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HR Glossary > Performance Management
Performance management is the strategic, timely, and progressive planning, appraisal, coaching, and development of all employees. Evidence suggests that it is a reliable and valid method for improving performance in all organizations, where it has been established as being applicable.
The performance management process creates a work environment in which employees can perform to the best of their abilities. It is a continuous process, preferably a one-time event, to monitor, influence, and manage an employee’s performance. Towards this end, the performance management process identifies business expectations and measures them against the employee’s performance.
The stages of performance management are:
The first step in employee performance management is to identify the goals of each employee. Identifying these goals is best done during the recruitment process itself. It helps to establish the expectations for individual employees and how they will be monitored over time.
The next stage in employee performance management includes setting short-term goals that are specific, measurable, and achievable. Depending on the nature of the work environment, it should review these goals at either monthly or weekly intervals to determine if there has been any change in them from their initial state.
The final stage involves discussing any changes that may have occurred since the last meeting. It can then review these changes and adjustments made if necessary. The manager can also determine whether or not these changes can be accounted for by external factors or whether there is an issue about the employee’s ability to perform their job duties or responsibilities.
According to Schneier, Beatty, and Baird (1987), there are four critical elements in any performance management system: planning, managing, reviewing, and rewarding.
Performance management is a system of managing the work performance of employees. It is also referred to as a performance appraisal system. The primary aim of any performance management process is to ensure that the employees are productive and can meet the desired targets.
The main objectives of a performance management system are to:
-provide feedback to employees regarding their performance.
-help the employees to learn from their mistakes or deficiencies.
-identify the training and development needs of employees.
-motivate employees towards achieving organizational goals and objectives.
-provide an effective system for compensation and reward of employees, based on their contributions towards organizational goals and objectives.
1. Helping in identifying the strengths and weaknesses of individuals.
2. Identifying opportunities for growth and development.
3. Helping the leader develop actionable performance insights that they can use to improve performance.
4. Providing transparency and clarity on how people are performing.
5. Providing organizational leaders with access to critical insights about their business across an organization.
6. Helping leaders to recruit and retain top talent based on data-based insights.
7. Helping organizations meet their objectives by focusing on key metrics/KPIs/KBIs.
There are differences between performance management and appraisal. Performance management is a process in which an employee is given guidance, training, and assistance to improve performance and productivity. Performance appraisal occurs when an employee is evaluated by his supervisor or higher-level manager based on his performance during the past period. Both the processes are essential and complement each other, but they differ in nature.
A good performance review program has several critical features:
1) It provides meaningful employee feedback at regular intervals throughout the relevant periods.
2) It identifies employees’ goals for promotion or pay increases.
3) It measures progress in achieving specific goals.
4) It provides managers with feedback on how well the employee performs these goals.
The essential elements of performance management systems are planning, monitoring, developing, rating, and rewarding work. These five component processes are interconnected and interact with each other so that performance management systems naturally support natural, effective performance management.
These five component processes do not occur in isolation from one another. They work together to create a complete performance management system that supports natural, effective performance management.
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