What Is Performance Management

Performance management is best described as a continuous and ongoing communication and feedback process that aims to optimize an employee’s performance so that they are able to perform at work to the best of their abilities.

This process occurs between employees and their supervisors in which the latter provides feedback, reviews results, sets objectives, identifies goals and clarifies expectations.  The ultimate goal here is to ensure that an employee’s performance and progress is well-aligned with the organization’s overall objectives and goals.

Performance Management Definition

The definition of performance management has undergone many changes ever since its inception as a concept. Initially, it used to be an annual process that used to take place once a year which is probably why the first thing that comes to mind when you talk about performance management is the annual employee evaluations.

However, it has slowly been transitioning into more of a continuous system where the main idea is to ensure that all employees in an organization are delivering excellent performance throughout the year.

It is important to note here that performance management is not a form of self-evaluation, nor is it an annual appraisal or evaluation meeting. It’s an extensive, systemic process that aims to create a productive environment or setting in which individuals are encouraged and enabled to perform according to their full potential.

The performance management system or process generally consists of five core steps that are extremely crucial. These include:

  • Planning – this stage comprises of setting goals and objectives for employees and then effectively communicating these goals to them.
  • Monitoring – this stage monitors an employee’s performance in terms of goal achievement. This is more of an ongoing stage where managers and supervisors track their team’s performance in real-time and offer corrections or solutions wherever needed.
  • Developing – this step makes use of the data collected in the previous stage to enhance employee performance by improving their knowledge and skills on the job.
  • Rating – this stage involves period ratings of employees in order to gain insight on where they stand currently and whether if any changes are required.
  • Rewarding – a very integral aspect of the performance management system is rewarding good performance in order to boost employee morale and motivation.

The importance of performance management cannot be emphasized enough, and every organization or company needs to have a good, solid system that strives to improve the overall organizational performance, boosts employee well-being and supports their productivity and performance. Note here that no two performance management systems are likely to have the same structure, considering how every organization has specific and different values and goals.

However, the ultimate purpose of performance management is the same – achieving organizational objectives while ensuring that they are aligned with an employee’s goals.

There are numerous benefits of having a continuous and systemic performance management process in place, such as:

  • It encourages employee recognition and reward.
  • It boosts employee productivity and engagement.
  • It creates strategies for employee development.
  • It creates a thorough understanding and clarification regarding goals and objectives.
  • It gives an opportunity to exchange useful feedback.
  • It supplements and supports the annual performance review.
  • It lets employees know that their managers care about their work which further helps make the former more open to receiving constructive criticism and feedback.

In a nutshell, performance management is extremely vital for all organizations, businesses and companies, but it’s only effective if done right. You must design a proper extensive process that comprises all the essential steps mentioned earlier in order to produce the desired results.

More Performance Management Definitions