What Is Performance Management Really?

Definition: Performance management is the process of planning, implementing, monitoring, improving and sustaining the efficiency and effectiveness of organisations, teams and individuals.

When examined closely, it is clear that this definition contains three main concepts.

They are the following:

It indicates that the process applies at three integrated levels namely:

• The organisation as a whole.
• Units within the organisation (divisions, departments, teams, etc.).
• Individual staff members.

It indicates that the process has five major components:

• Planning and contracting performance requirements.
• Implementing planned activities.
• Monitoring and measuring performance levels.
• Improving activities.
• Sustaining achieved performance levels.

It is important to realise that improving efficiency and effectiveness refers to both:

• Improving performance; and
• Developing skills and knowledge.

Whether in individuals, teams or organisational context

In summary, it can be concluded that Performance Management encompasses both the aspects of performance improvement and the development of human resources. Performance can only be improved to a limited point without the development of the skills and knowledge of the people from whom the improved performance is expected. The most effective performance management system therefore focuses on these two diverse aspects of performance management separately: “What the company gets out of it” and “What the employees get out of it.” It needs to be a balanced, two-way beneficial agreement if you want to ensure success.

Click here to view a video that explains Strategic Performance Management and Organizational Alignment.

The Performance Management system should therefore:

• Focus on performance improvement mainly to achieve the organisation’s current performance requirements with current available human resource potential.
• Focus on the development of human resources to enable the organisation to reach its vision and future performance objectives such as reducing cost, improving quality and increasing productivity in an ever-changing competitive environment.

Although these two issues cannot really be separated from each other, it is advisable to address them separately for functional purposes.