An important component of developing employees is a comprehensive and well executed performance management system incorporating elements such as regular one-to-one meetings, through to performance appraisals and processes to manage underperformance.
Performance management is a well-established, all-encompassing term used to describe the practice that drives decisions about performance, remuneration, promotions, disciplinary procedures, terminations, transfers and development needs within an organisation.
Performance management is a much broader concept than performance appraisal or a disciplinary process. It aims to improve organisational, functional, team and individual performances. Effective performance management measures the progress being made towards the achievement of the organisation's business objectives. It does so by planning, establishing, monitoring, reviewing and evaluating organisational, functional, team and individual performance.
Holistically, performance management may incorporate job design, recruitment and selection, training and development, disciplinary procedures and counselling, career planning, compensation and benefits and performance appraisals.
WHY DO WE DO IT?
To maintain competitive advantage in today's dynamic economic environment, it is essential that organisations invest the time to accurately reflect upon, evaluate and measure their performance at all levels against specific criteria. This process not only ensures strategic objectives are achieved and stakeholder needs are being met, but will have a direct impact on an organisations bottom line and ability to grow in the future.
A well-structured and implemented performance management system provides a number of benefits to the organisation, management and employees. These benefits include:
- establishing group and individual performance objectives to ensure that their performance is aligned with the organisation's strategic and operational objectives
- linking performance evaluation and employee development and rewards to motivate individuals
- assisting the organisation in improving its productivity and efficiency
- regular monitoring of progress toward achievement of performance objectives
- identification of specific training needs across the organisation
- improved salary administration
- improved communication and relationships between managers and staff members
- improved guidance and assistance in developing capabilities and potential of staff members
LINK WITH OTHER HUMAN RESOURCE ACTIVITIES
In order for a Performance Management system to work effectively, it must be encouraged and supported by strong leadership (support from senior management) and an organisational culture which values improvement. The diagram below depicts the relationship between performance management and other HR activities within the organisation. Put simply, all other HR activities need to be managed effectively as they have a direct impact on the performance management process and its likely success. Managed successfully, performance management can have flow on effects to other intangible elements of the HR function including engagement.