Performance Management – Definition

Cite this article as:"Performance Management – Definition," in The Business Professor, updated September 14, 2019, last accessed September 26, 2020,

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Performance Management Definition

Performance management is a tool used in corporate management for evaluating and monitoring the performance of employees in an organization. The main objective of performance management is to motivate employees to perform in the most effective and efficient manner in order to deliver top-quality results at work place.

The performance management approach enables both management and employees to identify and understand the organizational objectives, and performance standards set for employees. Also, it helps in creating an alignment between employees’ performance and the organization’s vision and mission. Such management approach usually enables employees to deliver best results while working in the organization.

A Little More on What is Performance Management

Usually, companies follow conventional tools to measure the performance of employees. Such tools include setting objectives and goals to be accomplished, informing employees about standard performance levels, and creating a well-defined process to ascertain performance. These tools not only tell about the employees’ performance, but also give them an opportunity to learn and grow in their professional field.

The managerial level of an organization prefers using performance management techniques for coping up with the company’s operations, make recommendations, and take decisions so as to enable employees in accomplishing their objectives, and perform efficaciously. For instance, the sales manager of ABC company can ask his employees to create a specific amount of revenue in a given period of time. However, when it comes to adopting a performance management approach, the employees are not only given targets, but are also given advice for achieving their objectives successfully.

Performance Management Program

Though there are many performance management software programs available, most of the companies prefer using customized templates for performance evaluation. The successful performance management programs have the following attributes in common:

  • Creating a link between employees’ tasks and the missions and objectives of the organization. Employees should know the relation between their objectives and the organizational overall goals.
  • Formulating particular results based on job performance. For instance, what results does an employee’s job position produce? What is the impact of employee’s activities on the organization? What should be the communication strategy for workers, supervisors, etc.?
  • Setting standards that are possible to attain. Employees should share their views on measuring success, or setting performance expectations. Expectations include results, signifying the final goods and services the employees should deliver; actions signifying the process that employees should follow in order to produce a product or render a service; and behaviors signifying the values that employees should exhibit during work.
  • Making plans revolving around job development. Both employees and managers should contribute in enlisting the duties of a job. Employees should also be given the authority to tell what new skills they want to learn, and how they plan to use them in favor of the company.
  • Conducting regular meetings. Rather than awaiting appraisal on a yearly basis, employees and managerial team should meet on a regular basis to assess performance.

Why does performance management matter?

Performance management, when followed correctly, helps in establishing a reliable work environment followed by a sense of transparency and effective communication. As performance management provides a specific framework and standards, employees know what they are required to do. This results in making the workplace less chaotic. Since the performance standards are always known, employees know what they are supposed to do, and managers don’t have to bother about reminding employees of their objectives.

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