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Posted on October 12th, 2012, by

Performance management is defined as a set of activities which ensure that goals are achieved in the most effective manner. Performance management can focus on different spheres. It can be focused on the performance in the organization, departments of the organization of separate employees.  In general, performance management is a comparatively new term in the field of management.  Though the tradition of performance appraisal is not new. However, with the implementation of performance management such processes as planning, budgeting, sales and billing became estimated in the new context. Now they are viewed according to the results they bring the organization.

Performance management makes exact distinction between different processes and results they bring. Performance management centers on the results. Performance management pays little attention to effort and commitment as it centers rather on the result of any activity.

ďThe major contribution of performance management is its focus on achieving results – useful products and services for customers inside and outside the organization. Performance management redirects our efforts away from busyness toward effectivenessĒĚ (Fischer, 1992:196).

The interest to performance management is conditioned by the challenges organizations face recently. Growing competition and changes in the world economy make organizations seek for more effective ways of production and performance management has become a mighty tool which helps to increase the effectiveness.  Coordination of different departments of organization is very important for performance management.  All spheres of performance management are focused on the achievements of results. The results of different departments should be combined all together for the ultimate success of the entire organization.

Performance management may be applied not only to employees. It can be applied on the level of organization, its departments, teams, projects and products. Performance management may also be used to increase the effectiveness of different processes, such as billing, budgeting, financial management and product development. Performance management aims to improve results of all subsystems and thus optimize the overall result of the organization.  In order to achieve the main goal performance management makes several steps. First of all, it is important to distinguish desired results and to find the ways to achieve them. As soon as the goal is defined performance managers can start the choice of necessary means to achieve them.  Other steps include defining standards, measuring progress, exchanging results with the participants of the process, and making corrections in the planning if necessary.

There are several approaches in organizations, which use similar means to achieve their goals. These approaches include Strategic Planning, Total Quality Management, Management by Objectives and others. The measurement of results and their improvement is the main focus of attention of Performance Management.  The working process in the organizations which uses performance management is integrated with the overall goals of the organizations.  Trainers who work using this approach often call themselves performance consults. All their training is centered on the optimizing the results. There are several basic steps which constitute performance management.  Despite there may be minor variations in these steps most of them are usually presented in Performance Management approach. These steps are common for all kinds of performance management including the management of organizations, employees, subsystems, team, etc.

The first step includes defining overall goals of the organization.  These goals must contain exact numbers, such as quality, quantity, time limits, etc. If the goals are set for separate department it is necessary to distinguish if there are any changes which should be performed to other department in order to receive desired results.

The next step includes evaluation of the desired results. After measuring results should be divided according to their priority. In some cases final results can not be achieved without accomplishing some changes. In these cases these changes should be included into general planning. Evaluation is an important factor in performance management. Before turning to actions it is important to define the scale of evaluation of the results. This will give the opportunity to make conclusions about progress and failures of the process. Standards for evaluation may be very useful in this case.  The next step includes created a performance plan, which would contain the description of desired results, standards and measurement.  After this part is accomplished the observation of recent performance is necessary. During this stage performance manager should collect information about present performance and make necessary conclusions. During the process of comparison performance manager compares present results with the desired ones and makes conclusions about present performance. If the performance is unsatisfactory the number of steps aiming to change this situation should be performed. If performance is satisfactory the rewards and appraisals should be distinguished.  These steps should be repeated till desired results are achieved. There are different ways to maximize high performance. Recognition of good results and successful performance is a key practice of maximizing high performance. Recognition may occur in different forms and in different situations.  Actions, behaviors, accomplishments and approaches may become the objects of recognition. Recognition and rewards should not only create stimuli and raise self-esteem of the employees. They also can be used to develop personal qualities and other characteristics necessary for good performance. Fairness is a very important  factor in maximizing performance.  Employees should know that each person who achieves the same good results receive the same appraisal. In general, setting up common standards for recognition is a very useful practice. Employees act better when they know exact measurements of their performance and know conditions when they will be rewarded. Regularity is another important factor of maximizing high performance. Rare and not regular appraisal do not create necessary effects for employees. When reward is not regular employees who do not receive it feel dissatisfied and those who receive this reward do not regard it as additional stimuli to improve performance.  Good explanations create additional stimuli for high performance .When employee who receives reward and his colleagues know exactly what is the reason there are more chances that other decide to repeat this success.

There are a lot of ways to give rewards to people. Monetary rewards, career opportunities, written thank notes, positive attention, benefits, gifts and symbol of honors are the most popular types of positive recognition though creative approach in this case is also very helpful.

Performance management deals not only with high performance. It also deals with unsatisfactory performance. First of all when dealing with unsatisfactory performance all employees who are related should be informed about it. Moreover, employees should know exact parts of their performance which are recognized as unsatisfactory. The next step is the correction of the situation. Employees should be proposed help to correct the situation. They may be given specialists’ advice, who show successful performance in this field. Then the performance of employee of group of employees who show unsatisfactory results should be taken under control. After this period the procedure of appraisal starts again.

Performance management is a comparatively new approach in organizational management but it gives good results and helps to increase performance. Hopefully, this approach will grow and develop and give organizations additional opportunities in the future.

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