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What is Performance Management?

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Performance management is a process for establishing a unified understanding between a supervisor and an employee about the expectations of management and what needs to be accomplished at the organization level.

This entails creating an aligned set of objectives for each employee to be measured by, but it also emphasizes learning and development for a higher level of workplace performance. Each employee should be motivated to improve his or her skills, competencies, development and delivery of results.

Emphasis on strategic goals and progress

Most organizations utilize a form of employee appraisal, or annual review. While most find it to be a standard and acceptable method of measuring an individual’s contributions over the previous year, many organizations find many shortcomings through this method of measurement. Without an emphasis on strategic goals and progress, employers can’t really determine whether improvements were made in congruence with the organization’s objectives.

Effective performance management ensures an employee’s activities and outcomes are aligned with the organization's goals. This entails a well-defined process that establishes groundwork for excellence in the following ways:

Link individual employee objectives to the organization through its mission and strategic plans. Employees should have a clear understanding of what is expected of them and how their goals will contribute to the company’s overall achievements. Performance expectations should go beyond the job description and entail a range of expected outcomes:

  • What goods and services should the job produce?
  • What effect should the work have on the company?
  • How should employees act with clients, colleagues and supervisors?
  • What organizational values should the employee demonstrate?
  • What processes or methods should the employee use?

Create measurable performance-based objectives and expectations. Employees should understand and give input on how each objective’s success is to be measured. Expectations can generally fall into two categories:

  • Results — the goods and services produced by an employee often measured by objectives or standards
  • Actions and behaviors — the methods used to make a product or perform a service, and the behaviors and values demonstrated during the process. Actions and behaviors can be measured through performance dimensions.

Define professional development plans. Supervisors and employees should work together to create development plans. The plan can focus on skills aimed at mastering the job or on professional development skills that go beyond the scope of the employee's job description. Employees should have a say in what new things they learn and how they can use it to the company’s benefit.

Meet regularly to discuss overall progress and identify potential roadblocks. Rather than waiting until an annual review, managers and employees should be actively engaged throughout the year to determine overall goal progress.

The benefits of performance management

Performance management essentially shifts the focus away from annual reviews to a more ongoing form of accountability. The simple implementation of periodic meetings ensures an ongoing level of progress rather than stagnation for the majority of a year and then a sudden rush to meet objectives at the last minute.

Performance management, when implemented correctly, can create positive performance outcomes at a drastic rate. Below are just a few basic benefits obtainable for employees, managers and organizations:

  • Improved communication. Employees and managers communicate more regularly to discuss company objectives and overall progress.
  • Established rules. Employees and managers more easily understand the process and stipulations for how performance appraisals are performed.
  • Reduced stress. Employees aren’t stressing about impressing a manager through some random task and managers aren’t worrying about offending employees for not performing.

Performance management is a healthy endeavor not only for employee development, but also for organization growth.

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