Performance Management

Posted in Human Resource Terms, Total Reads: 875

Definition: Performance Management

Performance Management is a key area under strategic HR Management- the field of study which aims at matching employee needs and performance to company’s strategy.

It is a broad term and incorporates goal setting, performance reviews, development programmes, communication, feedback and rewards.


Performance Management is a systematic approach to accomplish organizational goals successfully by improving employee performance and developing individual and group capabilities across the organisation.


The basic question addressed by Performance Management is

How do an employee’s plans contribute to goal of the organisation?

Performance Management starts when an incumbent enters the organization and continues till the employee leaves the organization. It is basically a three step process:


Define --> Facilitate --> Encourage


It manages the quantity, quality, time, cost of the work carried on by employees.


The main phases of performance management are:


  • Goal Setting:  This phase involves setting employee performance expectations, set goals for both individuals and groups and teach them what needs to be done.


  • Monitoring performance: This phase involves continuous monitoring – measurement of the performance and providing feedback on the same.


  • Development: This phase refers to facilitating performance through training, assignments, skill development programmes, making work process easier by providing technology and other developmental opportunities.


  • Rating: This phase involves summarising employee performance. The employee performance is graded against organisational benchmarks and affects employee promotion, pay etc.


  • Rewarding good performance: The last phase involves rewarding employee on the basis of his/her performance. This can be in the form of incentives, promotions, pay- hike, felicitation etc.


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