The importance of performance management

The interest in this topic has become more prevalent as the demand for up-to-date information has intensified with the economic downturn.  Human Resource professionals are striving to ensure performance is assessed against fair and relevant measures and are focusing on issues that really matter for their business.
Performance management is about helping people to understand how they contribute to the strategic goals of organisations. It is the process of creating a work environment in which people are enabled to perform to the best of their abilities. 
Armstrong and Baron (1998) defined Performance Management as; ‘a process which contributes to the effective management of individuals and teams in order to achieve high levels of organisational performance.  As such, it establishes shared understanding about what is to be achieved and an approach to leading and developing people which will ensure that it is achieved’.
Performance management ensures that managers effectively manage the people they are responsible for and in line with organisational objectives and goals. According to the Chartered Institute of Personnel and Development, it is the primary means by which they ensure that employees;

  • Know and understand what is expected of them
  • Have the skills and ability to deliver on these expectations
  • Are supported by the organisation to develop the capacity to meet these expectations
  • Are given feedback on their performance
  • Have the opportunity to discuss and contribute to individual and team aims and objectives

The process should be clear and easy to understand and individuals need to appreciate what performance management is trying to achieve, how the outcomes will be used as well as what the benefits will be for themselves and the organisation.
Effective performance management can be a powerful tool to focus activity and effort and enhance business performance. However, if done badly, it can disengage, de-motivate and misdirect rewards.
Poor performance management practices incur direct costs through loss in productivity that happens when performance problems are not addressed quickly. For example, a manager who only reviews employee performance once a year, and rarely talks to employees about performance throughout the year is likely to have huge inefficiencies. If the problems were discovered and addressed during the year, many of those productivity problems could be eliminated.
Some examples of poor performance include; not adhering to company standards or policies and procedures, inaccuracy and lack of attention to detail, poor attitude towards management and colleagues, missing deadlines, lack of commitment, motivation and initiative.
The key to effectively managing employee performance is communication. Regular and frequent communication is important with all employees, but it is especially important when dealing with a possible performance problem. Ongoing communication ensures that there is a shared understanding how the work should be produced.
Performance Management should be;

  • Effective – to ensure people have the knowledge and ability to perform.
  • Strategic – to take account of broader issues and longer-term goals.
  • Integrated – to link various aspects of the business, people management and individuals and their teams.
  • Employee performance management includes: Planning work and setting expectations, monitoring performance, developing the capacity to perform, rating and rewarding good performance.
  • Performance management provides an excellent opportunity to identify developmental needs. During planning and monitoring of work, deficiencies in performance become apparent and can be assessed.  Areas for improving good performance also become evident and action can be taken to help successful employees improve even further.

The goal of performance is to achieve the company mission and vision. Almost no one performs for the organisation, if their own mission and vision are not being accomplished.
According to Armstrong and Barren, in their book ‘Managing Performance’ performance management adds value by;

  • Communicating a shared vision of the purpose and values of the organisation.
  • Defining expectations of what must be delivered and how it should be delivered.
  • Ensuring that employees are aware of what contributes to high performance and how they need to behave to achieve it.
  • Enhancing motivation, engagement and commitment by providing a means of recognising effort and achievement through feedback.
  • Providing the basis for formulating personal development and improvement plans.
  • Enabling people to monitor their own performance as well as those responsible to them against agreed objectives and standards.
  • Encouraging dialogue about what needs to be done to improve performance – achieving this by mutual agreement rather than direction from above.

Performance management is a comprehensive, continuous and flexible approach to the management of organisations teams and individuals which involves continuous communication between those concerned.  Performance appraisal is a more limited approach which involves managers making top-down assessments and rating the performance of their subordinates at annual performance appraisal meetings.
Instead of focusing narrowly on the performance evaluation and the appraisal meeting, ask how your entire performance management system supports your desire to create a customer serving, motivated, accountable, reliable, creative, dedicated and happy workforce.  As management professionals, one of your major goals is to create a workplace in which people can develop to their full potential to create a high performance organisation. An effective performance management system guarantees you will achieve your goals.


Step Up to Training and Recruitment by Pam Travers, Stepping Stones Training and Development Ltd
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