The Concept of Performance Management

Performance Management is an integrated control system where processes, activities, personnel, and feedback are applied, It ensures an organization’s output meets it’s goals effectively where complex numerical concepts are being easily communicated and acted upon. It’s a continuous process of employee-supervisor communication to reach their highest potential, eventually maximizing an organization’s performance. It creates a shared understanding of what and how it is to be achieved; an approach to manage people to increase the probability of accomplishing job-related success.

In the current competitive global environment in which organizations operate, the need to retain and develop highly skilled employees is paramount for prosperity and survival.  Armstrong implies Performance management is an approach of getting better results from teams and individuals by understanding and managing performance within an agreed framework of period, planned goals, standards and attribute competence requirements. Bates and Holton argue that performance management is a multi-dimensional construct, the measurement of which varies based on a variety of factors where Armstrong and Baroncan state that it be defined as an integrated and strategic approach to deliver sustained organizational successes with improved performance. A similar view have been expressed by Nanni, Dixon and Vollmann stating performance management represents measurement and control systems that create information to be shared with:

• Align work with objectives;
• Developing Employees;
• Motivating Employees;
• Employee Retention;
• Assessing Performance internal-external users;
• Improving Performance;
• Holding Employees Accountable;
• Compensation Decisions;
• Termination Decisions;
• Recording for legal protection.

The Process

Performance management consists of six basic elements such as direction sharing, goal alignment, ongoing performance monitoring, ongoing feedback, coaching and developmental support and recognition and rewards. It could be noted as per March and Sutton that ‘performance’ and ‘effectiveness’ are put together interchangeably because problems related to their definition and measurement are virtually identical. Shenhav, Shrum and Alon argue that the two concepts can not be independent, effectiveness and performance contributed the literature interchangeably, hence the performance has become the most dominant concept. The Division of Human Resources and Organizational Effectiveness recognizes four key elements of performance management as PCER model consisting Planning, Coaching, Evaluating and Rewarding. According to Schneier, Beatty and Baird, a performance management system is classified into a development, planning, managing, reviewing and rewarding phase.

Phase 1 - Developing and Planning

Planning is the first stage in the performance management system and offers the foundation for an effective process which should be dealt with a great care. Armstrong and Baron point out that objectives or goals describe something to be accomplished by individuals, departments and organizations over an agreed period of time. Similarly Rogers and Hunter stated that goal setting is the fundamental aspect for an organization. In this planning phase, The managers and subordinates are participated in a process to set individual and team goals while the company crates an environment for employees to achieve and measure their outcome against an agreed standard evaluation. 

Phase 2 - Managing Performance

Managing performance is the second element of the performance management process. This step differentiates performance management as a process from performance appraisal as an activity. Amrstrong and Baron pointed that performance management is a tool to ensure that managers manage effectively. Therefor the performance management system should ensure that business expectations are communicated to the employees and the organisations fund required resources to deliver the captioned results. It includes the performance reviews which can be regarded as learning points, feedback coaching and document review which follows each step one after another to be identified completed by the manager in order to improve performance.

Phase 3 - Rewarding Performance

According to Schneier, Beatty and Baird, the rewarding performance phase consist three activities such as Personnel Development, Linking to pay and Identifying the performance. In Rahdert's view, the function of individual development is that the growth of people that is achieved naturally through personal and team goals. Teke also points out that required training and development interventions and constant performance feedback are important factors in skills retention which should be in line with HR coaching. Pay for the performance should be carefully designed.

Conclusion

Performance management (PM) is widely advocated as a way to develop employees. The performance management is the process for a company to manage it's performance in line with corporate and functional strategies and objectives. It creates significant source of information on human capital and provides a wide contribution to the organisations. As an important process in the field of business management performance management has specific goals and deadlines for their implementation, as well as concrete step-by-step stages of the implementation of the given tasks.