What is Performance Management?

performance management

What makes a business successful and sustainable in a long run? Is it the easy communication, advanced technology? I say not! Technology is indeed the facilitator, but not a guarantor for a company’s success. It is indeed their workforce.

So what makes a business successful is their people. The motivated talented employees, offering outstanding services to the customers. The customer wants to get the right information at the right time promptly and accurately. Only people can make this happen.

This ideology is well known in today’s workplace as ‘Performance Management’.

What is Performance Management

Performance Management is the strategic process of identifying, evaluating and developing the performance of the workforce – individual and team both, and aligning them with the ultimate goals of the workplace for an improvement to occur.

The performance of a company depends on the individual performance of its employee irrespective of the company’s size, purpose, and other characteristics. Moreover, performance management is seen as the critical aspect for small-big businesses, profit-non-profit, domestic-global, front officeback office and to all the industries. It is the process carried out under the HR department. Unfortunately, 96% of the HR professionals’ priority concerns are aligning strategic organisational priorities with employees’ performance. However, effective performance management requires two things:

Simple steps, yet complex process.

Performance Management Process

The process of performance management can be listed into 5 steps:

  1. Analysing performance role
  2. Identification
  3. Evaluation
  4. Feedback
  5. Performance Improvement

Step 1 – Analysing Performance Role

An effective performance management requires a keen understanding of performance domain, which includes the duty area, task of the jobs. As the scope of improvement comes only after assisting. The purpose of this process is to get a basic understanding of the most relevant and useful information and to focus on the most common approaches of the job. After all, these job analyses are not only the basis of defining performance but a major factor which drives salary and pay levels. Performance can be determined as follow:

Performance as Behaviour

From the perspective of employee, job performance is identifying behaviour. It is what the employees do in their working hours, how well they are fitting in their job roles and duties, the level of execution and the other behaviour which impacts their work call overall.

Performance as Outcome

From the perspective of a manager, it is the outcome which matters than how the outcome is achieved. It is the goals achieved, not the activities, that are important. What is the total sales? How many products were sold? How much profit is made? Such questions address the performance as the outcome.

Step 2 – Identification

Identifying the cause of performance is one of the most critical step of performance management process. Unfortunately, if identification is not made in conscious, it will still be done in an unconscious fashion. For example, identifying why John did poorly on the project? Is it the work pressure? Is there’s a skill he’s lacking? Here we are attempting to understand why something occurred. Hence, when we try to answer such questions after properly reflecting upon them, we increase chances of higher and effective performance growth.

Step 3 – Evaluation

Evaluating the tasks of the job increases the accuracy of the performance management. Evaluation is the process that critically examines the job task. It involves collecting information, data for an effective outcome. Evaluation directly affects the programming decisions. For example, judging how a worker carries out her/his task answers where she/he is lacking. Maybe there’s a scope of improvement in the skills, or maybe there’s a scope of improvement in the method of functioning and many other drawbacks. In other words, to evaluate means to judge the value or worth of the worker.

Step 4 – Feedback

Feedbacks are critical in enhancing performances. A well-constructed feedback can make all the difference. It can be seen in two ways in performance management process:

Feedback from the perspective of an employee:

Feedback from the perspective of a manager:

Step 5 – Performance Improvement

A performance improvement plan is an agreed upon plan that includes SMART goals (specific, measurable, attainable, relevant, and time-bound). This final step explicitly states the performance gap and what can be done to fix it. It’s like a result card which has all the listed drawbacks, which upon improvement can enhance the performance of an employee.

Benefits of Performance Management


The selection of employee for promotion, salary raise, transfer, and other actions depends drastically on performance management report. For the deserved candidate to achieve deserving position, s(he) has to go through performance management.

Morale and Retention

Performance management pinpoints the most motivated, deserving, loyal, skilled employee. After which they can be segregated accordingly. When a well-deserving employee gets what s(he) deserves, his/her morale rises, which ultimately results in higher productivity and employee retention.

Effective training

While performance management results in making a “good employee better”, it also results in creating an effective training program for the employees which is specific and consist of right amount of knowledge which matched the employee needs. This leads to an effective training process as the employees actually pay attention, otherwise a training workshop with no specific audience is a waste of office time.

Firing risks

Performance management segregates the deserving and non-deserving employees. Employees with weaker skills can be trained and evaluated after which they can be placed to a position which suits them and the company’s goal. While the employee and the organisation could benefit from an early end to a bad situation.

Bottom line

Strategizing a performance management open channels for employees to flag issues in times of need and a chance to express satisfaction when things go well. Similarly, for the managers, a perfectly shaped workplace whether a virtual workplace or a remote team or even in freelancing jobs, a balanced performance management system makes a workplace credible and builds a workplace diversity of success.

By Anshika Awasthi

Competitive, real; loves to keep working for what it wants. An extrovert who lives by her own ideas and methods.

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