Importance of Performance Management in an Organization

 

The success and growth of an organization purely depends on the contribution of their employees to the organization. In order to facilitate effective contribution, employees must know what is expected from them and how they are measured up to those expectations.

An organization is expecting high level of performance, commitment and results from their staff at all levels. They strive to create an environment where all members understand the impact of their contribution towards achievement of the organizations vision and are provided the opportunity for personal growth.

Therefore, the Performance Management should be a process of continues communication between team members and their supervisors. Managing performance is a mutual responsibility of team members and the respective supervisors.

“Performance Management is a systemic and continuous process of improving organizational performance by developing the performance of individuals and teams” (Armstrnog 2023)

It creates an environment where employees can perform to the best of their capabilities and in line with the organization's overall goals. This focus on clear understanding of expectations from employees. It provides continues feedback to employees on their performances.

 

The Purpose of Performance Management System

A well-designed performance management system is having fourfold purposes.

1.      Strategic Communication

2.      Relationship Building

3.     Employee Development

4.      Employee Evaluation  

 

From the organizational point of view fundamental purpose of performance management is to achieving the strategic goals of the organization and also having 03 specific purposes.

1. Managerial: To provide a framework within which managers can effectively manage performances

2.  Developmental: To provide the basis for identifying and meeting learning and development needs

3. Administrative: To provide the information required to administrate performance pay and talent management system. (Armstrong 2023)

Accurately measuring the performance can reward the achievements of assigned targets and to identify top talents for succession opportunities. This will create employee motivation as well as employee satisfaction which will more likely leads to employee retention. Further organization can also make sure their investment on rewards and benefits budget accurately utilized by ensuring they have reward to right talent.

Performance management is helping managers and employees of an organization to align their goals and expectations. Further importance of same can be elaborates as follows.

1. For Goal Setting: A good performance management system allow to set SMART goals which align with current job role and career objectives of employees which will ultimately achieve organization objectives. 

2.   Allows better engagement with a team: A successful performance management system help to increase team engagement and open dialogue between the managers and the staff to review the performance periodically and provide feedback to improve the efficiency and productivity. 

3.  Improve the productivity: It allows staff to perform in their best and improve capabilities and finally improve the productivity of them as well as organization.

4.   Helps to improve transparency:  By sharing the organization objectives and design SMART goals for their team will increase the transparency in the workplace. When employees know potential rewards and advancements available for them simultaneously their performances will be increased.

5.  Helps to identify High Performers: A good performance management system allow organization to identify high performers and can further use their talents to improve the productivity and adopt motivation strategies to retain them within the organization while utilizing their full strengthens for the organization. 

6.    Improve the Leadership: This further allow to improve the leadership skills. This encourage team to be accountability for assign tasks. 

7. Helps Employees make Improvements: Continuous performance management system allows employees to better understanding of their performance. Managers can monitor the performance of their staff and can identify who required additional training and guidance to improve the competency levels to achieving the assigned targets. They can have improvement plane for their employees and allocate the resources accordingly.

 

 References

1. Armstrong, M. and Taylor, S. (2023). Armstrong’s Handbook of Human Resource Management Practice: A Guide to the Theory and Practice of People Management. [online] Google Books. Kogan Page Publishers. Available at: https://www.google.lk/books/edition/Armstrong_s_Handbook_of_Human_Resource_M/3oChEAAAQBAJ?hl=en&gbpv=1&dq=inauthor:%22Michael+Armstrong%22&printsec=frontcover [Accessed 25 Nov. 2023].

 

2. Birt, J. (2023). Why Performance Management Is Important for Your Team. [online] Indeed Career Guide. Available at: https://www.indeed.com/career-advice/career-development/why-performance-management-is-important [Accessed 25 Nov. 2023].

 

3. Tardi, C. (2022). Performance Management. [online] Investopedia. Available at: https://www.investopedia.com/terms/p/performance-management.asp. [Accessed 25 Nov. 2023].