Definition of Performance Management
Performance management is a way of systematically managing people for innovation, goal focus, productivity and satisfaction. It is a goal congruent win- win strategy. Its main objective is to ensure success to all managees i.e., all task teams who believe in its process, its approach and implementation with sincerity and commitment. The managees success is reflected in organizations’ bottom line in terms of achieving its planned goals. Performance management is an endless spiral, which links several processes such as performance planning, managing performance throughout the year, taking stock of managees performance and potential. Also it includes recognizing and rewarding success at the end of the year. Performance management links these processes in such a way that an individual managees performance is always oriented towards achieving organizational goals. Performance management creates positive goal oriented task motivation and aims at reducing intra-organizational conflict. It is realized that organizations could not be successful if they do not have a good performance management system. Each manager needs to devise his/her own system of managing performance. While some norms of performance management are explicit others are not so clear even to the managers. It is said that standards or expectations that define good performance may be generally understood but are rarely specific.
Performance management is a holistic, largely participatory and goal congruent process of managing and supervising managers at work. It is understood as a systematic, organized approach to managing and rewarding performance by generating and sustaining positive managee (employee) motivation. Its salient dimensions include performance standards- representing organizational goals and objectives, managee recognition and reward.
According to Armstrong, ‘Performance management is a means of getting better results from the organizations, teams and individuals by understanding and managing performance within the agreed framework of planned goals and competency requirements.’ It is a process for establishing shared understanding about what is to be achieved and an approach to managing and developing people.
Performance management is a strategic and integrated approach in delivering sustained success to organizations by improving performance of people by developing the capabilities of teams and individuals. Performance management is a strategic tool since it is concerned with achievement of long-term organizational goals and effective functioning of organizations in its external environment. Performance management effects four types of integrations namely, vertical, functional, human resource and goals.
- Vertical Integration — aligning objectives at organizational, individual and team levels and integrating them for effective performance. The individuals and teams agree upon to a dialogue to work within the broad framework of organizational goals and values.
- Functional Integration — it deals with focusing several functional energies, plans, policies and strategies onto tasks in different levels and parts of the organization.
- Human resource Integration — this ensures effective integration of different subsystems of HRM to achieve organizational goals with optimum performance. These subsystems include people management, task monitoring, job design, motivation, appraisal and reward systems, and training and empowerment.
- Goal integration — it focuses on arriving at congruence between the needs, aspirations and goals of the managees with that of the goals and objectives of the organization.
Principles of Performance Management
Quality and effectiveness of Performance management is a reality in organizations only when certain basic and fundamental tenets/ principles or practices of management are followed. These include:
- Transparency — decisions relating to performance improvement and measurement such as planning, work allocation, guidance and counseling and monitoring, performance review etc., should be effectively communicated to the managees and other members in the organization.
- Employee development and empowerment — effective participation of employees/ managees (individuals and teams) in the decision — making process and treating them as partners in the enterprise. Recognizing employees/ managees of their merit, talent and capabilities, rewarding and giving more authority and responsibility etc., come under the umbrella this principle.
- Values — a fair treatment and ensuring due satisfaction to the stakeholders of the organization, empathy and trust and treating people as human beings rather than as mere employees form the basic foundation, apart from others.
- Congenial work environment — the management need to create a conducive and congenial work culture and climate that would help people to share their experience knowledge and information to fulfill the managees aspirations and achieve organizational goals. The managees/ employees should be well informed about the organizational mission, objectives, values and the framework for managing and developing individuals and teams for better performance.
- External environment — effective and contextual management of external environment to overcome the obstacles and impediments in the way of effective managerial performance.
Features of Performance Management
Performance management is a complex concept that encompasses different dimensions of the organization and the people. The mission, the objectives and the goals of the organization should be well designed. Performance planning, development and reward systems enable the managees to realize their true potential in order to contribute for organizational growth and development. The managees performance and quality is a function of several prerequisites that managers need to take care of. The following constitute the prerequisites /characteristics to ensure effective practice of Performance management:
- Clarity of organizational goals — the managers need to clearly and precisely lay down the organizational goals, objectives and ensure that these are well informed to the managees and other employees and make them to realize what the organization expects from them. The organizational goals need to be translated into individual, team and departmental/ divisional goals.
- Evaluation — the individual, team, department/ divisional performance needs to be evaluated on continuous basis. The organization should develop an evaluation system and process, which is designed and developed on scientific lines.
- Cooperation but not control — the managers should nurture the practice of getting work done through the system of obtaining managees consensus rather than through control or coercion.
- Self-management teams — the management need to encourage the individual and teams for self-management of their performance. This procedure creates in the managees a sense of responsibility and develops a spirit to work with commitment and evaluate his/her strengths and weaknesses from time to time and plan for reducing the performance gaps.
- Leadership development — the managers need to identify such of the managees who have leadership potential and apart from sincerity and honesty to ensure better and effective two-way communication between the managers and the managees.
- System of feedback — the organization must have a foolproof feedback system of managees/individuals/teams/departments performance. It should be monitored continuously and generate feedback loops for better performance management.
There must be a system that would help to monitor and measure all performance against the set standards and the managees need to be informed of their shortcomings. The evaluation system should be made transparent so as to repose managee’s faith in the system.
Scope of Performance Management
The Performance management should conform to broad organizational framework. It should provide for managers and managees shared experiences, knowledge and vision. It encompasses all formal and informal measures and procedures adopted by organizations to increase corporate, team and individual effectiveness. Managees/ employees should be enabled continuously to develop knowledge, skill and capabilities. Performance management has got to be understood in totality of the organization but not in various parts. Performance management is designed and operated to ensure the interrelationship of each of these processes in the organization.
- Performance management assumes that the managers and team members share accountability for performance by jointly agreeing on common set of goals i.e., what they need to do and how they need to do it. They jointly implement the agreed plans and monitor outcomes.
- Performance management is concerned with everything that people do at work. It deals with what people do (their work), how they do it (their behavior) and what they do it (their result).
- Performance management data generated by the appraising process is used primarily for deciding rewards. Including performance related pay. However, it is not the integral part of Performance management process.