Increase Business Success with the Performance Management System

Increase Business Success with the Performance Management System

Mention the word performance management and the first thing that comes to most people’s minds is an appraisal or an annual review which is viewed by employees and managers alike as a nerve wrecking process; managers complain that they have not been guided or coached on how to assess people while employees complain that the process is unfair.

Employee performance is usually assessed through an annual performance review whereas performance management is a broader concept which not only assesses employee’s performance but also measure how individual goals align with overall organization goals.

Realizing the Value of Performance Management System

According to Anthony Montebello (2003) performance management is a powerful tool for:

  • energizing people
  • propelling productivity to new heights
  • shaping a group of individuals into a committed work force dedicated to continuous improvement

These objectives, however, are often far from realized and, in worst cases, can actually deteriorate employee motivation.

This is because effective performance management system has to fulfill two divergent goals; administrative (process that focuses on employee performance in order to determine compensation, promotions, etc.) and developmental (process that focuses on employee performance in order to provide feedback and training, etc.) which may be at odd with each other. Employees adopt defensive attitudes during administrative goals which may stop attempts to address developmental goals.

There is a need to combine these goals because this enables us to look at the employee’s performance in a more holistic manner and enhances the decision making process.

Employee Performance Management Best Practice

Reviewing goals on a recurrent basis as opposed to just once a year, i.e. having an ongoing performance management system is preferable to the annual performance review because it:

  • does much more to improve performance
  • more fully develops the potential of employees, and
  • Produces greater results. (Anthony Montebello, 2003)

Other best practices recommended Watson Wyatt’s Human Capital Index research report (2004) include:

  • Delivering regular relevant job feedback
  • Setting and communicating clear performance expectations
  • Linking performance to compensation clearly
  • Identifying organizational career paths for employees
  • Evaluating performance and delivering incentives in a fair and consistent manner
  • Providing appropriate learning and development opportunities
  • Recognizing and rewarding top performers

If you want to develop a committed workforce that is energized and engaged then employee performance management needs to become an ongoing process that is linked with other talent management processes. In order to make the process easy and efficient automated systems and tools can help. They can be especially useful where there are limited staff and budgets.

Image courtesy of bplanet /

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