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Performance Management

The modern organization needs to manage its performance and the development of employees. The performance management is about setting the performance standards, monitoring the progress and building strong succession plans for the organization. The performance management provides the structured and formal feedback to managers and employees. The performance management allows motivating employees and giving the development of the organization the direction. The goals and tasks of managers and employees should be aligned with the business strategy. HR is responsible for the development of the consistent and painless performance management system in the organization.

Purpose of the Performance Management

The organization uses the performance manage to ensure the same direction at all levels of the organization. The top management sets the business strategy and defines the strategic initiatives. The top management defines the desired steps to be taken during one year.

The performance management is not focused on measuring the standard performance resulting from the job description (other processes should be used for keeping the consistent and reliable output of any job). The performance management is focused on performing the strategic tasks of the organization. It is focused on the development of the key talents, top performers and successors. The process identifies the best potentials in the organization, and it differentiates them from the rest of the population.

HR Role in the Performance Management

The performance management system has to be well connected with other HR processes like the Compensation and Benefits, Talent Management and Training and Development. HR cannot run the performance appraisals without using the outcomes from discussions. The performance management process is expensive. Each manager has to prepare for the appraisal, and the discussion has to last at least one hour per employee. It is a massive loss of productivity if the results are not used.

The performance management system is a ongoing process. It consists from several sub-processes during the year:

  • Goal Setting Process
  • Personal Development Plan
  • Interim Performance Appraisal
  • Performance Appraisal
  • Succession Planning and Talent Management

The performance management has to be consistent with the business strategy, and most processes have to be managed top-down. Employees do like to receive the positive feedback, but they do not like the ranking. Many organizations use the normal distribution for the performance rating of employees. Managers have to be trained in providing the honest feedback about the performance of the employee. Managers have to be trained in the consequences management.

The role of HR in the PM is about making the process transparent, clear and consistent across the organization. The results of employees have to be comparable as the outputs can be used in other HR processes. The top management will not take HR proposals relevant if they do not trust the fairness and transparency of the performance appraisal process.

HR has to make the process as easy as possible. It has to focus on collecting the most valuable information. HR has to lead the development of the application for the performance management system as the data collection is run automatically.

Performance Management Content