Performance Management is an innovative concept in the area of corporate management. More and more corporations are now beginning to understand the critical need for Performance Management to achieve their strategic goals. The main purpose of performance management is to synchronize individual objectives with organizational objectives to achieve the end results. Performance Management aims to drive people to perform to their optimum capacity and contribute to the growth of the organization.
Performance measurement is an integral part of Performance Management. Performance measurement is the process of periodically assessing the progress made towards attainment of the organization’s pre-determined goals. Performance management is to monitor on that process, apply the necessary correctives towards completion of the set objectives. Performance management is less about how active an organization and their employees are and more about producing results. Performance management redirects the company’s efforts toward effectiveness.
Performance Management is Collective Responsibility
Performance Management does not pertain only to the work-efficiency of individual employees. Performance Management is rather broad in its context and emphasizes various departments like administration, marketing, finance, production, materials and human resources. It monitors different processes like budgeting, billing, inventory, cash flow and IT support services. The whole exercise is to achieve organizational effectiveness and organizational effectiveness cannot be brought about by any one unit but only through collective efforts.
It is common knowledge that with the advent of the free market economy, most organizations have to contend with fiercer competition and stiffer challenges. Businesses must become more efficient and adopt right strategies to stay in business. Every employee in the organization must perform optimally to ensure strategies are implemented effectively. This situation also demands that systems and processes within the organization are set in the right way to achieve results.
Performance Management Aims
It is accepted that Performance Management comprises of a series of step by step processes as outlined below:
- Systematic planning of work and determining objectives
- Constant monitoring of work performance
- Required man-power deployed to perform
- Performance is continually measured and ratings provided
- Motivating performance through rewards
Performance Management Methods
- Business Performance Management (BPM) is a series of processes to enable businesses to understand and make efficient use of their various budiness functions, such as financial, human and material resources. Operations Performance Management (OPM) puts stress on devising the methodology to enhance overall business efficiency across the entire organization.
- Integrated Business Planning (IBP) focusses on the comprehensive planning methods integrating all units across the enterprise to improve organizational coordination.
- Application Performance Management (APM) is 'systems' management that focuses on monitoring and managing the performance and availability of software applications. APM refers to the IT tools deployed to detect, diagnose, remedy and report on application performance to ensure it supports the attainment of the company’s business goals.
Inputs Required for Performance Management
- Management capability to adapt by continually adjusting and aligning to the changing needs of the organization
- Leadership quality to set direction for the organization and to guide all operations to strictly pursue that direction
- Resources utilization is the ability to ensure effective and optimum use of all available human and material resources in the organization
- Technical competence depends on the particular type of products and/or services provided by the organization.
Benefits of Performance Management
The benefits of Performance Management are coordinated data distribution systems, optimum work efficiency, increased productivity, motivated sales force, introduction of automated processes, responsive management controls, alignment of organizational activities to the goals of the organization, periodic performance appraisal and equitable treatment of employees (as appraisals are based on results). Performance is seen as an ongoing continuing exercise rather than as a one-time affair.
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