PERFORMANCE MANAGEMENT AND BUSINESS SUCCESS
Introduction
It is important to note that most business or companies are driven by carefully set targets or goals. These goals set the standard for the business and all actions are driven towards their realization. Similarly, managers or employers employ distinct strategies to ensure that their employees are well motivated and performing efficiently. In the same vein, it is very critical for companies to regularly appraise the degree of efficiency of employees as it relates to their job description and business goals. In this light, performance management presents itself as a potent strategy and element to guarantee business success.
Performance Management
Performance management is a strategy for managers to monitor and assess their workers’ work. The objective of performance management is to promote an environment in which employees may work to their maximum capacity and efficiently and effectively provide the highest-quality work (Tardi, 2021). In other words, it is the act of consulting with management on an employee’s job performance and growth (Aguinis, 2013). Managing performance entails the collection of information through monitoring, target completion, discussions. Businesses can cultivate talent, boost individual performance, and filter out issues by analysing accomplishments, strengths, mistakes, and development potential. A performance management system that is effective requires the commitment and attention of the human resources department, supervisors, and workers. Performance assessments are necessary to demonstrate support and recognition to staff, and to provide training for employee development. Performance management programs employ traditional performance management tactics such as creating and analysing goals, targets, and milestones. Furthermore, they aim to define what comprises effective performance and to establish performance measurement tools. Rather than relying on the traditional year-end review cycle, performance management views each interaction with an employee as a learning opportunity (Tardi, 2021).
It is challenging to integrate the components of performance management into the fundamental operating system of a firm. Effective management of employee performance is essential for companies to remain competitive. It aids them in the formal and informal alignment of their employees, resources, and systems in order to meet their strategic objectives (Levy et al., 2017). It functions as a dashboard allowing management to be alerted to potential problems and take action to keep the business on track. Those companies who grasp the art of performance management become formidable opponents in their respective markets and fields of expertise. Effective performance management is based on the straightforward premise that what gets measured gets done. If all goes according to plan, a company’s top-level strategic goals will be followed by daily activities performed by front-line employees in a cascade of metrics and goals. Managers continually monitor and engage with their employees to ensure they are on track to meet their goals. Efficient performance and good behaviour are rewarded, whereas inefficiency and low productivity results in remedial action.
Selecting the appropriate targets is a combination of science and art. If they are too simple, they will have little effect on performance. Accordingly, setting high or near impossible targets could make reduce the morale of employees. The finest goals are those that are reachable but require a fair amount of stretching. To accomplish such goals, businesses frequently must overcome cultural hurdles. For example, in certain Asian firms, missing objectives is regarded extremely humiliating, and managers therefore prefer to set them overly low. By contrast, establishing a lower target than one reached in a prior period is frequently thought inappropriate in the United States, even if the shift is justified.
The measurements that a business uses must truly support the desired performance. Typically, this can be accomplished only by the incorporation of multiple of them into a balanced scorecard. When this does not occur, complications develop. For example, some industrial plants continue to establish total output objectives for each shift separately. Because each shift’s incentives are focused on its individual performance, rather than on the combined performance of all shifts for the day, workers have every reason to determine whether they can finish a full “unit” of work during their shift. They begin and complete a unit if they believe they can. However, if they do not, they may slow down or stop entirely at the conclusion of the shift, as all credit for completing their unfinished job would otherwise go to the following shift. As a result, each shift begins with little or no work in progress, reducing both productivity and production. A more effective method would combine individual team aims with the plant’s total production, so that workers gain from contributing to the following shift’s success as well as their own. People feel empowered when they are contributing to something bigger. That is why it is crucial for managers to communicate the company’s goal and set standards that are clearly in line with that goal. When that is not the case, the employees may feel like they are merely chasing numbers to boost their employer’s ego.
Importance of performance management to business success
Managers can use continuous performance management to discover moments when employees go above and beyond the set targets. It helps them to track their progress toward goals and personal growth and make educated compensation decisions, such as pay increments or bonus payments. Employee satisfaction is contingent upon meaningful pay systems. Performance management contributes to increased employee engagement and productivity. It should be noted that the more employees are engaged, the longer they remain, are more productive and involved in the workplace. Enhancing employee engagement is crucial for enhancing productivity and optimizing the Return on Investment (ROI). Furthermore, continuous management of employee performance develops an environment of open communication and mutual support, encouragement, and support. Additionally, it assists in the establishment of a sustainable bond between employees and management. Similarly, in cases where an employee understands that their manager and the business are invested in their success and are committed to assisting them in improving their performance and career development, the employees are significantly more likely to interact with the firm.
Employee development strategies can be created through performance management. Continuous performance management requires anticipating and meeting employees’ development needs. Managers can pursue continuous performance improvement through frequent meetings to discuss each employee’s performance, prospective development opportunities, and development goals. By combining this flexible personal development aim with performance reviews held once or twice a year, firms may grow talent in ways that are just not possible with once or twice a year performance reviews. This inadvertently increases the employee’s work motivation, makes them feel heard, respected, and gives them a sense of belonging which improves their productivity.
Managing performance gives room for the exchange of feedback between management and employees. It is impossible to overestimate the importance of feedback in performance management. Employees essentially desire feedback from management, and they would prefer to receive it on a consistent basis. They require (and deserve) to be informed about their performance and areas for improvement. Regular feedback would help address any form of communication gap between management and employees (Buckingham & Goodall, 2015). This would in turn create smooth communication in the workplace and improve employee efficiency. When communication is authentic and transparent, performance management, systems succeed. Businesses should have an open-door policy and foster open channels of communication within the organization (Hearn, 2018)
Performance management creates a sense of transparency (Levy et al., 2017). Employees must believe that the company objectives will result in meaningful accomplishments. However, when measurements and targets cascade through the organization, the connection between individual effort and organizational goals is lost or weakened. Distinct management layers may incorporate buffers into objectives in order to advance their own status or protect against underperformance in other areas. At certain levels, the metrics may be disconnected to those farther up the cascade. The most effective performance management systems are based on a single, verifiable version of the truth, and all employees understand both the general success of the firm and their individual contributions.
Performance must have ramifications. It is almost certain that rewarding good performance is more critical than punishing poor performance. While most businesses have some sort of official or informal recognition and reward system, few engage in enough of this type of morale boosting, either in terms of volume or regularity (Carpi, Douglas, & Gascon, 2017). The idea of a consequence been attached to an employee’s behaviour is critical as it helps to keep them in check and ensure that their actions are aligned with the business goals. In the same vein, it serves as a source of motivation to employees particularly when they see the actions of their colleagues being rewarded by management. It should however be noted that rewards may not always be in monetary terms. While some employees may seek this, others may desire internal advancement chances, increased paid time off, or simply regular verbal appreciation for their hard work.
Managerial implication of managing performance
It is important to note that performance management has significant managerial implications. First, it serves as a bridge that connects management and the employees. Through managing performance, management can interface with employees and also get to know these workers on a more personal level. This helps to foster good relationship in the workplace. In another vein, managing performance would help managers to monitor employee’s performance and facilitate trainings aimed at improving employee performance. Another implication is that it allows for management to assess the employees, reward those who have been efficient and in some cases sack employees who are underperforming. In this light, employees would align to the company principles and remain driven because they know that they will be appraised.
Conclusion
Performance management remains a vital tool for businesses to attain their set goals. This is so because it keeps management informed about their employees’ performance thereby giving room for development of employees through training. In the same vein, performance management creates a sense of transparency and keeps workers motivated at the workplace. Accordingly, companies should implement appraisal systems that are development inclined, based on fairness and compensation.
References
Aguinis, H. (2013). Performance management. New Jersey: Pearson Education, Inc.
Buckingham, M., & Goodall, A. (2015). Reinventing performance management. Harvard Business Review, 93(4), 40-50.
Carpi, R., Douglas, J., & Gascon, F. (2017, October 4). Performance management: Why keeping score is so important, and so hard. Retrieved from McKinsey & Company website: https://www.mckinsey.com/business-functions/operations/our-insights/performance management-why-keeping-score-is-so-important-and-so-hard.
Hearn, S. (2018, June 28). Why is Performance Management Important? | Clear Review. Retrieved from Clear Review website: https://www.clearreview.com/why-performance-management-important/.
Levy, P., Tseng, S., Rosen, C., & Lueke, S. (2017). Performance management: A marriage between practice and science- Just say “I do”. Research in Personnel and Human Resources Management, 35, 155-213.
PerformYard. (2021, July 2). How does Facebook do Performance Management | PerformYard. Retrieved 4th March 2022, from www.performyard.com website: https://www.performyard.com/articles/how-does-facebook-do-performance-management.
Tardi, C. (2021). Performance Management—We Explain This Corporate Tool. Investopedia. Retrieved 6th March 2022, from https://www.investopedia.com/terms/p/performance -management.asp.
