Performance management, also known as business performance management, includes (but are not limited to) the following:
- details the organisation’s business goals and KPIs
- sets the direction of business policies and strategies
- tracks progress and determines the effectiveness of plans
- reviews achievements and identifies learning points and room for improvement
- generates more tailored, targeted strategies to achieve aims
Benefits and Purpose of Having a Performance Management System
According to the HR Help Board, having a performance management system serves these aspects:
- Sets standard for employees’ work performance
- Differentiates the under-performing and the outstanding
- Decides the skill level and rewards system
- An arrangement established to inform employees of what’s expected of them
- Ease of communication when complimenting and advising employee about areas of improvement
- Leads to more focused learning and better performance
- Records all plans for review
- Able to identify future training and coaching methods and developmental plans to achieve better results
- Aligns each business goal to a strategy
- Benchmark for managing employees within each department
- Regulates the performance standards of the company
In summary, the idea is to put a fixed structure into place for more targeted decisions.
Components of a Performance Management System
In order to implement a successful business performance management process, it has to have the following components.
Characteristics of an Effective Performance Management System
It’s tough to create a system that evaluates all staff members equally. Thus, Forbes listed these key characteristics of an effective performance management system.
Types of Performance Management Systems
Best Performance Management Software for Small and Medium-sized Enterprises (SMEs)
This has been rated by FitSmallBusiness as the best software of 2019 with its optimal balance of pricing and features.
Get access to all the information you need in one customisable dashboard. With this software, you can integrate other apps to manage your business more effectively.
Best Performance Management Software for Large Companies
Zenefits has been recommended 251 times in the past month with a 4.15-star rating on Software Advice. This value-for-money tool is able to integrate numerous HR functions with essential services.
Capterra has collated a 4.5-star rating with 500 reviews on this software. It’s known for its user-friendly interface, 24/7 customer support and features that cater to all the steps in performance management.
What is the Difference Between Performance Management and Performance Measurement?
Performance measurement simply refers to tracking your organisation’s progress through predefined criteria such as Key Performance Indicators.
On the other hand, performance management is a constant cycle of crafting strategies to meet your business goals and figuring out how to improve those strategies. Measuring performance is part and parcel of being able to manage your strategies better.
So, why is a Performance Management System Superior to a Performance Measurement System?
While performance measurement provides results tracking, it doesn’t involve any follow-up action that could potentially lead to better outcomes.
Therefore, performance management is superior because it requires you to analyse your results and generate more calculated plans to attain your objectives.
– ClearPoint Strategy: Performance Measurement Vs. Performance Management
In order to constantly grow and accomplish greater things, it’s wise to incorporate a performance management system in your organisation.