Performance Management

Performance Management is the process of defining clear objectives and targets for individuals and teams, and the regular review of actual achievement and eventual rewarding for target achievement.

The process should ensure that individual and team effort support the organizational objectives and that key stakeholder expectations are realized by focusing on key value drivers. Thus:

  • Planning is crucial
  • Stakeholder expectations are key drivers of Performance Management
  • Management and employee buy-in and involvement are paramount
  • Key objectives and targets should be linked to corporate strategy

These factors are often not addressed in organizations and as a result the process is often destructive and draws a tremendous amount of energy from the organization – leading to a situation where value-add and benefits are minimal.

Performance Management should be a process that incorporates the following

  • Planning Performance: setting Key Performance Area’s (KPA’s), objectives and standards that are linked to corporate strategy, development plans
  • Maintaining Performance: monitoring, feedback, coaching and mentoring and regular interactions regarding goal achievement
  • Reviewing Performance: formal feedback and ratings – evaluating performance
  • Rewarding of Performance: increases, bonuses, incentives, etc

The Planning Phase is crucial – 80% of time and effort should be allocated to this phase. If the focus is on inappropriate aspects of the organization (i.e. the goals do not contribute to long-term strategy achievement and stakeholder requirements), none of the subsequent phases will be worthwhile. If the focus is inappropriate, it often leads to de-motivation, lack of credibility and failure of the business.

Planning typically should include the identifying Key Value Drivers of stakeholders (stakeholders typically are the shareholders, customers and employees of the organization).

Benefits of performance management:

A well-implemented performance management process is beneficial to the company, its managers and employees. The advantages include:

  • Integration
  • Open Communication
  • Improved Performance
  • Training and Development
  • Clarity of Standards/Requirements
  • Placement of Individuals
  • Increased Objectivity
  • Equitable Remuneration
  • Objective Promotability
  • Structured Career Planning

Success factors in implementing Performance Management:

  • Relevance

Link to strategy, clear job goals, up-to-date job profiles

  • Reliability

Consistent measurement, rating errors

  • Discriminability

Ability to discriminate between good and poor performance

  • Freedom from contamination

External factors should not influence measurement (resources, line of sight)

  • Practicality

Easy to use, understandable, manageable administration

  • Acceptability

Perceived legitimacy, involvement

  • Legal compliance

Labour law compliance, Employment Equity Act, substantive and procedural fairness


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