2. Effective performance management can lead to improved employee engagement, productivity, and retention.
3. Regular performance reviews and feedback are crucial components of a successful performance management system.
4. Performance management systems should be tailored to the specific needs and culture of an organization.
5. Linking employee compensation and rewards to performance can help motivate and retain top talent.

Review Questions

• Explain how performance management is related to the concept of measuring and evaluating strategic performance (9.6).
  • Performance management is closely tied to the process of measuring and evaluating an organization's strategic performance. By setting clear performance standards and goals, and regularly monitoring and assessing employee performance, organizations can determine the extent to which their strategic objectives are being achieved. Performance management data can provide valuable insights into the effectiveness of an organization's strategies and help identify areas for improvement.
• Describe how performance management is integrated into the overall human resource management process (11.1 and 11.3).
  • Performance management is a critical component of human resource management, as it helps organizations attract, develop, and retain talented employees. It is typically integrated into the HR process through activities such as job analysis, employee selection, training and development, and compensation and benefits. Effective performance management can also inform other HR decisions, such as promotions, transfers, and succession planning, ensuring that the right people are in the right roles to support the organization's goals.
• Analyze how the use of goal-setting and management by objectives (17.4, 17.6, and 17.7) can influence employee performance and the overall performance management process.
  • The use of goal-setting and management by objectives (MBO) is a key aspect of performance management. By collaboratively setting specific, measurable, and achievable goals, employees and managers can align individual performance with organizational objectives. This process helps to clarify expectations, motivate employees, and provide a framework for monitoring and evaluating performance. Moreover, the regular review and adjustment of goals through MBO can help employees adapt to changing business conditions and stay focused on the most important priorities, ultimately improving overall organizational performance.

Related terms

Balanced Scorecard:

A strategic performance management tool that uses financial and non-financial measures to provide a balanced view of an organization's performance.

Key Performance Indicators (KPIs):

Quantifiable measures used to evaluate the success of an organization or a specific activity in meeting its objectives.

Management by Objectives (MBO): A performance management system where employees and managers set specific, measurable goals and objectives, and then regularly review progress towards those goals.