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: