essay about performance management

Performance Management: Key Strategies and Practical Guidelines Essay

Reflective statement, introduction, performance management background information, developing objectives for individuals and teams, assessing performance and providing feedback, performance support for improvement, philosophy in disciplinary and grievance procedures in an organization, references list.

In this study, there are a number of practical lessons and values learnt that are of the essence to a manager. Firstly, performance management is a process that is geared towards achieving objectives set by a business plan in order to realize success.

This work thus gives a manager an insight onto ways and methods that he or she can use to steer an organization towards performance. In this process, a manager learns soft skills in team management, team structure and team social relations as a creation of a “family setup” in business. This can only guarantee success if properly utilized.

Secondly, in performance management, there is a need to develop objectives and goals. Goals and objectives are developed using certain measures and strategies in order to get the organization on top.

These are skills that a manager learns that they give the right approach to the business. In this process, a manager gets certain knowledge, experience and practice to develop what right, recognize what is above of below the actual requirements of the organization.

In terms of team management, this assessment helps in the future appreciation on values embedded in human relations in the work place. As a manager one can develop the right environment in order to nurture different human perspectives, qualities and concerns.

The lesson is that as a manager one is needed to take the role of an evaluator of the interconnection of many systems and how effective they are. In case something goes wrong, a manager can take actions to provide solutions. This may include disciplinary measures as well performance appraisals for an effective organization.

Performance management recognizes the use of modern technology that is appropriate in the work place. The lesson for a manager lies in choosing what works where and how does it impact to an organization. This helps a manager in the future to determine the best technology to incorporate in the most efficient and effective manner.

Performance management goes beyond the simplistic approach towards the employees only. In the book, “Field Guide to Leadership and Supervision in Business”, McNamara and McNamara (2002) argue that successful management focuses on the organization, departments processes, programs, products projects and teams (Bayazit and Mannix, 2003).

Performance is not about being busy; however, it involves delivering results in line with the survival of the business. A business has no choice, but to ensure that strategic processes opted for are only those meant to increase the effectiveness of the organization. This paper will take a detailed analysis method to explain performance management under the given highlights of this assignment.

The definition of performance management includes various components, which are linked together in a cycle. In this cycle, business strategy forms the starting point of which the summary of the organization is outlined in fair details. Business strategy allows personnel in the organization to grasp the sense of direction. This is because it is clearly outlined and thus the objectives act as a guide to planning (Bacal, 2011).

Secondly, the goals or the objectives that are in an organization must emanate from the business strategy. The objectives or goals must be placed within a time framework where certain activities are guided by each step to the next. Following objectives is the structure of the organization. There must be systems established to work in line with the emerging and on-going strategic issues.

Modern technology and information systems provide competitive advantage if utilized properly. This approach enables the job descriptions to be designed, and the organisation to achieve the prescribed goals.

From these job descriptions, there is mutual agreement between the employer and the employee with certain targets put in mind. The targets, systems, and the organization can thus be expected to perform to the required standards hence the attachment of performance standards (TACK International (Africa) Ltd, 2009).

Emanating from this knowledge, personnel in the organization should be assigned duties that are detailed in the designed job description. For the organization to come up with a job description, job analysis must be conducted to ascertain the key competencies needed to achieve the set goals.

These competencies are explained in terms of knowledge, skills and capabilities. The goals in this line help to indicate the direction to be followed and do form the central frame work of reference and aid to identify success as well as clarify issues and expectations of the organization and the employees (Ridzi, 2004).

On the other hand, the team objectives start from the basic process of laying out the business strategy. A business plan in any organization must communicate its vision to its members. The objectives of the company and direction as directed by the overall strategic planning set the ground for team work.

If the systems in the organization are not incorporated in this aspect, then the sense of direction and objectives may not be a source of motivation to employees and thus this may pull the company vision to individual objectives (Warner, 2002).

Setting goals is a process that requires meetings between the various stakeholders in the organisation. In this process, the individuals form a team, which focuses on development of key attributes like positive attitudes on employees, morale, and job satisfaction. Through team social relations, team effectiveness and participation in decision making enhance in building a team that perceives the level of commitment as very high.

This aids in formation of team objectives that are in line with individual objectives due to the sense of togetherness and positive attitude. By developing such groups of individuals in a team, then every person understands his or her roles and responsibilities and thus adequate resources are provided for it (Cammann, et al., 1983).

The SMART plan is a concept that is used by quite a number of organizations. SMART stands for Specific, Measurable, Attainable, Relevant, and Time framed. The plan makes goals conform to the best ideals and strategies in making objectives.

The links between individual, team, and organization perspectives are put into consideration by allowing individuals to participate in the decision making process through meetings. Through mapping, the process can incorporate performance planning where the profile roles are reviewed to determine the appropriateness and the expected behavioural requirements (Riccucci, 2005).

During the planning stage, as a leader, it is important to identify and reach an agreement on the criteria that should be used to measure how far the objectives have been achieved.

In this section, the assessment should be focused on the objective chosen by the individual in collaboration with a manager, and evaluate how well it has been performed. It is important to put in mind that the objective may be focused on a task, a project, behaviour, values, developmental or performance improvement as well as on going role objectives (Talbot, 2005).

When performing assessment, the following measures should be used to evaluate individual and team performances. Finance as a performance measure seeks to check whether value has been added either to shareholder’s or even income.

On the other hand, output seeks to assess whether new accounts or sales have reached the agreed target. Impact checks the quality of standards, behaviour changes and completion of identified task or project or even innovation.

The measure of reaction seeks to ascertain the judgment gotten from other colleagues who may be internal or external like customers. In terms of time, the assessment analysis refers to the records of the speed taken to respond to something, or to assess the time taken in the process of delivery marketing and retrieval of data in regard to the set timetable (Cummings & Worley, 2009).

Assessment largely involves evaluating what has been achieved in comparison to established standard. Secondly, documenting recorded results in the most appropriate manner and finally communicating the results as feedback to the individual or groups follows.

Feedback in cases of performance management is either positive or negative. One important thing to note as a manager is that feedback must be timely and specific with regard to the objectives established thus acting as standards. When the space between time of performing and feedback is prolonged or hurried untimely, then the appreciable effect is never realized.

With this in mind, the methods of providing feedback must be carefully chosen upon the most relevant communication methods available and used by an organization. The major modes of communication include oral, writing and nonverbal communication systems. Each system has its disadvantages and advantages (Moynihan, 2008).

The writing mode of communication involves the traditional writing of letters, memos reports, manuals, forms and critical summaries. In modern forms, a manager must understand that emails, e-memos, social websites and mobile texts form the most common and advanced usage of writing as a method of communication.

Oral communication involves the use of meetings, forums, and discussion groups that are meant to deliver solutions or chat the way forward through the mechanics of voice variation, tone setting, pitch adjustments and body postures and attitudes (Armstrong, 2006).

Thirdly, the nonverbal method of communication includes all the elements that do not include written or oral expressions of communication. These may be facial expressions, physical movements. Facial expressions may be indicated by a number of things including eye contact.

Therefore, a manager has will use the appropriate communication network for individual and team performance feedback. For teams circle communication method should be the best method of providing feedback and line network is the best for individual feedback (Radin, 2006).

However, the two types must incorporate all modes of communication at the same for purposes of clarity and review. Feedback gives the personnel the window to assess his or her importance in an organization. At the same time, it allows management to come up with rewards for everyone. Individuals and teams are able to identify skills and abilities they should work on and the organization can assess the skills needed for success.

In the process of assessment, conflicts may arise if the program is marred by ineffective strategies or poor planning. Three issues in particular that may bring conflict are, who does the assessment, how often is the evaluation done and thirdly how is performance measured.

Inadequate think through processes may result to lack of diversity in the performance evaluation. Environment, available structures and other issues like gender must be taken into consideration during assessment to avoid or minimise conflicts (Griffin & Moorhead, 2011).

Therefore, the person who does the assessment must put these questions in mind and promote truthful accounting of feedback. The instruments used for assessment like graphs, charts, behaviour observation, forms, questionnaires and calculation indexes must be standard.

In this case, they should be acceptable universally or have international bearing, and provide competent results across the spectrum. The frequency and timing of measure should be stipulated in reasonable periods according to the organizations period of operation.

In the development of objectives like in the MBO plan, managers guide the teams, and individuals to develop objectives in line with what the organization has laid out. In this process, planning, performance review and evaluation have to be backed by the development of the interrelationship between managers and the group.

This development should be based on trust, social interactions, and social relations, which enhance team structure (Heinrich, 2000).

Since goals are developed in line with problems or outlined objectives, the performance improvement cycle involves planning for improvement as the first step. Secondly, the implementation of the improvement follows after review, which is followed closely by evaluation of success of the improvement program.

Finally, from the results, the next step involves making decisions. Therefore, in this cycle, the principles move from the plan, then to check and finally to act (Avis, 2009).

As a manager, one need to support the efforts of teams and individuals should be guided from the top going down. Support should be of different forms in order to enhance performance since changes keep on happening in the management process. The support on performance from management is advantageous since communication is enhanced and during difficult periods.

The support may involve verbal encouragements to individuals or teams from managers. On the other hand, the management as an organization should support the individual and team by providing systems that are needed.

The support systems for teams may include efficient inventory and schedule systems, better hiring systems, improved information systems and appropriate compensation systems. Team leaders and managers must ensure growth of the team and individual towards the outlined objectives (Lussier, 2011). The following is a sample of the performance improvement cycle diagram:

Source: Joint Commission Resources, Inc. 2001, p. 36

Grievances are common in work places and court processes often return to an employer after an ex-employee sues an organization. The philosophy of discipline in an organization revolves around evaluation of work performance.

The process of assessing how much has been gained, as projected in the goals and objectives of individuals, teams and organizations, lead to performance review through continuous performance improvement cycles (Grifffin and Moorhead, 2011).

From the assessment feedback and review, an organizational can determine the right employee suited for a certain job, as well as the needed skills. At the same time, employees are able to identify their areas of improvement using measures like 360 degrees self-feedback mechanism and other measures.

The management takes keen interests in both those who have performed and underperformed. For those who have performed above or as expected through the objectives, rewards, incentives and compensation follow from as a process of support from the organization (Falcone, 2002).

In cases of underperformance, the organization, teams, individuals and managers work together in review meetings to analyse the results and possible failure in the support process or the development of unrealistic objectives. This results to performance improvement cycles until the performance is satisfactory.

However, in situations where the individual consistently espouses underperformance due to lack of ability skills in the presence of necessary supportive systems, then disciplinary actions must prevail (Grifffin and Moorhead, 2011).

The philosophy of disciplinary measures must put in mind the “work place due process” concept. This involves recording of documents that “indicate threefold” warnings to an individual who constantly under performs. These records serve to help the individual assess the procedures and ways she or he can use to improve in order to avert the chance of losing the job.

In this process are the principles of progressive discipline. These principles attempt to indicate to the employee that they stand a chance of losing a job. Therefore, legally, probations, suspensions precede termination which must be founded on just cause (Brousseau, 1978).

Therefore, as a manager, the role is to first support the individual or team found to have underperformed. This is done through various measures of support improvement.

In the progress of serious mistakes or grievances as a manger, I should record the warnings and expressly offer information that places the concerned personnel informed. These roles must fall in the stipulated procedures as stipulated in the Fourteenth Amendment and thus respect the rights of employees and employers.

In summary, an organization must first assess and measure performance of teams or individuals using the appropriate procedures and methods. At this stage, information must be recorded and documented for future purposes and references. In the process, appropriate feedbacks are communicated using the relevant procedures through performance review meetings and forums.

Following this the organization takes to the drawing board to plan and redevelop or assess the objectives laid out in the previous plan. This makes a performance improvement cycle which enhances achieving of objectives.

In case there is under performance, the manager and team leaders refer to documented information and continue to support the areas that need development in an individual. These from the background warnings must accumulate to three or more than three times.

If the performance falls less than below the set goals for three improvement cycles then suspension, probation and summons should precede termination. If these fail, then the manager has the power to terminate on an acceptable cause (Cardy and Leonard, 2011).

For those who perform to the expected goals the organization promotes them to desired levels in order to help the organization to train others in the area or department. Secondly, the organization reviews the performance remuneration to commensurate with the new results hence the profitability of the organization.

Organizations should incorporate performance management strategies in the management process in order to realize the benefits of optimal resource utilization. The human resource in an organization forms one the factors that an organization has the power to use to realize goals and objectives. It is thus paramount that performance management should be regarded positively and accepted by managers worldwide.

Increased improvement and success in organizations has often been attributed to efforts in the team work. The measure of success used to assess teams can have more impact when performance management is put in place. It is thus important for organizations to include performance management in order to achieve success.

Armstrong, M 2006, Performing management: key strategies and practical guidelines (3 rd ed), Pentoville Road, London: Kogan Page.

Avis, J 2009, P2 – Performance Management, Managerial (6ed), Jordan Hill Oxford: Butterworth-Heinemann.

Bacal, R 2011, Performance Management (2/E), Burr Ridge New York: Mcgraw Hill Professional.

Bayazit, M and Mannix, EA 2003, Should I stay or should I go? Predicting team members’ intent to remain in the team. Small Group Research , 34(3): 290-321.

Brousseau, KR 1978, Personality and job experience. Organizational Behaviour and Human Performance , 22: 235-52.

Cammann, C, Fichman, M, Jenkins, GD, & Klesh, JR 1983, “Assessing the attitudes and perceptions of organizational members”, in SE Seashore, EE Lawler, P. Mervis and C, Cammann (eds), Assessing Organizational Change , New York: Wiley, pp. 125-175.

Cardy, LB and Leonard, B 2011, Performance Management Concepts, Skills, and Exercises. Business, Park Drive, New York: M.E. Sharpe.

Cummings, TG and Worley, CG 2009, Organization development & change , Australia: South-Western/Cengage Learning.

Falcone, P 2002, The hiring and firing question and answer book , New York: AMACOM Div American Mgmt Assn.

Grifffin WR and Moorhead, G 2011, Organizational Behaviour: Managing People and Organizations , Boulevard, Mason: Cengage Learning.

Heinrich, CJ 2000, Organizational form and performance: An empirical investigation of nonprofit and for-profit job-training service providers. Journal of Policy Analysis and Management, 19: 233–61.

Joint Commission Resources, Inc. 2001, Using performance improvement tools in ambulatory care , Oakbrook Terrace, IL: Joint Commission Resources.

Lussier, NR 2011, Management Fundamentals: Concepts, Applications, Skill Development (5ed), Boulevard, Mason: Cengage Learning.

McNamara, C and McNamara, T 2002, Field Guide to Leadership and Supervision in Business , New York: Authenticity consulting, LLC.

Moynihan, DP 2008, The dynamics of performance management: Constructing information and reform , Washington, DC: Georgetown Univ. Press.

Radin, BA, 2006, Challenging the performance movement: Accountability, complexity, and democratic values , Washington, DC: Georgetown Univ. Press.

Riccucci, N 2005, How management matters: Street-level bureaucrats and welfare reform , Washington, DC: Georgetown Univ. Press.

Ridzi, F 2004, Making TANF work: Organizational restructuring, staff buy-in, and performance monitoring in local implementation, Journal of Sociology and Social Welfare, 31:2.

TACK International (Africa) Ltd, 2009. A briefing note on Performance Management . Web.

Talbot, C 2005, “Performance management”, in E Ferlie, LE Lynn and C Pollitt (Eds) The Oxford Handbook of Public Management , Oxford: Oxford Univ. Press.

Warner, J 2002, The Janus performance management system: A complete performance management support process for individuals, teams, and the entire organization , Amherst, Mass: HRD Press.

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What is Performance Management? The Ultimate Guide for Building a Strategic Approach

Table of Contents

What is performance management, why is performance management important, recognizing when you need to reevaluate your performance management approach, how to build an effective and thriving performance management program, how to identify effective digital performance management tools, putting your new performance management knowledge into practice.

Unlocking business success hinges on building an effective performance management strategy. Shifting from annual reviews to real-time discussions is a start, but to truly excel, companies need the right approach, processes, and tools.

An optimal performance management program goes beyond evaluation––it humanizes employee contribution, transforms managers into coaches, and integrates employee engagement into daily operations to drive growth.

This guide will clarify performance management by outlining its significance for your business and providing a blueprint for developing a robust strategy. Together we’ll realize the full potential of your team.

Performance management is the systematic approach to defining goals, appraising progress, and offering consistent coaching and feedback. Effective performance management ensures employees at all levels within a company achieve individual targets and contribute effectively to their company's goals.

Who does performance management affect?

Performance management plays a crucial role across all levels of a company, influencing every employee, team, and even the organization's success as a whole. It's the tool that helps individuals improve their work, encourages teams to collaborate effectively, and guides the entire organization towards achieving its ambitions. 

In the following sections, we’ll explore the impact of performance management in three key areas: 1) the performance of individual employees, 2) the efficiency of teams working together, and 3) the overarching progress of the organization.

How performance management impacts employee performance

Your employees have unique responsibilities, strengths, contributions, and experiences that help (and sometimes hinder) performance. How they go about achieving their goals might look a little different.

Performance management impacts employee performance by ensuring employees have clear goals and priorities, an understanding of where their performance falls, and frequent feedback and coaching from their managers.

How performance management impacts team performance

Many businesses have shifted from rigid organizational hierarchies to more effective and agile team-based models and cultures. Team performance increases accountability and ownership of individual performance through transparent, aligned, and shared goals.

Performance management impacts team performance by helping people leaders build positive relationships between team members and create a culture of feedback that motivates employees to work better together.

How performance management impacts organizational performance

Workplaces need to bring people, processes, and systems together to get work done. When individuals and teams understand how and why their contributions impact organizational outcomes, they’ll be more likely to continue contributing to business success.

Performance management impacts organizational performance by helping businesses promote transparency, alignment, and collaboration so that all employees and teams are working together to reach a common goal.

How does performance management differ from performance appraisal?

Performance management and performance appraisal are distinct concepts in the workplace. Performance appraisal is an annual evaluation focusing on past behaviors and outcomes, often feeling static and retrospective.

Conversely, performance management is a continuous, dynamic process. Rather than a once-a-year event, it involves regular dialogue between employees and managers, facilitating real-time feedback and ongoing development from both people. 

This approach is interactive, with one-on-one conversations and frequent reviews to align personal goals with company objectives. Managers can excel in these regular conversations by individualizing their approach for each employee and being open to continuous feedback on how they manage.

The tools and resources that support this modern approach are varied and interactive. One-on-one conversations are a staple, allowing for personalized, direct communication about progress and areas for improvement. Collaborative reviews can take place semi-annually or quarterly, providing a more frequent check-in that helps to align individual goals with the company’s objectives. 

Digital tools can facilitate this continuous feedback loop by offering in-platform goal tracking, documentation of an employee's growth and development, transcripts of past one-on-one conversations, and more. 

The right system will allow for a more engaging and interactive process that empowers employees to take charge of their own performance while giving managers the resources to support their team effectively.

A study by Harvard Business Review Analytic Services found that more than half of business leaders chose productivity as a primary business goal for their organization's investments in performance management, employee engagement, and development. Yet only 31% say they’ve actually improved productivity as a direct result. This is where performance management comes in.

Performance management is crucial for several reasons, including:

• Employee Engagement : Regular feedback and clear expectations increase employee involvement and commitment.
• Productivity : Continuous performance dialogue helps individuals align their efforts with company goals, leading to higher productivity.
• Professional Development : Employees have clear pathways for growth and development, improving their skills and career prospects.
• Trust : Ongoing communication builds trust and understanding between staff and management.
• Organizational Success : A well-implemented performance management system aligns individual performance with company objectives, contributing to overall success.
• Training Needs Focus : Consistent assessments can reveal gaps in skills, guiding where to focus training efforts.
• Retention : A culture that fosters growth and values contributions can help retain top performers.

Compensation and Promotions: Performance management provides a basis for making informed decisions about pay raises and advancement.

Purpose of performance management

It’s clear that performance management is an essential part of business success. There are many reasons for performance management . When designed and implemented correctly, your performance management cycle has the power to:

• Clarify and reinforce expectations and accountabilities
• Align goals under the organization’s vision and mission
• Engage and retain top performers
• Develop and grow employees, personally and professionally
• Encourage critical thinking, agility, and creativity
• Motivate employees toward success

In understanding the power of performance management, it’s first important to recognize how this strategy came to be. Let’s take a look at its historical value and context.

History of performance management

Performance management has taken many shapes over the years and eventually went on to shape what we now categorize as the “traditional performance appraisal approach”. This looked at an employee’s individual performance by:

• Setting goals at the beginning of the year
• Working on those goals throughout the year
• Reviewing performance against those goals at the end of the year
• Determining compensation and bonuses based on the review of these goals

Historically, employees were categorized as high, middle, or low performance workers, and contributions were measured by output versus outcomes.

Historical trends that inform modern day performance management

Given that the original performance management systems were built to suit workplaces at the turn of the 20th century when work environments were much different, they’ve received an upgrade over the years. 

As theories on employee motivation and satisfaction have been more widely understood, more participative and developmental forms of assessment have been introduced. The rise of technology and data analytics drove this shift, enabling more frequent, detailed, and personalized feedback throughout the year . 

The shift to continuous performance management

As businesses have evolved over time, so has performance management. Today, organizations are leveraging their talent as a competitive advantage and prioritizing innovation and critical thinking over execution.

This evolution has inspired a shift from annual appraisals and goal management to continuous performance conversations and feedback. Our research shows that 36% of employees prefer to have weekly one-on-ones and just 3% want to only have these conversations annually.

A continuous performance management approach allows leaders to capture real-time data and coach toward ongoing progress.

Peter Cappelli, Director of the Center for Human Resources at The Wharton School of Business at the University of Pennsylvania, outlines three reasons for adopting a continuous performance management approach.

Employees want ownership over their development.

As millennials continue to monopolize the workforce, businesses have been forced to create cultures that encourage employees to design their own paths to success. Continuous performance management gives managers the opportunity to coach employees in real-time and reflect on current work to help determine where they should focus going forward.

This focus is even more pronounced with generation Z ’s entrance into the workforce. This digitally native group values transparency and clear pathways for advancement. They are not content with the status quo; instead, they seek active participation in building their career trajectory. They prioritize work-life balance, seeing it as a fundamental necessity for success rather than a company perk. 

Performance management systems that empower millennial and gen Z employees with tools to set goals, track progress, and receive continuous feedback resonate with their desire for autonomy and personal development, while also meeting their expectations for a supportive work environment that acknowledges the importance of life outside the office.

Managers want teams with a unified purpose.

High performing teams are made of talented employees who feel supported by their managers, peers, and senior leadership. While individual goals are important, team goals help businesses grow and drive ongoing performance for the long-term.

Our research shows that managers play a fundamental role in team success and unified goal setting. We’ve found that managers can be more effective in team management by prioritizing three things:

• Growth and development : Quantum Workplace’s employee development research uncovered that 79% of employees who were introduced to a formal development program were considered more engaged versus the 58% who said their organization didn’t have a program.
• Recognition and appreciation : Our research shows that 52% of employees want regular recognition from their manager, and 22.1% never or rarely receive comments expressing appreciation. This can go a long way.
• Feedback and strong communication : By having regular one-on-one meetings, you will have a more engaged workforce. Our findings show that 71% of employees who have a weekly one-on-one with their manager are more highly motivated and engaged in their work. This number is almost 20% higher than those that just have a one-on-one annually, showing how much value regular communication has.

When put into practice, these priorities have the power to foster a team with a unified purpose where every member is aligned and working toward a common goal. Having a unified team reduces confusion, focuses efforts, and creates an atmosphere where individuals are motivated not just by their personal successes, but also by the success of the team as a whole.

Businesses need to be agile and tech-savvy.

The future of work is unpredictable. To stay the course, organizations need access to technology and systems that help their:

• Leaders quickly review, adjust, and adapt their strategies as needed
• Teams set, align, and track progress on goals
• Employees understand their impact with clearly defined and transparent goals

What does a continuous performance management approach look like?

To sum up everything we’ve discussed above, continuous performance management is about having regular talks between bosses and workers instead of just a yearly review. This process prioritizes giving feedback often, setting goals together, and using the right tools to track results consistently. 

These regular check-ins help workers know where they stand and help leaders guide their teams effectively, making sure everyone is working towards the same goals and objectives that boost company results.

How organizational performance impacts business success

Better performance across the organization means a better chance at hitting organizational goals and achieving key business outcomes. When performance is measured and discussed continuously, it builds engagement and vice versa. 

Put simply, when employers prioritize collaborative, transparent, and supportive performance management practices, employees are more engaged and ultimately more successful.

According to Business Leadership Today , companies that score in the top 25% of organizations for good employee experience have the potential to outpace sales of lower scoring organizations by two times. 

The business case is clear––engaged employees do lead to better organizational performance and business success. 

Knowing when to reevaluate your performance management approach is crucial to maintaining a productive and engaged workforce. If your current system isn’t yielding the desired results or if employee morale is on the decline, it might be time for a change. 

This section will highlight key indicators that signal the need for a fresh look at how you manage performance. From lackluster results to a disengaged team, we'll guide you through the signs that your performance management system requires a strategic overhaul to realign with your organizational goals and employee expectations.

Signs your performance management process needs improvement

A few key signs can point to the need for changes in your performance management process. These are the red flags to look out for:

• Stagnant Employee Growth : If you're noticing that employees are not developing their skills or advancing in their roles, your performance management process may lack the necessary support for their growth.
• Low Morale and Engagement : A drop in team morale or a lack of enthusiasm for work can indicate that your performance strategy isn't providing the motivation or recognition that employees need.
• Inadequate Feedback Mechanisms : When feedback is infrequent, not constructive, or one-sided, employees miss out on valuable insights that could drive their performance.
• Unclear Objectives : If employees are unclear about what is expected of them, it's a sign that goals and benchmarks are not effectively communicated within your current system.
• High Turnover Rates : An increase in staff turnover might suggest that your performance management is not meeting employee needs for career development and satisfaction.
• Lack of Alignment with Business Goals : Performance management should be tightly aligned with the overarching goals of your business. A disconnect here could mean your approach needs realignment.
• Insufficient Training for Managers : As we highlighted earlier, managers play a key role in performance management, and if they aren't properly trained to coach and provide feedback, the whole system suffers.

If any of these signs resonate with your current situation, it's time to take a closer look at your performance management approach. A successful revamp can create a more dynamic and supportive environment that empowers employees with frequent coaching, feedback, and opportunities to develop their knowledge and skills. 

This will help them reach their full potential for individual, team, and business success.

3 steps to improve your performance management process

If you are recognizing the need to revamp your performance management process based on what you read above, three steps can help get you started. Begin by:

1. Conducting an audit of your current performance management process.

In order to design a successful performance management program for the future, you need to assess your past and current experience. Yet only 22% of organizations have updated their performance management approach within the past year. HR leaders must review and update these practices frequently to keep up with industry, marketplace, and workplace trends.

Ask yourself :

• Do our processes and systems align with the pace of our business?
• How does our current process help us achieve our org-wide goals?
• What gaps or blindspots do we have with our current process or system?

2. Making sure employees are a key element of the process.

Rather than performance management happening to employees, they should be a critical part of the process through shared goal setting, multidirectional feedback, and continuous conversations.

In a survey , 81% of respondents strongly agree that highly engaged employees perform better. And organizations have been capitalizing on improving employee engagement for years. 

• Do our employees have what they need to perform at their highest level?
• How are we helping coach employees to leverage their strengths?
• What other support or training do they need to own their performance?

3. Creating an agile approach.

Annual goals can become quickly dated if organizational changes occur. Keep your biggest business objectives and key results top of mind and updated on a regular basis. Build a process that gives you a detailed view of real-time employee performance so managers can take action and actively retain and develop their team.

• Do our managers have what they need to be successful performance coaches?
• Are we using the right tools to help us adapt and adjust organization-wide goals?
• Do employees understand how their goals align with business outcomes?

After you’ve evaluated the current state of your performance management process, it’s time to start building your new program. You’ll want to start by setting goals.

Setting performance management goals

Setting SMART goals is fundamental to a successful performance management process. SMART, an acronym that stands for S pecific, M easurable, A chievable, R elevant, and T ime-bound, is an established criteria that helps to ensure your goals are clear and reachable. 

• Specific : Goals should be precise and targeted. For example, "Increase the department's efficiency" is too vague, whereas "Implement a new project management software to reduce task overlap" is a specific goal that addresses efficiency.
• Measurable : It's important that the progress towards each goal can be quantified. A goal like "Enhance team performance" becomes measurable when framed as "Achieve a 10% increase in team productivity by the end of Q2 as measured by project completion rates."
• Achievable : Goals must be realistic. Aiming to "completely eliminate all project delays" may not be feasible, but "reduce project delays by 20% over the next six months" is more likely attainable with the right strategies and resources.
• Relevant : Objectives should align with both the employee's role and the company's strategic goals. For a performance management goal, "Improve employee satisfaction" can be made relevant by stating "Conduct bi-monthly performance check-ins to increase employee engagement scores by 15% this year."
• Time-bound : Goals require a clear timeline. Instead of simply aiming to "improve report accuracy," a time-bound goal would be "Increase report accuracy to 98% by the end of the third quarter."

Incorporating SMART goals into performance management helps in providing clarity and focus for both managers and employees. It encourages a shared understanding of what constitutes successful performance and defines the path to professional growth and organizational achievement. 

Components to build into your performance management program

Besides the people who make up your organization and the process or system you use to manage performance, an effective program is made up of the following key elements:

Shared ownership

Like other workplace initiatives, performance management is not solely an HR function. Performance management programs require ownership and involvement of all employees in order to be effective. Buy-in should start with senior leadership, but that’s not where it ends. Make sure you explain the unique benefits and components of the program to employees, managers, and leaders.

Frequent performance conversations

Solely relying on annual employee performance reviews can be subject to bias due to depending on memories and recollection of past performance and behavior. By supplementing with more flexible, two-way conversations (or check-ins ) you’ll enable  employees and people managers to shape a shared agenda and discussion.

One-on-one meetings should happen monthly to allow managers and employees to discuss performance and other important topics frequently. These meetings can cover a variety of topics and should always be:

• Developmental and future-focused
• Transparent and timely
• Inclusive of the employee voice
• Aligned with employee aspirations

Performance conversations should be devoted to performance and occur at least quarterly.

Individualized approach

Employees have different ways they like to be motivated, receive feedback, and be recognized. People leaders should take note of these preferences, individualize their approach to employees' matters, and coach them to better behaviors . When employees feel their individual contributions and strengths are valued and understood, they are more likely to be engaged and perform better.

360 feedback

Whether feedback is positive or corrective, it shouldn’t have to wait until the end of the year. In fact, 71% of employees prefer immediate feedback and 72% said their performance would improve if their managers provided corrective feedback .

Managers don't always have a direct line of sight into their employees’ performance or developmental needs to provide constructive feedback—which can create bias. Manager-employee feedback is key, but adding peer feedback can help paint a bigger, clear picture of performance.

Employees should seek out 360 feedback and participate in self evaluations. This will help shift everyone in the organization to feel more comfortable sharing feedback and motivating performance.

Opportunities for development and training

68% of millennials who feel they’ve had development opportunities at work in the past year plan to stay at their organization for at least another year. Employee development helps managers understand what motivates employees and makes them tick. Not only that, effective development programs can help upskill or reskill employees to become more valuable contributors to team and organizational objectives.

Additionally, you can’t expect employees to jump into a new program and figure it out on their own. Whether you’re adopting a new philosophy, using a new tool, or setting new expectations, you need consistent training programs for employees and managers. When offering these opportunities, you want to focus on the behaviors and skill sets you want them to understand and adopt. These can include:

• Conducting an effective one-on-one meeting
• Asking for and receiving critical feedback
• Developing shared individual and team goals

Recognition and appreciation alongside compensation

Traditional performance management approaches offered compensation (or pay-for-performance) as a way to reward high performers. But today’s workforce isn’t motivated by monetary benefits alone.

While compensation conversations are still important, organizations are separating pay from performance and emphasizing positive feedback and recognition to increase engagement and motivate performance. Recognition should go beyond employees' individual contributions and celebrate the behaviors that support and reinforce your organization's mission, vision, and values.

Growth mindset

Employees perform better when they adopt a growth mindset—a belief that they can always improve and achieve more. When they do, employees:

• Put in more effort
• Seek feedback to improve
• Find role models to learn from
• Take smarter risks
• Set better goals

Defined ownership and accountability 

If you’re moving toward a model of continuous conversations, it’s important that both managers and employees are delivering on what’s expected of them. Ownership is only the first step. To create shared accountability:

• Employees should regularly contribute and collaborate on goals and meetings
• Managers should provide frequent feedback and coaching
• Leaders should continuously communicate and advocate for your performance plan

Digital tools

Organizations are employing workers of all types: remote, temp, hourly, and salaried. No matter the makeup of your organization, you need technology that links teams and their performance. With the right digital tools:

• Employees can set goals, schedule check-ins, provide feedback and recognition, and stay connected between check-ins
• Managers will have greater visibility and transparency into goal progress and performance, employee recognition, and feedback
• Organizations won’t be dependent on "seeing" employees to understand their performance and how it does (or doesn’t) impact business

Choosing the right digital performance management tool to fit your workplace culture is essential to the success of your strategy. When looking for technology to complement your people and team performance management process, you need a solution that can bring elements of an effective system together.

Look for a provider that isn’t limited to standalone systems or tools. Instead search for one that supports and propels organizational growth.

9 features to look for in a performance management software

Here are 9 performance management software features you should look for:

1. Integrates with your HRIS.

HR is responsible for a lot when it comes to employee performance. Make sure your new performance management system integrates with not only your existing Human Resource Information System (HRIS), but other systems and databases to remove the administrative burden of getting started. 

For example, by integrating your HRIS with your choice of an employee success platform, information flows seamlessly, providing HR professionals, managers, and employees with current and precise data. This integration eradicates isolated data pools and minimizes the need for manual entry, thereby improving operational efficiency.

2. Customized to fit your culture.

For a performance management program to be welcomed and adapted by your employees, it has to feel like a natural part of your organizational culture. That means your performance management software should be customizable to fit the needs of your organization so that it becomes ingrained and integrated with other processes and traditions.

3. In-tool nudges and alerts.

Busy schedules are a big obstacle when it comes to effective and continuous performance management processes. Look for software with in-tool and email notifications that notify and surface important insights and actions to managers.

4. Mobile app or access.

Help employees of every level track and motivate performance no matter where they work (and when). Make sure your performance management software can be accessed from computers, tablets, and mobile devices.

5. Access to integrated performance tools.

The best performance management software allows you to integrate all your performance tools in one place—including goals, 1:1s, recognition, feedback, and talent reviews. Find a software that allows users to access them all with one, simple login to decrease hassle and increase usage.

6. Reliable service and support.

A user-friendly performance management system is great, but if your software partner isn’t accessible, responsive, and friendly when you (or your employees) have questions, then it’s not the system for you. Look for a vendor that includes a dedicated support team, provides resources and templates, and keeps you informed on the latest trends and research.

7. Integrates with engagement tools.

For your performance management software to be truly effective, it should be integrated with engagement tools. This integration allows you to observe the effects of your contemporary performance strategies, pinpoint what drives engagement and retention among your top performers, and identify any high achievers who may be at risk of leaving. By doing so, you gain valuable insights that can inform and enhance your talent management decisions, ensuring that your high-potential employees remain motivated and committed to your organization.

8. Succession planning strategy.

Incorporating performance data into your succession strategy allows you to keep your talent pipeline robust and your succession plans on track. Utilize a performance management system that enables you to set and monitor discreet development goals for high-potential employees. This ensures that you're not only recognizing current performance but also actively preparing your team for future leadership roles. 

9. Retention support.

A performance management system should provide insights into potential turnover drivers by identifying shared characteristics and trends among departing employees. By highlighting high-impact questions and key engagement outcomes, the system should offer actionable information to help organizations proactively address issues and mitigate turnover risks. This capability to pinpoint underlying factors contributes significantly to retention strategies, enabling you to make informed decisions to keep your top talent.

The state of performance management is always evolving—and will likely be at the top of many business leaders and HR agendas for the foreseeable future. To continuously achieve business success, organizations will need to adapt and adjust their approach to attract and retain high-performing employees.

Changing focus from annual performance reviews to continuous performance conversations and creating a process that drives employee engagement, employee and team performance, and business success will help:

• Employees understand why their contributions matter and how to make a bigger impact
• Managers coach successful teams by providing continuous feedback and building aligned goals
• Leaders tie performance metrics to business outcomes to build a competitive workforce

To learn more about leveraging performance management to drive employee, team, and business success download this new report, The Business Case for Modern Performance Management .

Published November 21, 2023 | Written By Jocelyn Stange

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Performance Management

Ivan Andreev

Demand Generation & Capture Strategist, Valamis

March 14, 2022 · updated April 2, 2024

17 minute read

Increasingly, organizations are understanding that their management systems must be brought into the 21st century if they are going to be competitive in the current market.

Research shows that previous systems, such as yearly appraisals, are outdated and can even serve to decrease employee engagement and motivation. In light of this, more companies are turning to performance management than ever before.

This dynamic and strategic approach to developing improved performance in employees is gaining ground in companies large and small, including many Fortune 500 and industry-leading organizations.

What is performance management?

The importance of performance management, the purpose and goals of performance management, the benefits of performance management, 15 employee performance management best practices, 5 real-world examples of performance management, what is the difference between performance management and performance appraisals.

Performance management is a strategic approach to creating and sustaining improved performance in employees, leading to an increase in the effectiveness of companies.

By focusing on the development of employees and the alignment of company goals with team and individual goals, managers can create a work environment that enables both employees and companies to thrive.

Based on the definition of performance management, a system is built within an organization to measure and improve the performance of the people in that organization.

In practice, performance management means that management is consistently working to develop their employees, establish clear goals, and offer consistent feedback throughout the year.

In contrast to other systems of reviewing employee performance, such as yearly performance appraisals , employee performance management is a much more dynamic and involved process with better outcomes.

For the Human Resources department, performance management is an important system for onboarding , developing and retaining employees, as well as reviewing their performance.

It is increasingly understood that a yearly performance appraisal system does not effectively engage employees, fails to consistently set and meet company objectives, and does not result in a strong understanding of employee performance.

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You’ll get a list of useful questions and tasks to help you know your learning space better and ways to improve it.

Why is performance management important?

In any organization, no matter the size, it is important to understand what your employees are doing, how they are doing it, and why they are doing it.

Without a system in place to define roles, understand individual strengths and weaknesses, provide constructive feedback , trigger interventions and reward positive behavior, it is much more difficult for managers to effectively lead their employees.

Smart organizations pair their performance management with an incentive management process. The two systems have a lot in common, from defining roles and setting goals to reviewing and rewarding employee behavior, and as such, do very well when run simultaneously. Using incentive management also means that the all-important ‘reward’ step of performance management is done properly.

Talent management is an important part of every organization. Three of the main problems that organizations face are:

• keeping employees engaged
• retaining talent
• developing leaders from within

These are the issues that performance management very effectively targets.

1. Keeping employees engaged

Engagement of employees is a focus of any management team. In a yearly appraisal system, goals would be given at the beginning of the year and then revisited 12 months later to see if they had been met. This long stretch of time without feedback or check-in is an almost certain engagement killer.

In fact, 94% of employees would prefer their manager gives them feedback and development opportunities in real-time, and 81% would prefer at least quarterly check-ins with their manager, according to the Growth Divide Study .

Studies show that employees do best with feedback on a monthly or quarterly basis, with regular check-ins serving as a zone to problem solve, adjust goals as necessary, and to refresh their focus on the goal. In fact, companies where employees meet to review goals quarterly or more frequently are almost 50% more likely to have above-average financial performance.

When surveyed, employees had some negative feelings about a yearly appraisal system:

• 62% of employees feel that their performance review was incomplete
• 48% did not feel comfortable raising issues with their manager in between performance reviews
• 61% feel that the process is outdated
• 74% feel that they would be more effective with more frequent feedback
• 68% of executives don’t learn about employee concerns until the performance review

All of this adds up to a lot of missed opportunities to solve problems and increase employee performance and engagement.

As employee engagement rises, nine key performance indicators show successful outcomes. Absenteeism, turnover, shrinkage, safety incidents, patient safety incidents and defects in quality are lessened by at least 25%, and often more, across the board. Customer experience, productivity and profitability all show positive outcomes.

This study, by Gallup , was conducted across a broad range of industries, showing that employee engagement is a critical factor, no matter the industry.

2. Retaining talent

Employees who have frequent meetings with management to discuss performance, solve problems and receive training are more likely to stay with the company.

If employees see that their management team is putting in the work to develop them professionally, help them succeed with their goals, and reward performance on a consistent basis, then they are more incentivized to both stay with the company and work harder.

3. Developing leaders from within

This consistent development and partnership between managers and employees allow for the development of leaders from within the company.

Recruiting costs can be extremely high, as are costs for onboarding and training new employees. To be able to groom leaders from within the company means that there is already a proven culture fit with this individual and that training costs and resources spent developing this person into an asset are not lost.

This leadership path also serves as a motivating force for employees, who can see that their hard work will be rewarded with promotions and other benefits.

Performance management also creates a need for management to consistently focus on company objectives and goals, and to consider how best to achieve them. This continual revisiting of goals means that they are more likely to stay relevant, as goals will be adjusted in light of new technology, changes in the market, or other factors throughout the year.

According to Forbes , ‘companies that set performance goals quarterly generate 31% greater returns from their performance process than those who do it annually, and those who do it monthly get even better results.’

The purpose of performance management is to give both managers and employees a clear and consistent system within which to work that, in turn, will lead to increased productivity.

• This system shows employees the pathway to success, allows for the measuring of performance coupled with feedback and offers training and development opportunities.
• Performance management allows management to understand what their employees are doing and track progress on company objectives while providing consistent feedback.

There are five main objectives of performance management:

• Develop clear role definitions, expectations and goals
• Increase employee engagement
• Develop managerial leadership and coaching skills
• Boost productivity through improved performance
• Develop a performance reward program that incentivizes accomplishment

These performance management goals show a clear path from the developing of goals to the rewarding of increased accomplishment. If one of these performance management objectives is not done well, then the others will suffer as a result.

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Performance management has a multitude of benefits for employees and managers, as well as for the company as a whole. If a company can successfully create an environment of engagement where customers are equally engaged by employees on the front line, their outcome is even better.

When organizations successfully engage their customers and their employees, they experience a 240% boost in performance-related business outcomes compared with an organization with neither engaged employees nor engaged customers. – Gallup

• Having well-defined roles and performance standards makes hiring an easier process, as candidates know what is expected of them, and HR can more easily understand if a candidate is a right fit for the role.
• Those well-defined roles and standards make training easier, as trainers know exactly which areas need to be covered, and which information is nonessential.
• Consistent developing and revisiting of goals ensure that the organization keeps up with changing market forces easily, and reacts quickly as a whole, regardless of the size of the organization.
• Clear expectations and roles set employees up for achieving goals from the start, providing a springboard to success.
• Employees who feel that their company is invested in their success stay with their companies, increasing employee retention.
• Consistent feedback and coaching from managers lead directly to increased engagement from employees while developing the ability to provide good coaching and feedback leads to more skilled managers.
• As employees become more skilled, they can move up through the company, creating a leadership pipeline.
• Productivity will increase thanks to increased engagement, clear goals and upskilling of employees.
• Employees remain incentivized to perform long-term, as they are properly rewarded for their hard work.

While performance management can sound deceptively simple, with just four steps as outlined above, the process itself is very complicated. That’s why we have put together this list of best practices for performance management.

Think of it like the essentials of performance management – these will help make sure that your employee performance management system is performing the way it should.

1. Identify the goals of your performance management initiatives

As you are creating your performance management program, you need to understand what you want to accomplish.

Asking the following questions can help you:

• Is increased productivity a priority?
• Does your organization want to identify leaders from within and develop them?
• Do you want to streamline the compensation process?
• Are you seeking to improve employee retention or engagement?

If you know what you want your program to do, it will be easier to build it to accomplish that goal.

2. Define and describe each role

We mentioned this above, but it bears repeating. It is much harder for an employee to be successful if they don’t know exactly what is expected from them, how they should do it, and what the end result should look like.

3. Pair goals with a performance plan

As you set goals, develop a performance plan to go alongside. Year-long goals often fail, as they are too large and employees can get overwhelmed before they start. A performance plan helps them visualize their path, making it much more likely that they will meet their goal.

4. Monitor progress towards performance targets

Review key areas of performance. Use metrics and analytics to your advantage, tracking how goals are progressing to make sure that interventions can happen early, if necessary.

5. Coaching should be frequent

The point of coaching is to help identify and solve problems before they get too big. If it’s not frequent, it’s not going to help at all. Monthly or quarterly meetings should be held to help keep employees on the right track.

6. Use guidelines to your advantage

Guidelines should be created for each role as part of the first stage of the performance management cycle. These policies or guidelines should stipulate specific areas for, or limits on, opportunity, search and experimentation. Employees do their jobs better when they have solid guidelines to follow.

7. Build a performance-aligned culture

Make sure your workplace has shared values and cultural alignment. A sense of shared values, beliefs and expectations among employees creates a more harmonious and pleasant workplace. Employees should be committed to the values and objectives outlined, and exemplified by, top management.

8. Organize cross-functional workshops

This helps employees – and managers – understand what other departments do, how they think and what their strengths and weaknesses are. They can discover something new and find new connections, which can help them in future work.

9. Management should offer actionable feedback

During these coaching meetings, tensions can arise if the feedback is not given in a constructive, actionable manner. It is not very important to look backward and point fingers, rather management should guide employees towards future success.

10. Keep it professional, not personal

Giving less-than-stellar feedback is hard on both managers and employees, it’s one of the reasons that performance appraisals tend to be a least-liked task. Managers should make sure to keep feedback professional and remember to focus on behavior, rather than characteristics.

For example, pointing out that David regularly turned in important reports late is feedback about a behavior. Saying that David is lazy, and that’s why the reports were often late is feedback about a characteristic. One of these can help an employee own their role in a project’s success (or lack thereof) and the other will make them defensive instantly.

11. It’s not only employees that need training

Management should be trained too. Coaching and offering good feedback are not easy jobs, which is why there are so many specialist coaches out there. For managers to be able to lead well, they should be trained in these skill sets.

12. Take advantage of multiple-source feedback

Ask employees to write feedback for each other. This will give management a more holistic view on employee performance, understand the challenges that teams are facing, and be able to better offer feedback.

13. Don’t depend only on reviews

While the review process is important, it is only one part of the system as a whole. Planning, coaching, and rewarding employees are equally key parts of the system.

14. Problems are not always employee-based

It can be easy to assume that problems are always caused by employees, but that simply is not the case. Problems can arise from external factors such as availability of supplies, internal processes that are causing issues, or organizational policies. Seek out the source of problems as precisely as you can in order to fix them.

15. Recognize and reward performance publicly and frequently

Management cannot expect employees to stay motivated if they are never rewarded, yet many companies overlook this key step. Make sure that employees are compensated and recognized for their hard work, and they will continue delivering for your organization.

Of course, it’s one thing to understand the theory of what performance management is, but it’s another thing to use it in a real company. Let’s take a look at some real-world examples of the performance management process in action:

It’s no surprise that Google would show up on a list of companies that use a newer, innovative system of management. This company has always been a trendsetter, and their performance management process is one that relies on data and analysis, as well as making sure that their managers are well trained.

When assessing their performance management system, Google launched a project dedicated to assessing their managers, which has led to a thorough training and future development process that sets managers, and thus employees, up for success.

They also use a system of setting goals that have caught on across multiple industries. Using their Objectives and Key Results (OKRs) system, they reframe the goal-setting process, with great results.

Another tech trendsetter, Facebook has a performance management process that puts a heavy emphasis on peer-to-peer feedback. In semi-annual reviews, they are able to use that feedback to see how well teams are performing and understand where collaboration is happening – and where it is not. They also have developed an internal software to provide continuous, real-time feedback. This helps employees solve issues before they become problems.

Cargill is a Minnesota-based food-producer and distributor with over 150,000 employees and serves to demonstrate that even huge companies can ditch unwieldy performance appraisals and institute a new system. In following the latest research on the dissatisfaction of management with outdated performance management process, Cargill created their ‘Everyday Performance Management’ system. The system is designed to be continuous, centered around a positive employee-manager relationship, with daily activity and feedback being incorporated into conversations that solve problems rather than rehash past actions.

The Everyday Performance Management system had overwhelmingly positive results, with 69% of employees stating that they received feedback that was useful for their professional development, and 70% reporting that they felt valued as a result of the continuous performance discussions with their manager.

Adobe calculated that managers were spending about 80,000 hours a year on performance reviews, only to have employees report that they left those reviews demoralized and turnover was increasing as a result.

Seeing a system that only produced negatives, Adobe’s leadership team made a bold leap into a performance management system that began by training managers how to perform more frequent check-ins and offer actionable guidance, then the company gave managers the leeway they needed to effectively lead.

Management was given much more freedom in how they structured their check-ins and employee review sessions, as well as more discretion in salaries and promotions. Employees are often contacted for ‘pulse surveys’ – a way for the leadership team to make sure that individual managers are leading their teams well. One of the many positive results of this has been a 30% cut involuntary turnover due to a frequent check-in program.

Accenture is a massive company – over 330,000 people, so changing their systems means a huge effort. When they switched to their new system, they got rid of about 90% of the previous process. Now, they are using a more fluid performance management process where employees receive ongoing, timely feedback from management. This has been paired with a renewed focus on immediate employee development and an internal app for communicating feedback.

There are common threads in all of these examples. Each company has built a system that works for them, rather than following a one-size-fits-all approach. What works for one company might not work for another – it depends on the industry, the speed and flexibility of the company, and the overall goal of the system itself.

With similar names and purposes that sometimes align, it is no surprise that some people find it hard to spot the difference between performance management and performance appraisals.

In fact, performance appraisals are often part of the performance management process , although some companies still rely on performance appraisals alone.

An easy way to understand the difference between the two is that performance appraisals are reactive, and performance management is proactive.

A performance appraisal looks at all of the past actions of the employee within a set amount of time , and rates how well they performed in their role and how many goals they met.

Performance management looks at the present and future of the employee, and what can be done to help future performance and meet future goals . Performance management is focused on the development and training of an employee, and how that can benefit both the employee and the company.

A performance appraisal is a formal, operational task, done according to rigid parameters and in a quantitative manner. HR leads performance appraisals, with input from management. Performance management is much more informal and strategic, led by management with input from the employees in a more flexible manner.

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121 Performance Management Essay Topic Ideas & Examples

Inside This Article

Performance management is a crucial aspect of any organization, as it involves setting goals, evaluating progress, and providing feedback to employees in order to improve their performance. However, coming up with essay topics on this subject can be challenging. To help you out, we have compiled a list of 121 performance management essay topic ideas and examples that you can use for your next assignment.

• The importance of performance management in organizations
• The evolution of performance management systems
• The role of leadership in performance management
• Benefits and challenges of performance appraisals
• The impact of performance management on employee motivation
• How to create an effective performance management system
• The role of technology in performance management
• Performance management in the era of remote work
• The connection between performance management and organizational culture
• The link between performance management and employee engagement
• The role of feedback in performance management
• Performance management and talent development
• Performance management in multinational companies
• The impact of performance management on job satisfaction
• Performance management in the public sector
• Performance management in small businesses
• The role of HR in performance management
• The impact of performance management on organizational performance
• The connection between performance management and compensation
• Performance management and succession planning
• The role of training and development in performance management
• Performance management and diversity
• Performance management in healthcare organizations
• The impact of performance management on employee retention
• The role of communication in performance management
• Performance management in the gig economy
• The connection between performance management and job design
• Performance management in the age of automation
• The role of coaching and mentoring in performance management
• Performance management in the hospitality industry
• The impact of performance management on team dynamics
• The link between performance management and job performance
• Performance management in nonprofit organizations
• The connection between performance management and organizational change
• Performance management in the retail industry
• The role of goal setting in performance management
• Performance management and conflict resolution
• The impact of performance management on employee morale
• Performance management in the education sector
• The connection between performance management and employee well-being
• Performance management in the manufacturing industry
• The role of performance management in organizational learning
• Performance management and ethical considerations
• The impact of performance management on employee burnout
• Performance management in the financial services industry
• The connection between performance management and employee turnover
• Performance management and work-life balance
• The role of performance management in organizational development
• Performance management in the technology sector
• The impact of performance management on employee job satisfaction
• Performance management and corporate social responsibility
• The connection between performance management and employee empowerment
• The role of performance management in promoting diversity and inclusion
• Performance management and talent acquisition
• The impact of performance management on employee engagement
• Performance management in government agencies
• The connection between performance management and organizational resilience
• Performance management and employee performance improvement
• The role of performance management in promoting a culture of continuous improvement
• Performance management in the healthcare sector
• The impact of performance management on organizational efficiency
• Performance management and employee recognition
• The connection between performance management and organizational agility
• Performance management and employee development
• The role of performance management in promoting innovation
• Performance management in the energy sector
• The impact of performance management on team collaboration
• Performance management and organizational learning
• The connection between performance management and employee accountability
• Performance management in the telecommunications industry
• The role of performance management in promoting work-life balance
• Performance management and employee engagement strategies
• The impact of performance management on organizational culture
• Performance management and employee retention strategies
• The connection between performance management and organizational effectiveness
• Performance management in the automotive industry
• The role of performance management in promoting employee well-being
• Performance management and employee satisfaction
• The impact of performance management on team performance
• Performance management and employee development strategies
• The connection between performance management and organizational performance
• Performance management in the pharmaceutical industry
• The role of performance management in promoting employee motivation
• Performance management and employee engagement initiatives
• The impact of performance management on organizational success
• Performance management and employee performance management
• The connection between performance management and organizational growth
• Performance management in the construction industry
• The role of performance management in promoting employee productivity
• The impact of performance management on organizational resilience
• Performance management and employee development initiatives
• The connection between performance management and organizational change management
• The role of performance management in promoting employee engagement
• Performance management and employee satisfaction strategies
• The connection between performance management and organizational performance improvement
• The connection between performance management and organizational success
• The impact of performance management on organizational growth
• Performance management and employee satisfaction initiatives
• The impact of performance management on organizational change management

These essay topics cover a wide range of aspects of performance management, allowing you to choose a topic that aligns with your interests and expertise. Whether you are studying HR, organizational behavior, or management, these topics will help you explore the complexities of performance management in depth. So, pick a topic that resonates with you and start writing your next performance management essay!

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In the spotlight: Performance management that puts people first

In volatile times, companies are under outsize pressure to respond to economic, technological, and social changes. Effective performance management systems can be a powerful part of this response. They’re designed to help people get better in their work, and they offer clarity in career development and professional performance. And then there’s the big picture: companies that focus on their people’s performance are 4.2 times more likely to outperform their peers, realizing an average 30 percent higher revenue growth and experiencing attrition five percentage points lower (see sidebar, “About the research”). Companies that focus on their people and organizational health also reap dividends in culture, collaboration, and innovation—as well as sustained competitive performance. 1 Alex Camp, Arne Gast, Drew Goldstein, and Brooke Weddle, “ Organizational health is (still) the key to long-term performance ,” McKinsey, February 12, 2024.

Today, company leaders lack full confidence in most performance management systems—despite these systems’ importance and value—citing fragmentation, the existence of informal or “shadow” systems, misalignment, and inconsistency as common challenges. What sort of systems fit the company’s needs? Should rewards focus on individual or team goals? Where are limited resources best spent?

About the research

The insights in this article draw from a comprehensive review of industry best practices, including the experiences of more than 30 global companies across sectors, as well as research by the McKinsey Global Institute (MGI) into how companies gain a competitive edge and deliver top-tier financial results. Specifically, MGI studied more than 1,800 companies with revenues of greater than $100 million. 1 Performance through people: Transforming human capital into competitive advantage ; MGI, February 2, 2023. The article’s author team also completed a study of more than 50 companies’ performance management practices, aiming to provide a nuanced understanding of how organizations approach and execute performance management.

An understanding of the four basic elements of performance management—goal setting, performance reviews, ongoing development, and rewards—provides a foundation for answering these questions and more. Of course, the right performance management system will vary by organization. Leaders who embrace a fit-for-purpose design built on a proven set of core innovations can build motivational and meritocratic companies that attract and retain outstanding employees.

How leading companies approach performance management

Our research across a set of global companies found that despite widespread agreement about certain performance management best practices—such as offering regular feedback outside of an annual review—many companies remain stuck in old ways of working. There are many design choices that can determine the characteristics of a performance management system, but some are more critical than others (Exhibit 1). These decisions—and how they interact with each other—will help determine how the performance management system maps onto the company’s overarching strategy.

Goal setting

Two critical design decisions relate to goal setting: the number of performance management systems used and whether to prioritize individual or team performance goals.

Degree of differentiation. The simplest and best option for many organizations is a single performance management system to address the needs of all employees. However, in more-complex companies with several employee groups, more than one system might be necessary. Manufacturing companies, for instance, may employ three performance management systems with few commonalities: one for sales, in which sales agents are provided direct incentives for the number of goods sold; one for production, with a monthly rhythm focusing on improving core production KPIs; and one for executives, in which the focus might be related more to annual objectives and leadership behavior.

Considerations for these choices often revolve around the nature of the work and the ease of quantifying outputs. For roles in which performance can be easily measured through tangible metrics, such as sales and production, a system emphasizing quantifiable outcomes may be more suitable. On the other hand, for roles involving tasks that are less easily measured, such as those in R&D, a performance management system should be designed to accommodate the nuanced and less tangible aspects of their contributions.

The nucleus of performance. Many organizations have traditionally placed a strong emphasis on individual performance, rooted in the belief that individual accountability drives results. In recent years, there has been a noticeable shift toward recognizing the importance of the team in achieving overall organizational success.

At a large European online retailer, for instance, the focus of performance management has been put on the team rather than the individual. Goals are set for the team, feedback is given to the team, and the performance appraisal is conducted for the team. Example performance metrics for teams can include project completion timelines, cross-functional collaboration success, and the achievement of collective milestones. On an individual level, the company assesses performance using a sophisticated model that prescribes skills and behaviors for 14 job families, each with up to four hierarchies.

Another prominent company in the automotive industry underscores the team as the cornerstone of performance. The teams could be defined along both functional and organizational lines—such as the division or the business line—and the company linked the organizational lines’ performance to the individuals’ compensation.

Performance reviews

Performance reviews raise the question of how to balance the individual objectives and their appraisal with respect to the “what” and the “how,” as well as whether review responsibility should lie primarily with managers, committees, or a combination of both.

Performance formula: What versus how. The balance between setting objectives and assessing what employees accomplish and how they go about their work is the central focus here. To measure the “what,” reviews have traditionally used KPIs, concentrating on quantifiable metrics and specific targets and emphasizing measurable outcomes and achievements. 2 For more on metrics best practices and how they can help leaders avoid pitfalls in their performance management systems, see Raffaele Carpi, John Douglas, and Frédéric Gascon, “ Performance management: Why keeping score is so important, and so hard ,” McKinsey, October 4, 2017.

However, for many roles and in many segments of the company, the work is complex, multifaceted, and fast-paced and can be difficult to capture with rather static KPIs. Consequently, many companies have reverted to using objective key results (OKRs) to link results to defined objectives. The objectives represent the qualitative, aspirational goals an individual or team aims to achieve, while the key results are the quantifiable metrics used to measure progress toward those objectives. The objectives provide context and direction, capturing the broader strategic intent behind the measurable key results.

Companies that explicitly focus a portion of performance reviews on the “how” consider qualities such as collaboration, communication, adaptability, and ethical decision making. Considering behavior and conduct, in particular, can help assess leaders whose teams’ outcomes are hard to measure—such as long-term projects, complex initiatives, or qualitative improvements that may not have easily quantifiable metrics. About three in five companies in our sample look at a mix of both what and how, which can equip managers with a more comprehensive understanding of not only tangible results but also the underlying approach and mindset that contributed to those outcomes.

Review responsibility. In structuring accountability for conducting performance reviews, companies tend to lean on managers, committees, or a combination of both.

Managers should play a central role, and their discretion should be a significant factor in performance assessments because they can judge the context in which an employee has been working. For example, when evaluating performance, it’s crucial to consider the headwinds and tailwinds that the business, team, or employee faced during the evaluation period. External factors, market conditions, and organizational dynamics can significantly affect an employee’s ability to achieve their goals, and considering them helps provide a fair and contextual assessment.

In this context, another design question emerges: whether to appraise employees against OKR fulfilment or the effort they put into achieving the desired outcome. Particularly in many large digital players, OKRs are set as “moonshot” goals—objectives so ambitious they are difficult to achieve. Managers can help ensure that, at the end of the performance cycle, an employee is assessed against not only OKR fulfillment but also—and to an even greater degree—how hard they tried given the resources available to them.

Managers’ points of view, formed with knowledge of the circumstances that produced employees’ performance, produce richer assessments that are sensitive to context—given that managers work closely with their team members and have firsthand knowledge of the challenges, workloads, and specific situations that each employee encounters.

Committees, meanwhile, bring diverse perspectives and can mitigate biases that might arise from individual managers’ subjectivity. Committees can provide a checks-and-balances system, promoting consistency and standardization in the evaluation process.

A combination of these two approaches can be an effective solution. Senior managers and high performers across hierarchies could be discussed in committees, while the rest of the workforce could be evaluated by their direct managers. This integrated approach leverages the contextual insights of managers while also incorporating the diverse viewpoints and standardization that committees offer, particularly for more-senior or high-impact roles.

Regardless of the review responsibility structure, it’s worth noting that more and more managers, committees, and employees are using generative AI (gen AI) to aggregate and extract information to inform performance reviews. For example, some employees may toil to define clear, specific, and measurable goals that align with their career aspirations; gen AI can help create a first draft and iterate based on their role, helping the employee focus on their specific growth areas as well as gauge improvement on an ongoing basis. Managers and committees, meanwhile, used to spend a lot of time gathering performance metrics from different sources and systems for employee evaluation. Gen AI can aggregate input from various sources into a consolidated format to provide managers with a more comprehensive starting point for reviews.

Beyond employees’ formal professional-development opportunities, their managers’ capability to set goals, appraise performance fairly and motivationally, and provide feedback is one of the most critical success factors for an effective performance management system. As a result, many companies have pivoted to invest in focused capability building.

Ongoing development

Another key aspect to consider when designing a performance management system is the focus of the assessment: will it evaluate past performances, or will the emphasis be placed on creating an understanding and foundation for further growth?

A backward-looking assessment will focus on fulfillment of the what and how objectives to create a fair basis for ranking and related consequences. However, many companies are pivoting to complement this assessment or are even focusing entirely on a developmental appraisal. In this approach, the focus is on truly understanding the strengths and weaknesses of the individual as a basis for further development, capability building, and personal growth.

Against that backdrop, rather than concentrating solely on top performers, an inclusive developmental system should cater to the growth needs of employees across all levels and backgrounds. McKinsey research emphasizes the importance of ongoing development for all employees, including—crucially—efforts tailored specifically for women 3 Women in the Workplace 2023 , McKinsey, October 5, 2023. and other underrepresented groups. 4 Diversity matters even more: The case for holistic impact , McKinsey, December 5, 2023. Such development programs not only foster a more equitable culture but also help unlock the full potential of the entire workforce.

Traditionally, many companies have used relative ratings to compare and rank employees against one another, often resulting in a forced distribution or curve. Employees are placed into categories or tiers based on their relative performance, with a predetermined percentage falling into each category (for example, top 10 percent, middle 70 percent, and bottom 20 percent).

Many companies today are simplifying their ratings systems so employees understand where they stand while shifting toward development approaches tailored to individuals’ strengths and weaknesses. The goal is to identify areas for growth and provide targeted support to help employees enhance their capabilities and skills.

While assessing performance remains important, the emphasis should be on using those assessments as a starting point for identifying developmental opportunities, with an understanding of both strengths and weaknesses and the specific development needs to improve performance. The focus shifts from mere evaluation to understanding the underlying factors that contribute to an individual’s performance, be it skills gaps, mindsets, or environmental factors.

Four reward categories—compensation, career progression, development opportunities, and recognition—remain the core pillars of an effective performance management system. Most leading companies provide individual rewards (as opposed to team- or corporate-driven ones), with equal relevance given to short- and long-term incentives, looking at impact holistically and balancing investment in all four reward categories.

Under certain circumstances, it may make sense to emphasize financial rewards, particularly in sales functions or other roles where monetary incentives are highly valued. Indeed, some organizations may double down on monetary compensation, offering significantly higher pay packages to their top performers, because money is seen as a key motivator in these roles.

In other cases, it may be more effective to take money off the table and emphasize nonfinancial rewards, such as recognition, flexibility, and career development opportunities. While base pay may remain the same across the firm, high performers can be rewarded with faster career progression, more recognition, and better development opportunities. A 2009 McKinsey survey found that “three noncash motivators—praise from immediate managers, leadership attention (for example, one-on-one conversations), and a chance to lead projects or task forces” were “no less or even more effective motivators than the three highest-rated financial incentives: cash bonuses, increased base pay, and stock or stock options.” Furthermore, “The survey’s top three nonfinancial motivators play critical roles in making employees feel that their companies value them, take their well-being seriously, and strive to create opportunities for career growth.” 5 “ Motivating people: Getting beyond money ,” McKinsey Quarterly , November 1, 2009. More than a decade later, McKinsey research found that managers and employees remain misaligned: specifically, employers overlook the relational elements—such as feeling valued by a manager and the organization and feeling a sense of belonging—relative to how important these factors are to employee retention (Exhibit 2). 6 “ ‘ Great Attrition’ or ‘Great Attraction’? The choice is yours ,” McKinsey Quarterly , September 8, 2021. Indeed, the importance of nonmonetary incentives represents a consistent theme in performance management research and inquiry.

Given the time and effort required to effectively implement nonfinancial rewards, it’s crucial for organizations to carefully consider how to deploy these rewards strategically with employee groups. The decision of where to place emphasis should align with the organization’s culture, values, and the specific workforce’s motivations.

It’s worth noting that companies focusing on team achievement over individual performance also tend to value praise of the team. Public recognition and praise for effective teamwork and joint accomplishments can foster a sense of unity, camaraderie, and motivation.

Things to get right

Of the global companies we observed, there was a shared set of enabling factors across those with effective performance management systems. These things are fairly intuitive, but they are hard to practice well. Done consistently, they can produce powerful results.

• Ensure that performance management systems are agile. Systems should allow for goals to be easily updated so the workforce—and therefore the organization—can respond to quickly changing conditions. The processes themselves should also be agile. For instance, relationships and interactions between managers and employees should allow for coaching that is close to real time so employees are consistently being pushed in the right direction—and learning to create that momentum themselves.
• Provide regular feedback. Annual reviews can create a bottleneck on managers and the C-suite. More regular performance conversations can be successful in a variety of formats; quarterly, weekly, and casual check-ins should supplement formal reviews. Conversations can be about both the what and the how of the work and be a source of ongoing coaching.

If reviews remain once a year rather than more frequent, top management may consider prioritizing their direct involvement in the evaluation process to keep a pulse on employee sentiment and progress. A leading financial institution in Europe chose this route and found it was able to build a strong capability-building program around a feedback culture that is unafraid of difficult conversations.

• Establish an effective fact base. According to our research, only two in five companies use both upward and downward evaluation in individual performance reviews. To establish a more comprehensive fact base, organizations can implement robust 360° review processes that solicit feedback from an employee’s manager, peers, direct reports, and even customers or stakeholders outside the company. Many leaders have found that 360° reviews offer a comprehensive understanding of an individual’s performance because such reviews consider perspectives from both those who are led and those who are in leadership roles.
• Maintain rating and differentiation. Many companies have reassessed their approach to employee ratings and the subsequent differentiation of consequences. While some companies have eliminated ratings altogether, most companies have been evolving their systems to drive motivation, recognize and incentivize performance, and create a “talent currency.” This means a high performer from one division is considered by the organization to be of the same caliber as one from another division. Overall, leaders are pushing for simplification, such as moving from a seven-tier approach to a four-tier or even three-tier system. There is also a stronger link between ratings and outcomes, as well as a shift from forced distribution to distribution guidance.
• Employ gen AI. Gen AI—the latest technology to change the business landscape—can be a tool to support select elements of performance management, such as setting goals and drafting performance reviews. A manager could use the technology to aggregate and synthesize input from different sources to draft communications to and about employees more efficiently, freeing them to focus on the core value driving parts of performance management and giving more time for personal interactions with their employees, such as coaching and feedback. 7 For more, see People and Organization Blog , “ Four ways to start using generative AI in HR ,” blog post by Julian Kirchherr, Dana Maor, Kira Rupietta, and Kirsten Weerda, McKinsey, March 4, 2024.

Getting started

Companies can get started by understanding where they are now. Specifically, they should assess their organizations’ current performance culture, including the level of adoption of the existing performance management system and its quality. Decision makers should then use the following three questions to check the health of their performance management efforts and outline their ambitions for performance management:

• Are we getting the expected returns from the time invested in the performance management process, and does it drive higher performance and capabilities?
• Does the current performance management system reflect the needs and context of this particular business or workforce segment?
• Do we have a performance culture? (Hint: How frequent are employees’ coaching interactions? How clear and differentiated is feedback?)

Many traditional approaches to people management are unlikely to suffice in today’s top-performing organizations. The research-backed benefits of prioritizing people’s performance, from enhanced revenue growth to lower attrition rates, underscore the strategic importance of these systems. By embracing a fit-for-purpose design anchored in the key elements of performance management, organizations can position themselves as dynamic and adaptive employers.

Simon Gallot Lavallée is an associate partner in McKinsey’s Milan office, where Andrea Pedroni  is a partner; Asmus Komm is a partner in the Hamburg office; and Amaia Noguera Lasa is a partner in the Madrid office.

The authors wish to thank Katharina Wagner, Brooke Weddle, and the many industry professionals who contributed to the development of this article.

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Essay on Performance Management Process

Through performance management, management and workers collaborate to organize, evaluate, and analyze an employee’s job objectives and contributions to the corporation. Performance management is a continual process of creating targets, measuring progress, and offering continuing feedback and coaching to ensure that workers fulfill their objectives and career goals. Armstrong and Baron (1998) consider it a never-ending process that prioritizes the future over the organization’s past. They stress the strategic and holistic character of the process, which aims to improve the efficacy of firms by enhancing the efficiency of the employees and by expanding the capacities of individuals and team contributors. The main goals of performance management are to communicate a common goal of the firm’s mission, define expectations of the firm, and ensure that the employees understand what high performance means and how to accomplish it. Also, it helps increase worker motivation and allows them to track their progress and determine what should be done to enhance overall performance. The process is more than just an annual performance review. The steps to the process can be broken down into four, including; planning, coaching, reviewing, and rewarding.

While planning, HR must describe the position in detail, including the short- and long-term goals, primary aims, detailed descriptions, and an explicit criterion for evaluating these goals and objectives. The goals should be detailed, quantifiable, attainable, and exact performance requirements should be established. Personnel has an opportunity to provide feedback on the information after managers have completed the defining step (Qureshi et al., 2010). They execute their jobs; therefore, they have a unique perspective on the skills, abilities, and goals that can best help the corporation accomplish its objectives. Both administration and the personnel agree on the role’s description, purpose, and aims. By making the first step of the process collaborative, the management set the tone for the rest of the process to be interactive. Personnel feels participated in goal setting, which is critical.

At the beginning of the process, it is critical to go over performance objectives with personnel, covering both results and behavior they are intended to accomplish during the next cycle. Behaviors are significant because they indicate how employees approach their work, support the team, mentor, and communicate to others (Pulakos, 2014). Some employees produce excellent results, but it is challenging to deal with, unfriendly, and demonstrate maladaptive work behaviors. Behavior is vital to consider in the work environment; such behaviors can be pretty disruptive. On the other hand, a worker can be interpersonally practical, kind, and exceedingly helpful but never achieve significant outcomes.

Coaching is a necessary process and should be done regularly. Employees are coached to solve performance challenges and problems to make an excellent contribution to the corporation. Monitoring performances do not include scrutinizing details of how employees do their allocated duties and activities. During couching, there is an examination of how far the employees have a cone in achieving their goals. Potential roadblocks to the staff’s performance goals and what might be done to overcome them are identified. Thoughts are made on how the team achieves its objectives (Qureshi et al., 2010). Adjustments to the work schedule are determined due to shifts in the corporation’s priorities or when staff is required to take on new duties. The management determines whether more assistance is necessary to help the employee in accomplishing their goals. Setting objectives for specific employees is an integral part of performance management and requires a successful performance evaluation. Thus, there is a need to track how far the employee has progressed towards their objectives. Also, it is important to note how they attained their goals. The idea is to measure frequently and apply the results to coaching and counseling.

A review or appraisal meeting is a chance to examine, analyze, and highlight the employee’s achievements during the appraisal period. Most appraisals include a self-examination component. Workers can analyze their performance in advance of the appraisal meeting by utilizing the performance plan and evaluation form as a guide. The procedure can aid in the identification of discrepancies between the employee’s self-perception and the manager’s perspectives and promote a more in-depth discussion of performance difficulties. To properly analyze employee performance, the manager should evaluate their performance management notes and other documentation collected during the year issues communicated to the employee before the assessment should be included in the record and meeting. Thus, ensuring that the management address performance problems while developing and assuring the employees that the performance evaluation meeting will be free of surprises (Qureshi et al., 2010). A successful review system should include all critical parts of the job, be devoid of contaminating influences, and quantify essential job attributes. It should be trustworthy and free of rating flaws. Equally important, review systems should be fair to everyone as they must meet the criteria of equality legislation.

Recognition and reward are the last steps in the process, and it helps employees stay motivated such as leadership opportunities, time-off, recognition, and new projects. Workers should be motivated by a good incentive and recognition system that aligns their objectives with the company. Staff remuneration and recognition for good performance must maximize competitiveness and yielding pay investment in such a framework. Given the high expense of reward programs, it is critical to have a well-thought-out strategy that reflects their goals and expectations. The significant functions of incentive programs are attracting and retaining qualified people, particularly in tight labor markets, driving workers to fulfill their job aims and impacting the culture, reinforcing and defining the structure like status and hierarchy, and encouraging entrepreneurship, flexibility, participation, and innovation. The end of the performance cycle provides the last opportunity for the employees and the management to give feedback on the process and input and feedback for the first stage for the next cycle.

Performance engagement aids in the development of a culture of support and trust among employees and the business. Workers are more engaged when they are aware that their efforts are recognized and appreciated. Staff who receive feedback from their employers once a year, for instance, will be detached and disengaged (Brown et al., 2018). Performance management can also be helpful when building employee development strategies, indicating that one is anticipating employee development requirements thus, boosting the overall performance.

An aging population has two significant HR impacts in terms of the management process. First, the management can ensure the delivery of knowledge held by the older workers before they retire; second, firms have to address how to maintain reliable levels of efficiency among older workers even as they remain in the firm. As the personnel that drive the knowledge-based economy ages, there seems to be a risk that critical expertise will be lost as the older workers go to retirement (Beardwell & Thompson, 2017). Therefore, knowledge transfer ensures a firm’s success, and knowledge is recognized as the most significant business resource. A performance management process is a deliberate approach for providing the appropriate information to the right individuals at the right time and a method for placing knowledge into practice to enhance corporation performance.

Understanding how diversity influences performance has become a preeminent problem for HRM as the workers continue to be more diversified and inclusive. The impact of diverse populations on workplace results has been investigated. Job satisfaction is favorably and strongly connected to diversity management. Well-managed diversity management leads to a more satisfied workforce. It implies that resources should be allocated to diversity management initiatives and training programs at the corporate level (Beardwell & Thompson, 2017). All personnel, especially supervisors, should consider diversity as a fundamental asset. At the sub-organizational level, the management interested in successful performance management should devote time and effort to comprehending the various views of staff groups. Acknowledging and handling diversity present in teams will lead to the success of the organization. Therefore, HR teams must consider diversity management as a primary instrument in the toolset of performance management. They must endeavor to provide diversity-related competencies and elevate levels of awareness and understanding throughout the company.

In conclusion, human resources are significant to a company’s success. Corporations would be unproductive if they did not have efficient personnel, and they would risk missing to carry out their stated objectives and goals. As a result, every company, as part of its strategy, implements appropriate processes of performance management, a system that aids in the commitment of staff members to the company’s goals. If personnel realize that their effort and devotion are being reviewed, they will be more motivated to continue working. To encourage the growth of remuneration or other forms of incentives like praise and appreciation, as an element related to assessment and plays a vital role in engaging workers. Thus, many multinational businesses use remuneration due to good performance in the company structure (Osmani & Ramolli), 2012). The performance review process is perceived as more formal and should be completed by the management. Still, in most instances, the evaluation of the people is done without assessing the actual capabilities and outcomes of staff performance. While the technique of remuneration is used, it all remains a matter of choice as the evaluation is variable depending on narrow political or personal interests as determined by the management or business leaders. In addition, a component that should be present in performance evaluations is a greater emphasis on the discovery and use of strategies for enhancing performance instead of their application with no beneficial consequences.

Beardwell, J., & Thompson, A. (2017).  Human resource management: a contemporary approach.  (8th ed.). Pearson.

Brown, T. C., O’Kane, P., Mazumdar, B., & McCracken, M. (2018). Performance Management: A Scoping Review of the Literature and an Agenda for Future Research.  Human Resource Development Review ,  18 (1), 47–82. https://doi.org/10.1177/1534484318798533

Osmani, F., & Ramolli), G. M. (2012). Performance Management, Its Assessment and Importance.  Procedia – Social and Behavioral Sciences ,  41 , 434–441. https://doi.org/10.1016/j.sbspro.2012.04.052

Pulakos, E. (2014).  Performance Management A roadmap for developing, implementing and evaluating performance management systems . https://www.shrm.org/hr-today/trends-and-forecasting/special-reports-and-expert-views/Documents/Performance-Management.pdf

Qureshi, J., Shahjehan, A., & Afsar, B. (2010). Performance management systems: A comparative analysis.  African Journal of Business Management ,  4 (9), 1856–1862. https://academicjournals.org/journal/AJBM/article-full-text-pdf/0ECF0F532323.pdf

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90 Performance Management Research Topics

🏆 best essay topics on performance management, 👍 good performance management research topics & essay examples, 🎓 most interesting performance management research titles, ❓ research questions on performance management.

• Amazon Approach to Management and Performance Evaluation
• The Amazon Company’s Performance Management
• Hotel Management: Performance Improvement Plan
• Google Inc.’s Performance Management System
• Performance Management and Strategic Planning
• Nike Company’s Performance Management & Logistics
• Performance Appraisal and Human Resource Management
• Importance of Performance Management in Organizations The paper explores the concept of benefits management at the organization plumbing supply company in Olean, New York.
• Portfolio Management: Stock Selection and Portfolio Performance The paper covers the performance of the portfolio, stock selection criteria, each stock performance, and the returns of the portfolio for the period.
• Management: Effective Teamwork Role for Organizations Performance Groups usually pass several important stages: forming, storming, norming, and performing. Depending on the stage, teams and groups demonstrate unique organizational features.
• TD Canada Trust Bank’s Performance Management The performance management system implemented in the TD Canada Trust Bank corresponds to the international financial sector management standards.
• Performance Management and Appraisal Systems The performance management process is important. During it the HR team works together with other members of the company towards achieving organizational goals.
• Leadership, Management Style and Organizational Performance The focus on globalization and multiculturalism has emphasised the importance of understanding Organizational productivity and team effectiveness.
• Why Performance Management Appraisals Fail Performance management appraisal may fail due to judgment by top management and the supervisors. The top management and supervisors sometimes experience errors.
• Performance Management and Appraisal Plan The Office of Human Resources presents a Management by Objectives (MBO) performance appraisal plan and process that will be implemented in the next month.
• New Employee’s Success and Performance Management Once a new employee is selected, strategies of how best to maximize employee success on the new job should be put in place.
• Performance Management Issues of the Organization There is a significant relationship between compensation and performance management. This is because compensation can be a way of performance management.
• Strategic Human Resource Management and Performance For successful performance, human resource managers have to ensure that they recruit employees with potential and possess qualifications that will enable them to create value.
• Human Resource Management and Performance of the Organization The success of the company relies on the proper management of its people because the workforce of a company is the major factor that runs the business.
• Metrics and Performance Measurement in Operations Management Metrics is indeed a powerful management tool in aligning company strategies and objectives and ensuring people are working towards a common direction.
• Employee Performance Management System In human resource management, it is important to ensure that employees are motivated and satisfied with their work. It can achieve by carrying out employee performance management.
• Performance Management System in Healthcare The Joint Commission enhances the level of the healthcare services provided to the public. The entity ensures that hospitals have a good performance management system.
• Information Systems and Project Management Performance The authors assert that requirements instability and requirements diversity are related to stakeholder perception gaps and this can be tied in with project performance.
• Performance in Safety Management Systems (SMS) The study will collect data on improvement patterns of SMS regulations and technologies as two qualitative independent variables and risk factors.
• Organizational Management and Performance: Inter-Organizational Relationships Organization as a system entails that there must be inputs which are to be processed in order to give an output. This output is optimal goal the organization strives to accomplish
• Management Functions for Better Company Performance Managing an organization is not easy when one has to the role of a leader, the role of a manager, and the role of an HRM specialist.
• Performance Management System: Role and Advantages Performance management systems play an important role in the achievement of organisational goals, mission, and vision
• Performance Management in Business Performance has now been integrated into the quality management system of the organization. Effective performance measurement influences efficacy of the use of information.
• Informative Speech On Business Performance Management In the troubled days of economic crisis and recession the only way companies have to survive economic uncertainty is by making good use of business “performance management”.
• Management: Performance Measurement in Organizations Performance measurement is vital in all organizations because the organizations need to verify the validity of the selection methods and to improve the productivity.
• Performance Management Issues: Types and Factors Performance management aims to ensure the effectiveness and growth of the organization through the definition of strategic objectives and management activities.
• Performance Management System: Personal Experience Managers collect the data systematically based on each department’s performance. In other words, the performance is measured by the results.
• Strategic Performance Management Plan for a Sales Manager The paper creates a strategic performance plan for the Dialogue Direct and recognizes the attributes that will be rated regarding the position of the sales manager.
• Negative Performance Management Managers should possess strong planning and problem-solving skills to establish clear goals and strategies to achieve goals on time without losing quality.
• Performance Management and Working Relationships Performance management is an area of execution, and benefits may not be obvious at the project planning stage.
• Quality Management and Performance Improvement in Healthcare There are a number of healthcare quality issues affecting the performance improvement of various caregiving centers.
• Performance Management and KPIs in a Management Measurement System Performance management is a dynamic process that requires timely reports so that procedures are drawn to guarantee that corporate goals are achieved.
• Balanced Scorecard: Performance Management Tool This essay presents an assessment of a balanced scorecard used by an organization in a real estate business environment.
• Business Intelligence and Performance Management Business Intelligence encompasses software tools for querying, reporting and analysing. It may be summarised as the processes and tools that turn data into information.
• Earned Value Performance Management for Projects In the earned value management system, the project performance is measured by taking into account the actual cost spent for the baseline plan.
• Performance Management: Aspects and the Levels Performance management is a cyclical process that is usually aimed at improving the performance of either under performing group, individuals, to further improve good performers.
• Performance Management: Term Definition Performance management is assessing the process of achieving goals and objectives to unsure that it is successful through communication and taking the right action.
• Performance Management: Employee Performance Documentation Organizations that succeed in effective documentation of employee performance can feel secure in the current economic realities.
• Performance Management: Warehouse Performance Measurement The analysis of the costs taken by the organization can be viewed as the first step towards identifying the changes in the warehouse business performance.
• Options Consulting Solutions Company’s Performance Management Options Consulting Solutions is a recruiting firm headquartered in Toronto, Ontario. The firm was started more than two decades ago.
• Issues Concerning the Use of Social and Environmental Indicators for Performance Management
• Performance Management and Performance Measurement in the Education Sector
• The Relationship Between Performance Management and Organizational Goals
• Effective Performance Management With the Balanced
• Major Constraints and Possible Solutions for Performance Management in Korea
• Performance Management and Key Performance Indicators for Higher Education Institutions in Serbia
• Differences Between Cost-effectiveness and Performance Management
• Performance Management Strategy and Broader Issues of Organizations
• Linking Performance Management Strategy To Corporate Management Strategy
• Relationship Between Hrm and Organisational Performance Management
• Effective Leadership Practices Can Lead to High-Performance Management
• The Difference Between Performance Management and Performance Appraisal
• Performance Management Practices, Employee Attitudes, and Managed Performance
• Factors Influencing Software Team Performance Management
• Power and Performance Management of GPUs Based Cluster
• Strategic Performance Management and Creative Industry
• Global Performance Management Systems: The Role of Trust as Perceived by Country Managers
• Effective Team and Performance Management
• Developing High Performance: Performance Management in the Australian Public Service
• Performance Management and Incentive Plan Design
• Does the Company Size Affect Performance Management System?
• Why Is Strategic Performance Management Important?
• How Is Performance Management Related to Learning and Development?
• What Are the Benefits of Performance Management?
• How Are Performance Management Systems Used for Dual Purposes?
• Why Is Team Performance Management Important?
• Can Performance Management Improve the Skills of an Individual?
• What Is the Impact of Performance Management on Employees?
• How Has Sainsbury’s Used Performance Management to Increase Their Quality of Service?
• What Can Performance Management Offer to Learning and Development Practice Within an Organization?
• How Does Performance Management Help Employees to Learn?
• What’s the Purpose of Performance Management?
• Why Are Learning and Development Important for Performance Management?
• How Does Performance Management Encourage Employee Development?
• What Are the Primary Objectives of Performance Management?
• How Can Performance Management Improve Productivity?
• Why Should HR Connect Performance Management and Learning?
• What Is an Effective Performance Management System?
• How Does Performance Management Work in an Educational Institution?
• What Are the Possible Outcomes From Effective Performance Management?
• How Does Performance Management Contribute to the Output of an Organization?
• What Is the Main Feature of Performance Management?
• How Does Performance Management Add Value?
• What Is the Difference Between Performance Management and Performance Appraisals?
• Why Is Performance Management Important in Training and Development?

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Essay on Performance Management

Over the last four decades, there has been an increase in interest in performance management due to modifications to organizations with increased competition, workforce flexibility, and tying achievement to rewards. Performance management is becoming more popular among employers and management, and it has trickled down to shopfloor employees. The increased use of performance monitoring in enterprises can be ascribed to various issues, notably the desire for organizations to remain profitable, retain efficient staff, and improve profitability. Effective performance management offers an organized approach for employees to get feedback and coaching, allowing them to enhance their abilities and expertise and, as a result, contribute to better company results. Regardless of the potential advantages, performance management has drawbacks.

Consequently, businesses must critically examine the approach’s advantages and disadvantages and seek to implement it in a reasonable, open, and prospective-focused manner. This study assesses performance management, why more organizations use it, and the Human Resource Theory’s relationship to performance management. Furthermore, the paper will critically examine the advantages and disadvantages of performance management.

Overview Of Performance Management And HR

Today, the administration of performance mechanisms is an increasingly important focus in company operations. Essentially every human resource management (HRM) provides to performance management, instruction, and performance evaluation are of greater significance. The early years of HR and performance development for management may be traced directly to the early 1900s, throughout the industrial revolution. The industrial welfare movement advocated for employers’ efforts to improve working conditions in their respective industries. The revolution’s major goal was to ensure a higher standard of existence for employees, which impacted them psychologically. The primary objective of performance leadership is to enhance worker efficiency, motivation, and work satisfaction, eventually leading to better results for the organization. The cornerstone of a good HR system is performance management. According to Tweedie et al. (2019, p.77), most HRM literature focuses on the link between performance administration and appraisal. Integrating commercial and individual performance towards pre-defined business objectives to maximize the contribution from staff is thus a key component of strategic HR operations. Effective human resource management strategies rely on a solid grasp of human relations and the social and psychological aspects that impact employee conduct and job effectiveness. Performance administration is important for attaining HRM goals because it enables a structured procedure for reviewing and enhancing worker performance.

Theoretical Framework

The scientific approach analyses labour and discovers the most effective technique to do every task. The classical viewpoint, often known as scientific administration, emphasizes effectiveness, logic, and an organizational approach to work organization. According to scientific theory, workers are driven by financial considerations, and management organizes and directs the work process (McAuley et al., 2014). Edwin Locke developed the goal-setting theory in the year 1968. According to this concept, an employee’s specific goals are vital in encouraging him to perform well. Employees continue to work toward their objectives. If these goals are not met, they either enhance their performance or adjust the objectives to make them more achievable. The performance management framework’s objectives will be met if the performance improves. According to goal-setting theory, feedback is vital to the target-setting process (Lunenburg, 2011, p.4). Workers require periodic updates on how they are attaining their objectives to stay engaged and make any required improvements to their performances. Goal commitment is also emphasized in the philosophy. Employees dedicated to their goals are more likely to be driven to attain them. Employee commitment can be increased by integrating their input into setting objectives, offering resources and encouragement to assist them in achieving their goals and tying them to prizes and additional rewards. The relevance of communication in goal-setting is also emphasized by goal-setting theory. Employees require regular feedback on their performance in order to comprehend how they are making progress towards their objectives. Goal setting, for example, is frequently used to enhance patient outcomes in healthcare. Healthcare providers may create precise goals for their customers’ exercise routines, eating habits, and medication adherence while offering periodic updates on their progress toward these goals. The method can assist patients in remaining motivated and devoted to their therapy, resulting in improved health outcomes.

Performance Appraisal

Human resources perform a significant role in employee appraisals, thereby, are an essential part of organizational performance administration. The human resources department is critical in designing and implementing performance appraisals. The HR department is a go-between for the heads of function and evaluating authority and the employee. The HR team is in charge of designing the complete appraisal procedure. The HR team must understand the duties given to each employee to build and design a framework in which their real accomplishments may be graded concerning their primary responsibility areas. The performance appraisal criterion must be extremely straightforward and succinct. Employees should be well trained so that individuals can handle the whole performance appraisal procedure graciously and sportingly. Human resources are responsible for training and counselling managers and employees on their evaluation and appraisal process. It entails instructing managers on the most effective approaches to provide criticism and conduct employee performance reviews, enlightening employees on their potential and guiding them on creating desired outcomes and targets. Human resources are responsible for dealing with flaws that emerge during the performance review process.HR can help businesses improve worker engagement, economic viability, and staff retention by developing clear goals for performance, offering training and help to staff members and managers, and tracking performance appraisal information.

Strengths Of Performance Management

Managers can constantly discuss employees’ performance with them and offer comments on their fields of strength and need for development attributable to performance management. Between managers and staff members, such may assist in fostering confidence and improving connections, which can raise employee retention and involvement. Employees can benefit from performance management by identifying areas for growth and developing talents and abilities essential for accomplishment in their present and potential roles. Performance management may help people succeed professionally by offering regular guidance and feedback that can boost employee happiness and recruitment. For example, according to Sutton (2018), Adobe, a software developer headquartered in the United States, has established a system for managing employee performance that emphasizes continuous feedback and progress. Every year, performance evaluations have been replaced by frequent check-ins between leaders and staff members to discuss efficiency, goals, and career progress. Employee actions should be coordinated with the company’s overarching aims and objectives, partly due to performance management. Performance management assists in establishing a sense of shared direction and purpose among employees, boosting motivation and efficiency. Firms have fostered an environment of confidence and dedication by emphasizing regular communication and instruction and giving chances for individual growth and advancement. Therefore efficient feedback has aided the organization in attracting and retaining top employees and its performance in a highly competitive marketplace.

Managers can use performance management to interact with staff members regarding their work habits on an ongoing schedule and provide comments on their areas of expertise and room for growth. Mentoring can aid in developing confidence and strengthening connections between management and staff members, improving employee involvement and retention. Management can use performance information from management to make educated choices about allocating resources and long-term planning. Managers can uncover patterns and areas for enhancement regarding making decisions and allocating assets by recording and evaluating performance information. Regarding disagreement and legal difficulty, performance management establishes a standardized mechanism for tracking performance among staff members, which can give legal recourse. Businesses can show that they are taking sufficient steps to oversee staff efficiency and ensure compliance with laws and regulations by preserving assessments of achievement and recommendations. For instance, Amazon has proven able to establish confidence and deepen connections between executives and staff members by giving employees chances for career advancement and development and boosting their performance via regular coaching and evaluation (Bao et al., 2016, p.145). Management performance has aided the business’s image as a top employer and in attracting and retaining top people in an extremely competitive business.

Critiques of Performance Management

Performance management’s weakness in the setting of the neoliberal management system that customizes the job relation is that it might foster a focus on one’s accomplishments and competitiveness rather than collaboration and communal problem-solving. The results can lead to a hyper-individualistic environment in which employees are encouraged to prioritize their objectives and performance measurements over those of the firm or the wider community. Working conditions of performance management in a neoliberal framework can also add to workers’ perceptions of job instability and extreme poverty. Companies can leverage metrics for performance to argue for layoffs, reorganization, and exporting by stressing human accomplishments and results without considering broader financial, political, and social issues that may be influencing the firm or the industry. For instance, when performing as an individual is the main basis for progression and awards, it can foster an environment of prejudice and bias in which people who fit the company’s cultural and even demographic pattern are more inclined to thrive. In contrast, people who fail to succeed may be sidelined or removed.

Another criticism levelled regarding performance management is that it is discretionary and prejudiced. Performance appraisals are frequently based on managers’ and supervisors’ judgments and impressions, which can be affected by personal prejudices such as sexual orientation, colour, and temperament. A leader, for example, may offer a higher grade to a worker who is identical to themselves or they like, regardless of whether their performance does not deserve it. It thus can result in unfair and erroneous assessment, which may discourage personnel and erode a performance management system’s trustworthiness. The gender pay disparity at Google is one real-world illustration of the criticism against discretionary and biased performance oversight. The US Department of Labor sued Google in 2017 for claiming gender bias in wage and recruiting practices ( Levin, 2017). The lawsuit asserted that Google had an enduring issue of remitting female employees lower salaries than the male staff for comparable work and that Google’s performance appraisal system was “subject to bias.”

Management of performance increases workplace demands and, in many cases, a short-term perspective. Performance management can be demoralizing and foster a fear-based culture. Employees can feel agitated and concerned about attaining their objectives for performance, particularly if those targets are unreasonable or do not fit with their talents and abilities. Therefore, the performance management concept can result in fatigue, separation, and employee turnover, which can be expensive for the company’s shareholders. Furthermore, employees could feel hesitant to take threats and try something novel out of fear of missing resulting in an unfavourable performance assessment. Performance oversight may additionally contribute to an atmosphere of dread and unpredictability, especially when employees believe their careers or lives are in jeopardy due to their performance evaluations. Anxiety might result in a perpetual state of worry and tension, which can be discouraging while leading to employee burnout and turnover.

According to Foucault, performance management can be regarded as a concentration on managerial control and monitoring – disciplinary gaze. The power to discipline is an authority employing observing, measuring, and classifying persons to regulate and regulate their conduct. The regulatory gaze of managerial performance is frequently coupled with a sense of supervision and punishment, in which workers’ performance is continually observed and assessed. The result can foster an anxious and fearful culture in which employees believe they are continuously under investigation and face retribution and disciplinary proceedings if they fail to fulfil their assigned expectations. Performance management’s administrative gaze contributes to the integration of disciplinary power, in which workers start to regulate and regulate their conduct based on their performance measurements and reviews. Therefore, it can lead to a mentality of independence and monitoring, in which workers become their monitoring, continuously seeking to achieve their supervisor’s performance requirements leading to tensions.

Performance management is an organizational technique firms use to increase productivity among staff members, improve the quality of their goods and services, and fulfil corporate goals. Businesses can create objectives and deadlines, evaluate achievement, provide comments, and discover areas for development by adopting performance management processes. It also helps improve communication between managers and employees, as well as the identification and development of talent inside the firm. In addition, appraisal systems can foster an encouraging work environment and encourage staff members to give their all. However, there are certain constraints to performance management. One of the major complaints is that the emphasis on one’s accomplishments might foster a competitive culture that hinders working together as a team. Despite its drawbacks, performance management can help companies improve worker efficiency while reaching business goals. Therefore, it is critical for businesses to carefully organize and carry out performance management systems to ensure that they are efficient and compatible with the values and objectives of the business.

Bao, S., Damon, S.M., Landman, B.A. and Gokhale, A., (2016, March). Performance management of high-performance computing for medical image processing in Amazon Web Services. In  Medical Imaging 2016: PACS and Imaging Informatics: Next Generation and Innovations  (Vol. 9789, pp. 143–150). SPIE.

Boxall P F (2007). ‘The goals of HRM’, in (eds) Boxall P, Purcell J and Wright P,  Oxford Handbook of Human Resource Management,  Oxford, Oxford University Press, pp 48-67

Franco-Santos, M., Stull, D. and Bourne, M., 2021. Performance management and wellbeing at the workplace. In  Handbook on management and employment practices  (pp. 1-22). Cham: Springer International Publishing.

Levin, S. (2017, April 7). Google was accused of “extreme” gender pay discrimination by the US labour department. Retrieved from http://www.theguardian.com/technology/2017/apr/07/google-pay-disparities-women-labor-department-lawsuit

Lunenburg, F.C., 2011. Goal-setting theory of motivation.  International Journal of Management, business, and Administration ,  15 (1), pp.1-6.

McAuley, J., Duberley, J. and Johnson, P., 2014. Organization Theory, Challenges and Perspectives, második kiadás.

Sutton, R. I (2018, May 11).Why Adobe killed off the annual performance review – CMIRetrieved from https://www.managers.org.uk/knowledge-and-insights/case-study/why-adobe-killed-off-the-annual-performance-review/

Tweedie, D., Wild, D., Rhodes, C. & Martinov‐Bennie, N. (2019). How does performance management affect workers? Beyond human resource management and its critique.  International Journal of Management Reviews ,  21 (1), 76–96.

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Home — Essay Samples — Business — Performance Management — The Future of Performance Management

The Future of Performance Management

• Categories: Business Plan Performance Management Strategic Management

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Published: Aug 30, 2022

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Table of contents

Current view of performance management, factors impacting organisations today, implication of these factors to performance management, influential research and its impact on performance management, emerging trends in performance management.

• Macro-Economic Environment;
• Globalisation;
• Increased competition.
• Collaboration;

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Essay: Performance Management in the Public Sector

• by Vicenzo Vignieri
• 15 minute read

This essay on Performance Management in the Public Sector has been published as a chapter of the Global Encyclopedia of Public Administration, Public Policy, and Governance .

Vignieri, Vincenzo. 2018. “Performance Management in the Public Sector.” In Global Encyclopedia of Public Administration, Public Policy, and Governance , 74:1–8. Cham: Springer International Publishing. doi:10.1007/978-3-319-31816-5_3480-1.

Performance management is a management style aimed at setting goals and ensuring that such targets are achieved through a planning and control cycle. It embodies a set of activities, tools, and mechanisms intended to measuring and evaluating results to continuously improve performance.

Introduction

In the last 20 years or so, public sector organizations have borrowed management practices from the private sector. The pushing argument of doing more with less , which have inspired New Public Management (NPM) reforms, brought within the public sector the need for explicit use of standards and measures of performance (Hood 1991). The government ofWestern countries started to place greater emphasis on output control, reward systems, and results rather than overlooking compli- ance with administrative rules and procedures. NPM-oriented reforms provided public managers with these new tools for achieving performance. However, the specific complexity of the public sector demands to frame performance and adapt its management tools and methods to such environmental aspects, as well as to implement these techniques by balancing different values within organizations. Following these premises, this work explores the content of performance management in public sector organizations. Initially, the substance of performance is examined along three lines: models, dimensions, and levels of analysis. Then, performance management and measurement are distinguished and described. Lastly, a concluding section highlights central points concerning this performance management in the public sector.

Performance in the Public Sector: Models, Dimensions, and Levels

Models of Performance

The meaning of government operations and deliveries has changed over the years as the literature on performance management has recognized (Talbot 2009; Van Dooren et al. 2015; Walker et al. 2010). Academic and practitioners have offered a large variety of frameworks. However, they are based on two fundamental models: the “3Es” model (i.e., economy, efficiency, effective- ness) and the “IOO” model (e.g., input, output, outcome) (Boyne 2002). Performance has been described according to two leading perspectives, here commented in turn: performance as production and performance as public value. The production process model refers to the ability of an organization to turn resources into outputs and outcomes. The production logic – inputs ➔ activities ➔ outputs – can be applied to an institution/organization or a policy program. Such a standard model has been extended (Pollitt and Bouckaert 2011) (Fig. 1) and labeled as “the span of performance” (Bouckaert and Halligan 2007, p. 16).

The analytical framework of performance portrayed in Fig. 1 can be used not only to mea- sure the efficiency and effectiveness ofan agency, but it also increases the span of performance measurement and management since it concerns two levels of results: operational result and process results (Pollitt and Bouckaert 2011). Indeed, managers can measure the capacity ofthe organization to (i) address socioeconomic issues ofthe context, (ii) deliver services and outputs – even non- transactional ones – to the citizens and to the administered community and its efficacy in doing so, (iii) have an impact on the socioeconomic environment through intermediate and final outcomes. This model assumes as a starting point the societal needs of the environment based on which a public organization endows its system with the requested resources to deliver the planned outputs. Services and products such as the number of authorizations issued by a municipality, school degrees, meals provided to students at a school canteen, surgery treatments, and vaccination treatments are delivered to external users and may generate intermediate and final outcomes on both the targeted users and the social context. Picking some of the above output examples, the time it takes for the municipality to issue the authorization may impact on the current profit- ability of a business venture, students passing the university admission tests after getting a college degree, and people fully recovered after surgery treatment. All of these outcomes reflect the effects of a policy program on the external environment and – as Fig. 1 portrays – gathering the trust toward the political system. Therefore, the extended production model connects organizational performance with internal and external dimensions of effectiveness and includes the “four types of performance” as recognized by Dubnick (2005, p. 392). The public value perspective of performance clarifies the substance (Van Dooren et al. 2015)of what is described by the four performance types. Indeed, Moore (1995, p. 10) asked himself how to operationalize the ability of public sector organizations “to create value in the short and long run” or what he called the managerial success. For the private sector, the value created by an organization is measured by the profitability or the stock price (as a forecast of the first), but there is no equivalent for public sector organizations. Public value can be derived from the improved living conditions for the community as a whole, and public sector organizations produce value when they meet the needs of citizens. Public value embraces several disciplines, and it enhances the production model of performance (Voets et al. 2008). To this end, literature refers to the admin- istrative arguments as grouped by Hood (1991). He clustered administrative values about performance into three clusters: economy and parsimony, honesty and fairness, and security and resilience. The first group of values emphasizes output control since they are connected with “the matching of resources to defined tasks” (Hood 1991, p. 12). The second cluster of value is associated with the governance process. A government has to operate in a democratic, honest, fair way. This group of values focuses on the process rather on results as stressed by the production view of performance (Voets et al. 2008). The third group was labeled as “regime” which includes values relating to resilience, endurance, robustness, survival, and adaptivity. This argument indicates the capacity of a public organization to remain active in “worst case conditions and to adapt rapidly in a crisis” (Hood 1991, p. 14). The public value perspective of performance offers a framework which enhances public governance, with additional dimensions (Boyne 2002) including measures of the citizens participation in public processes, integrity of public agencies, and accountability (Walker et al. 2010), as well as democratic values “like equity, equality, probity, and social capital” (Talbot 2009, p. 501).

The discussion on the two perspectives of performance has introduced some fundamental dimensions of performance. Both production and public value models require measuring performance regarding the use of resources, quality and cost of processes, quality and quantity of outputs, and outcomes achieved by public sector organizations (OECD, 2009). Indeed, for public organizations to cover the entire extent of performance, they need a wide range of measures: outputs, efficiency, outcomes, and effectiveness.

The focus of traditional performance measurement was concerned with inputs and processes. Innovations provided by the NPM and Public Governance agenda shifted the focus of performance management system to the results of such processes, namely outputs and outcomes . An output configures an immediate result of organizations activity (certificate issued, the amount of money spent), an outcome expresses “everything beyond outputs” (Bouckaert & Halligan, 2007, p. 16) the effects or the impact of these activities on the external context (the fraction of certificated issued correctly, what has been produced with these public spending). The outcome implies an estimation of the worth of what has been delivered by public sector organizations, it proxies the quality of a quantitative output or a volume. “Such a view implies the existence of an identity of the form: Outcome = Valuation (output * quality)” (P. Smith, 2013, p. 2).

Dimensions of performance

Other key dimensions refer to the internal efficiency that measures the ability of an agency in “turning inputs into outputs” (Talbot, 2009: 499) and it can be associated at the maximum production yield of an organization when operating along its production frontier (Van Dooren et al., 2015). On the other side, the allocative efficiency allows organizations to understand the effect of resources’ allocation to a specific policy area. As Schick (1996, p. 87) argued, the “efficiency in producing outputs is not the whole of public management. It also is essential that government has the capacity to achieve larger political and strategic objectives. […] It will have to move from management issues to policy objectives, to fostering outcomes.” The ratio between output and outcome can be used as a measure of effectiveness (Bouckaert & Halligan, 2007). In the same way, the comparison of inputs vs. outcomes focuses on the organizational capacity to address societal requests expressed within the political system.

Levels of performance

NPM reforms focused performance analysis at the micro level (i.e., the organizational level) (Voets et al., 2008). However, both the multidimensionality of the concept (Talbot, 2009; Van Dooren et al., 2015) and the spread of the emergent paradigm of public governance  induced scholar to widen the scale of their analysis. In this sense, the integration of the extended performance model with values of public governance resulted in a “dynamic and variable span and depth of a performance platform for control” (Bouckaert & Halligan, 2007, p. 16). Indeed, when assessing performance, three main “levels” of analysis can be distinguished (Bianchi, 2010): (i) a political (or macro level); (ii) a managerial (or micro level); and (iii) a political vs. managerial conversation (or meso level). The first level refers to the national/international scale and implies gauging four types of results (Fukuyama, 2013): i) procedural measures (corruption, tax evasion, gender discrimination at workplace); ii) capacity measures (taxation, education of public service employee and professionalization); iii) output/outcome measure (education scores, GDP, literacy, public health, public security and national defense); and iv) bureaucratic autonomy measures (as a response to-principal agent theory implications). These empirical measures are examples through which assess and compare the quality of public sector services. However, data may not cover all of these areas making them difficult to measure. Furthermore, main issues regarding the national scale concern the conceptualization behind such performance measurements (Fukuyama, 2013). A macro perspective of performance can also be seen, for instance, as the case of a local area that needs to align its strategies with few involved Municipalities. One may call this perspective as “inter-institutional” (Bianchi, 2010, p. 376), or a “governance wide” (Bouckaert & Halligan, 2007, p. 18).

At a micro level of analysis, the concept of performance is mainly associated with organizational results such as outputs measures of services or products delivered by a public organization to the society. Organizational performance is customer-focused and expresses the allocation of outputs to specific users or the administered community as a whole. It also has a particular emphasis on the quality of deliveries as well as on the customer service level as effects of the “general quality movement” (Talbot, 2009, p. 498). Organizational performance includes elements such as the waiting time for surgical treatment or for issuing a certificate, the quality of the document delivered as gathered through the paperwork errors rate, and the adequacy of resources compared with service demand. These elements pertain to departmental or inter-departmental level and substance organizational performance. Therefore, by “mapping products and processes, strategic resources and results” (Bianchi, 2010, p. 378) organizations may achieve a certain fit with users’ expectation regarding service performance.

Meso level analysis refers to three main areas of application (Van Dooren et al., 2015): i) a policy program (e.g., health care, industrial development); ii) a value chain leading to products and services delivered to both internal (within the same organizations and across the vertical line of organizational structure) (e.g., the preliminary analysis for public prosecution: from a police officer to a Court office) and to external customers such as users or the community as whole (e.g., protection and security services);  iii) a network project (e.g., the strategic plan for a tourism destination). At this level of analysis, performance is primarily meant as intermediate and final outcomes. Meso level results are realized by the network of organizations involved in a specific policy field (e.g., unemployment). Thereby, performance management system must connect the outputs that each organization involved in such a network produced, with both intermediate and final outcomes achieved through the implemented policy at meso level (Bouckaert & Halligan, 2007)

Performance management

Performance management concerns a set of activities, tools, and mechanisms aimed at measuring and evaluating results to continuously improve performance. Performance management systems enable organizations to plan, control, evaluate and manage performance (regarding output and outcomes). Such processes by promoting shared goals and introducing an ongoing based control, also allow organizations to improve culture, enhance reporting system, and increase resources productivity. These benefits can be attained only by introducing in an organization a consistent framework embodying all the elements profiling the multifaceted and multidimensional concept of performance.

As classified by Van Helden, Johnsen, and Vakkuri (2012), the introduction of performance management system within a public sector organization may include four different stages. To a construction phase, in which both the system and the extent of performance indicators are designed, follows an implementation stage, that considers tests and empirical experiments. Once the system is up and running, the use of management tools and methods allows organizations to influence its internal units. The subsequent assessment phase concerns a review of performance management system architecture and its internal and external impacts, as well as an evaluation of potential implications for the whole institutional environment where the organization is embedded.

A cyclical approach to performance management emphasizes that performance management differs from mere performance measurement activities, although in some cases, among politicians and managers there still exists vagueness about the difference in the meaning of these words. To avoid such an indistinctness, the following two sections deal with performance measurement and management respectively.

Performance measurement

“Performance measurement is a bundle of deliberate activities for quantifying performance” (Van Dooren et al., 2015, p. 32) and is focused on capturing how the organization/policy-program is performing with regards to several aspects. Performance measurement requires incorporation of measurement within policy design and management initiatives. However these measurements are frequently weak and crude, since they miss many relevant dimensions of results (OECD, 2009). Indeed it has been termed as “the Achilles’ heel in administrative modernization” (Bouckaert & Peters, 2002). Furthermore, the way in which public administration make use of these information has been recognized as a raising question for public management scholars.  Selective and smart uses of performance measurement information may enhance performance management systems as a literature review provided by Cepiku (2016) argues. She clustered of drivers and effects of performance use in three groups: “characteristics of performance information systems, features of public managers as users of information, and internal and external context” (Cepiku, 2016, p. 298).

Additional questions regarding performance measurement relate to the rationale and to the object of measuring. Addressing both issues, Behn (2003, p. 587) identified meaningful performance measures associated with “eight managerial purposes.” The extent of performance measurement and its purposes play a central role in performance management: when deciding what to measure, organizations set up the most appropriate type of control system according to the possibility to measure outputs/outcome and the level of knowledge of the process.

Measurability has been explored since the 60’s. Downscaled measurability along eight structural aspects of bureaucracy, while Hackman and Oldham (1980) analyzed measurability along two domains: task ambiguity and task routine. They found that when the level of task routine is low and the task ambiguity is high, both give rises to difficulties in measurement. Blankart (1987) identified in the measurability of the quality of public services outputs the limits to their privatization. He clustered quality in three groups: inspection (tangible), experience (predictable), and trust (intangible). Wilson (1989) classified four types of organizations according to the possibility to measure their outputs and outcomes. These refer to production, procedural, craft, and coping organizations. In discussing the measurability of performance within their extended production model, Bouckaert and Halligan (2007) pointed out the existence and the relevance of three level of analysis (macro, micro, and meso ) as crucial elements of performance measurement.

Managing performance 

Within the context of public sector organizations, the focus of performance management has shifted from input management (budgets and staffing) or process management (rules and routines) towards achievements accounting (Walker et al., 2010) meant as “managing for results” – driven by NPM reforms – (Moynihan, 2006, p. 78), or­ “centered on programs outcomes” (Heinrich, 2002, p. 713). As Behn (2014) argued, performance management requires that an agency provides efforts aimed at achieving a specific public purpose, by eliminating or reducing obstacles to that purpose, setting and tracking targets constantly, examining performance information and data to understand progress and design corrective policies. In other words, performance management includes either measurement and monitoring, as well as reporting activities of selective and significant values to administrative and political bodies for allowing them to use this information as input for decision-making. The aim of a performance management process is improving the efficiency, effectiveness, economy, and equity of policy programs, organizations, and services . Its cycle includes activities such as planning, measuring, evaluating, reporting and implementing corrective actions (Cepiku, 2016).

The ambition of performance management is to incorporating information and data regarding results within the policy-design and budget allocation activities. Thereby, the purpose of such a management style is threefold: i) to learn how to improve/change strategy and/or implementation with an internal focus; ii) to steer and control processes and associated activities; and iii) to report and communicate performance values to give account of public sector results to the external environment (Van Dooren et al., 2015).

The idea that performance management is required to address problems such as inefficiencies of public sector organizations is widely recognized. However, given the specific complexity of public sector organizations, performance management systems may produce structural dysfunctionalities and behavioral implications(Cepiku, 2016; OECD, 2009; Van Dooren et al., 2015). Risks associated with performance management systems dysfunctionalities may be an inadequate political and managerial focus on performance management practices and a probability of gaming with measurement and report (Vakkuri & Meklin, 2006; Van Thiel & Leeuw, 2002). When designing performance management systems, to mitigate such adverse effects, is essential to well-balanced managerial values, political priorities, and the institutional setting.

Performance differs from a mere behavior since it includes some degree of intent (Dubnick, 2005). It can be conceptualized as “a set of information about achievements of varying significance to different stakeholders” (Bovaird, 2008, p. 185). Two approaches define performance: the production model and the public value perspective. Both models of performance stressed the multidimensionality of the tenet in terms of dimensions (input, output, outcome, efficiency, effectiveness, and productivity) and levels (micro, macro, and meso ). Performance management is a cyclical process through which managers set goals, measure achievements and use information regarding performance to implement corrective actions and/or to change targets. Since performance measurement cannot be understood as an end per se (Behn, 2003), performance management embodies the measurement of results as supporting activities for the control function. Performance management is an effective practice for improving efficiency and effectiveness of the public sector. To alleviate the risk of distorted effects, in designing and assessing the performance academics and practitioners must enlarge the extent of indicators and the interest of stakeholders

Behn, R. D. (2003). Why measure performance? Different purposes require different measures. Public Administration Review, 63(5), 586-606. Behn, R. D. (2014). What Performance Management Is and Is Not. Bob Behn’s Public Management Report, 12(1). Retrieved from Bianchi, C. (2010). Improving performance and fostering accountability in the public sector through system dynamics modelling: From an ‘external’ to an ‘internal’ perspective. Systems Research and Behavioral Science, 27(4), 361-384. doi:10.1002/sres.1038 Blankart, C. B. (1987). Limits to privatization. European Economic Review, 31(1), 346-351. doi:https://doi.org/10.1016/0014-2921(87)90050-X Bouckaert, G., & Halligan, J. (2007). Managing performance: International comparisons. New York: Routledge. Bouckaert, G., & Peters, B. G. (2002). Performance Measurement and Management: The Achilles’ Heel in Administrative Modernization. Public Performance & Management Review, 25(4), 359-362. doi:10.2307/3381129 Bovaird, T. (2008). Political Economy Perspectives on Performance Measurement. In R. Thorpe & J. Holloway (Eds.), Performance Management: Multidisciplinary Perspectives (pp. 184-199). London: Palgrave Macmillan UK. Boyne, G. A. (2002). Theme: Local Government: concepts and indicators of local authority performance: an evaluation of the statutory frameworks in England and Wales. Public Money and Management, 22(2), 17-24. Cepiku, D. (2016). Performance Management in Public Administration. In T. Klassen, D. Cepiku, & T. J. Lah (Eds.), The Routledge Handbook of Global Public Policy and Administration. Abingdon, UK: Routledge. Dubnick, M. (2005). Accountability and the Promise of Performance: In Search of the Mechanisms. Public Performance & Management Review, 28(3), 376-417. Fukuyama, F. (2013). What is governance? Governance, 26(3), 347-368. Hackman, J. R., & Oldham, G. R. (1980). Work redesign. Reading, MA: Addison-Wesley. Heinrich, C. J. (2002). Outcomes-Based Performance Management in the Public Sector: Implications for Government Accountability and Effectiveness. Public Administration Review, 62(6), 712-725. Hood, C. (1991). A Public Management for All Seasons? Public administration, 69(1), 3-19. doi:doi:10.1111/j.1467-9299.1991.tb00779.x Moore, M. H. (1995). Creating Public Value: Strategic Management in Government: Harvard University Press. Moynihan, D. P. (2006). Managing for Results in State Government: Evaluating a Decade of Reform. Public Administration Review, 66(1), 77-89. doi:10.1111/j.1540-6210.2006.00557.x OECD. (2009). Measuring Government Activity. Paris: OECD Publishing. Pollitt, C., & Bouckaert, G. (2011). Public Management Reform: A Comparative Analysis. Oxford, UK: Oxford University Press. Schick, A. (1996). The Spirit of Reform: Managing the New Zealand State Sector in a Time of Change; a Report Prepared for the State Services Commission and the Treasury, New Zealand: State Services Commission. Smith, P. (2013). Measuring Outcome In The Public Sector. New York: Taylor & Francis. Smith, P. C., & Goddard, M. (2002). Performance management and Operational Research: a marriage made in heaven? Journal of the Operational Research Society, 53(3), 247-255. doi:10.1057/palgrave.jors.2601279 Talbot, C. (2009). Performance Management. In E. Ferlie, L. E. Lynn, & C. Pollitt (Eds.), The Oxford handbook of public management. Oxford, UK: Oxford University Press. Vakkuri, J., & Meklin, P. (2006). Ambiguity in Performance Measurement: A Theoretical Approach to Organisational Uses of Performance Measurement. Financial Accountability & …, 22(3), 235-250. doi:10.1111/j.0267-4424.2006.00401.x Van Dooren, W., Bouckaert, G., & Halligan, J. (2015). Performance management in the public sector: Routledge. Van Helden, G. J., Johnsen, Å., & Vakkuri, J. (2012). The life-cycle approach to performance management: Implications for public management and evaluation. Evaluation, 18(2), 159-175. doi:10.1177/1356389012442978 Van Thiel, S., & Leeuw, F. L. (2002). The performance paradox in the public sector. Public Performance & Management Review, 25(3), 267-281. Voets, J., Van Dooren, W., & De Rynck, F. (2008). A Framework for Assessing the Performance of Policy Networks. Public Management Review, 10(6), 773-790. doi:10.1080/14719030802423129 Walker, R. M., Boyne, G. A., & Brewer, G. A. (2010). Public Management and Performance: Research Directions. Cambridge, UK: Cambridge University Press. Wilson, J. Q. (1989). Bureaucracy: What Government Agencies Do and Why They Do It: Basic Books.

• measurement
• Performance
• Performance Management
• Public Sector

Vicenzo Vignieri

Vincenzo Vignieri is an Assistant Professor at the Department of Law and Business Studies, University of Siena (Italy), where he teaches Business Administration. Formerly, he served as an Adjunct Professor in Business and Public Management at the Department of Political Sciences and International Relations, University of Palermo (Italy), where he taught Business Administration, Business Performance Analysis, and Performance Management in programs at master and doctoral level. He holds a Ph.D. in Public Management and Governance from the University of Palermo. During his Ph.D. studies, he spent a term at the University of Bergen (Norway) and the Radboud University of Nijmegen (Netherlands). He also has been visiting scholar at the University of Baltimore (USA). Main research areas cover Business and Public Management with a priority focus on performance management and policy analysis in cross-boundary settings, public service co-production, urban and rural regeneration, local development, and open innovation. In these research fields, he uses the System Dynamics Methodology as a method enabling a better understanding of complex social systems behavior. In these domains, Vincenzo Vignieri has published several articles in academic and professional journals. He also has experience as a policy analyst for the Italian Ministry of Economy and Finance and the Italian Agency for Territorial Cohesion.

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Performance Management Systems: Essay

Type of paper: Essay

Topic: Workplace , Management , Employee , Medicine , Performance , Job , System , Goals

Words: 1700

Published: 11/11/2021

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Introduction:

Performance management is a comprehensive process that ensures that ensures that the performance of individuals and teams of employees works towards achieving the business goals and objectives (Demartini, 2013). In this regard, an operational system governing performance and employees’ behavior is put in place. The system establishes a mutual understanding on what is to be achieved and develops an approach on how the set goals will be achieved. The process combines key elements of good human resource management practices such as, learning and skills development, performance appraisal, and organizational development.

Relevance of performance management systems:

The initiative focuses on achieving high levels of organizational performance, while linking all aspects of the business and all the stakeholders. This attribute makes the system integrated. Performance management relates to every organizational activity based in the context of human resources policies, tradition and culture, and communication systems. Therefore, a performance management system must be strategic, that is, it should address broad organizational issues and long-term goals (Walburg, 2006). Veteran Affair Community-based Outpatient Clinic is one entity that offers a clear description of a performance management system. With the demand to improve medical services and achieve a projected organizational growth and production output of at least 15 percent annual increment, the management designed a management system that encompasses the components of a practical performance management system (Kominski, 2014). As a result, the clinic stands to be the most competitive across Los Angeles, with the capacity to offer quality medical services on a sustainable level. Moreover, the clinic is ranked among the best outpatient medical faculties across the region, and has attracted some of the best medical practitioners from across the United States. Therefore, a performance management system is an essential organization management tool that defines productivity and effectiveness towards achieving the organizational goals and objectives. The systems in place focus on performance improvement between individuals and teams, and cumulatively across the organization. To attain this effectiveness, continuous training and skill development is paramount. Therefore, the system in place must put into account capacity building and employees’ skill development. The system also functions to address employees’ behavior, encouraging employees to maintain sound work relationships that promotes better working and effectiveness. Despite the fact that these systems give the awkward feeling, among employees, that their activities are always under a spotlight, this is the only way that employees’ strength and weaknesses can be highlighted (Demartini, 2013). A viable system should be clear, with concise job descriptions relating to each job position. Considering that the job descriptions highlight the employees’ goals and objectives, it is essential that the employees’ goals must be aligned with the organizational goals. Consequently, the system institutes priorities for both the employees and the organization. As Mukherjee (2012) espouses, a successful system must also provide a clear and open communication path between managers and the employees. In this sense, the managers receive input from the employees, giving the freedom of discussion, and establishing a framework for managers to respond. The communication path ought to be recurrent and with continuous feedback attributes, both formal and informal with positive and constructive functions. Moreover, a sustainable system must also provide employees with sufficient resources and opportunities for professional development. Courses, workshops, seminars, conferences, mentoring, and refresher courses should be offered continuously. Besides, the system should provide relevant information relating to employment decisions, promotions, remunerations, and terminations. Moreover, such a system must be user friendly (Walburg, 2006). This report will focus on the performance management systems in Veterans Affair Community- based Outpatient Clinic based in Saint Augustine, Florida. The paper will lay emphasis on two job positions, a Medical Administrator and a Scheduler, defining their evaluation approaches and compensation plans. Moreover, the author will shed light on the importance of providing employees’ benefits to these two positions.

Job evaluation approach:

In defining job evaluation, this systematic procedure determines the value of a job position against other job positions within an organization. The adopted evaluation approach compares the job descriptions by analyzing the relevance of the responsibilities towards organizational goals and objectives. It is through this evaluation that the relative work rational pay is established for the purposes of pay equity, that is, equal pay for equal work (Cadwell, 2000) As highlighted by Demartini (2013), four approaches of job evaluation have been described classification, ranking, factor comparison, and point method. In the classification approach, the jobs are ranked according to an existing hierarchy or structure that defines job descriptions and job titles. Due to differences in duties and responsibilities, the wage rates remain different. The ranking method is the simplest approach, and compares jobs depending on their overall importance to the organization. The value of a job is based on the skills required and responsibility. The factor comparison method is a matrix of factors that compares different responsibilities and their hourly rates depending on the skills and responsibilities appertaining to the position. In the point method, a number of compensable factors are projected as the key factors in assessing the worth of a job such as, skill, responsibilities, effort, and working conditions. To each of these factors a point score is attached which ultimately contributes to the wage or salary (Murkherjee, 2012). The Veterans Affairs Clinic utilizes both the ranking method and the factor comparison methods. Concerning the ranking method, the position of a Medical Administrator is ranked higher than that of a Scheduler. This ranking becomes a subset of the factor comparison evaluation. The administrator is tasked with comprehensive responsibilities that aim towards managing, directing, and coordination of medical services within the clinic (Simons, Leroy & Savage, 2013). Knowledge about the medical practice, laws, policies, and regulations is among the relevant qualifications. In reference to the Medical Scheduler position, the individual executes simple clerical duties that coordinate the smooth running of operations, from booking appointments to database management. The employee must possess office management skills as the major job requirement. Knowledge about the medical practice is not a must. The advantage of these approaches is that equitable pay is offered according to the range of responsibilities, that is, more responsibilities come with a higher pay. With a higher level of skill and expertise and more duties to execute, the administrator earns more as compared to the scheduler. Therefore, the value of the job is expressed in financial terms. Considering that the pay factor for each position is entrenched on subjective judgements, there are no definite standards for job ranking or in job factor comparisons. Consequently, the main demerit in this approach is that the females working in this facility are often disadvantaged, factoring that more females take the Scheduler position as compared to males (Kominski, 2014).

Compensation plans:

The table below summarizes the compensation plans between the aforementioned positions. The Medical Administrator position is accorded more priority than the Scheduler due to the high level of skill and professional certification required. The plan considers several factors that determines the pay depending on the skill, effort input, responsibility, and the general working conditions. All the payments are quantified in United States dollar (USD).

Table1: Compensation plans (Kominski, 2014)

Importance of employee benefit plans: The Veterans Affairs Clinic offers housing, travel, health, benevolence, and retirement benefits to all its employees. These benefits, however, arise with skill and responsibility. The more the responsibilities and the level of skill, an employee is entitled to more benefits. There is equitable pay for the services offered. This fact provides a financial safety net for the employee, while the clinic works towards achieving its financial goals thus fostering a sustainable business model. In this regard, employees strive towards self-improvement, particularly in augmenting their education, skills and job experience (Simons, Leroy & Savage, 2013). With a concrete employee remuneration and benefit plan, it is easy for the Veterans Affairs Clinic to offer reasonable pay and allowances to its employees while monitoring its financial and budgetary control. Therefore, the pay schemes commensurate with the services offered and the ultimate contribution to the business goals and objectives. As a result, both the employer and the employee operates in a mutual balance that safeguards the rights of both parties, while the collective goals and objectives are accomplished (Bacal, 2012). As Walburg (2006) emphasizes, it is worth noting that with substantial employee benefits, the Veterans Affairs clinic has managed to assign emotional values such as satisfaction, loyalty, commitment, and engagement towards the employer. Subsequently, to the clinic management, competitive benefits have proved critical in attracting and employee retention towards long-term careers.

Conclusion:

While performance management systems remain complex to establish and monitor, it is essential to note that these processes are vital tools that define the overall efficiency and organizational productivity. As demonstrated by Veterans Affairs Community-based Clinic, a viable performance management system stands to be the most reliable instrument that organizational managers can utilize in gauging the strengths and weaknesses of the current management approaches (Marquis & Huston, 2006).

References:

Bacal, R. (2012). Manager's guide to Performance management. New York: McGraw-Hill. Cadwell, C. M. (2000). Performance management. New York: American Management Association. Demartini, C. (2013). Performance management systems: Design, diagnosis and use. Heidelberg: Physica-Verlag Kominski, G. F. (2014). Changing the U.S. health care system: Key issues in health services policy and management. San Francisco, CA: Jossey-Bass, a Wiley Brand. Marquis, B. L., & Huston, C. J. (2006). Leadership roles and management functions in nursing: Theory and application. Philadelphia: Lippincott Williams & Wilkins. Mukherjee, J. (2012). Designing human resource management systems: A leader's guide. Thousand Oaks, Calif: SAGE Publications. Simons, T., Leroy, H., & Savage, G. T. (2013). Leading in health care organizations: Improving safety, satisfaction, and financial performance. Bingley, U.K.: Emerald Group Publishing Limited. Walburg, J. (2006). Performance management in health care: Improving patient outcomes: an integrated approach. London: Routledge.

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