Benefits and Strategies of Performance Management

Armstrong and Baron define performance management as 'a process which plays a part in the effective management of individuals and teams to be able to achieve high levels of organisational performance. As a result, it establishes distributed understanding in what is usually to be achieved and an approach to leading and producing people that may ensure that it's achieved'. They go to stress that it is 'a strategy which pertains to every activity of the company set in the context of its human resource regulations, culture, style and communications systems. The nature of the strategy depends on the organisational framework and may differ from company to company. '

In other words performance management should be:

  • Strategic - it is about broader issues and longer-term goals
  • Integrated - it will link various areas of the business enterprise, people management, and people and teams.

It should integrate:

  • Performance improvement - throughout the company, for specific, team and organisational effectiveness
  • Development - unless there exists continuous development of individuals and teams, performance will not improve
  • Managing behaviour - ensuring that individuals are inspired to behave in a way that allows and fosters better working associations.

Armstrong and Baronstress that at its best performance management is an instrument to ensure that managers take care of effectively; that they ensure the individuals or teams they deal with:

  • know and know very well what is expected of them
  • have the skills and ability to provide on these expectations
  • are recognized by the organisation to develop the capacity to meet these targets are given opinions on their performance
  • have the chance to discuss and donate to individual and team aims and aims.

It is also about ensuring that managers themselves know about the impact of their own behavior on individuals they manage and should identify and exhibit positive behaviours.

So performance management is about establishing a culture where individuals and groups take responsibility for the continuous improvement of business operations and of their own skills, behavior and contributions. It is about sharing expectations. Managers can clarify what they expect individual and groups to do; likewise individuals and teams can speak their anticipations of how they must be handled and what they need to do their jobs. It comes after that performance management is about interrelationships and about improving the quality of human relationships - between professionals and people, between professionals and clubs, between users of teams etc, and is also therefore a joint process. Additionally it is about planning - defining prospects expressed as targets and in business programs - and about dimension; the old dictum is 'If you can't measure it, you can't control it'. It will connect with all employees, not merely managers, and also to teams as much as individuals. It is a continuous process, not really a one-off event. Finally, it is all natural and really should pervade every aspect of running an company.

How does performance management work?

Because performance management is (or should be) so all-pervasive, it needs structures to aid it. These should provide a platform to help people operate, and help them to help others to use. But it should not be a rigid system; there has to be a reasonable amount of flexibility to allow people freedom to use.

Performance management is a process, no event. It functions as a continuous cycle.

Corporate strategic goals supply the starting point for business and departmental goals, followed by arrangement on performance and development, resulting in the attracting up of programs between individuals and managers, with constant monitoring and opinions reinforced by formal reviews.

Tools of performance management

It is impossible to go into details of each one of the tools utilized by performance management, therefore the pursuing paragraphs simply provide an outline.

Performance and development reviews

Many organisations without performance management systems operate 'appraisals' where an individual's administrator regularly (usually annually) records performance, potential and development needs in a top-down process - see our factsheet on performance appraisal for more information on this theme.

  • Go to our Performance appraisal factsheet

It can be argued that the perceived problems of appraisal systems (that collection managers viewed them as irrelevant, including form-filling to keep the personnel team happy, and not as a normal procedure for management) led to the introduction of more rounded ideas of performance management. Nevertheless, organisations with performance management systems need to provide those associated with the possibility to reflect on past performance as a basis to make development and improvement strategies, and the performance and development review conference (please note the terminology; it isn't appraisal) provides this chance. The assembly must be constructive, and various techniques can be used to conduct the type of wide open, free-flowing and genuine conference needed, with the reviewee doing the majority of the communicating.

Learning and development

Employee development is the key route accompanied by most organisations to much better organisational performance, which in turn requires a knowledge of the techniques and techniques of organisational, team and individual learning. Performance reviews can be regarded as learning events, where individuals can be prompted to think about how precisely and in which ways they would like to develop. This may lead to the sketching up of an individual development plan (PDP) aiming the activities they propose to adopt (with the help of others, not least their managers) to develop themselves. To maintain development separate from performance and salary conversations, development reviews may be held at other times, for example, on theanniversary of joining an company.

Increasing focus on talent management also means that lots of organisations are re-defining performance management to align it to the necessity to identify, nurture and keep talent. Development programs are reflecting the needs of succession ideas and wanting to foster control skills. However, too much of an focus on talent management may be damaging to overall development needs and every work needs to be made to ensure that development is inclusive, accessible and centered on developing organisational potential.


Coaching is an important tool in learning and development. Coaching is creating a person's skills and knowledge so that their job performance enhances, resulting in the success of organisational goals. Coaching is progressively recognised as a substantial responsibility of range professionals, and can play an important part in a PDP. They'll take place during the review meetings, but also and more importantly should be carried out over summer and winter. For some professionals coaching comes effortlessly, but also for many they may well not and training may be needed to enhance their skills. See our factsheet oncoaching for more information.

  • Go to your Coaching factsheet

Objectives and performance standards

Objectives (some organisations opt to use 'goals') identify something to be achieved by individuals, departments and organisations over a period of time. They could be expressed as goals to be achieved (such as sales) and duties to be completed by particular dates. They can be work-related, discussing the results to be gained, or personal, taking the form of developmental aims for individuals. Goals need to be defined and arranged. They will relate with the overall purpose of the work and define performance areas - all the areas of the work that donate to attaining its overall purpose. Targets then have to be set for every performance area, for example, increase 'sales by x per cent', 'reduce wastage by y per cent'. . .

<p;>Alongside aims are performance requirements. They are used when it is not possible to set time-based focuses on, or when there is a continuing target which does not change significantly in one review period to the next and is also a ranking feature of the work. These should be spelled out in quantitative terms when possible, for example, rate of response to requests or meeting defined specifications of reliability.

Competences and competencies

Some organisations, but by no means all, use competences and competencies as the different parts of performance management. Competences summarize what people need to be able to do to execute a job well (the descriptions in Country wide Vocational Qualifications are types of competences). Competencies (more helpfully, 'behavioural competencies') are defined as the proportions of behavior that lay behind experienced performance. Although language used does not help in making the variation, to execute well it's important both to have the ability to execute a job at a technically competent level also to have behaviours that reinforce those technical skills; an evident example of behavior is the physician who needs a good bedside manner and to be able to communicate with acquaintances, in addition to medical skills. There are various techniques for calculating competence (some organisations would prefer to use 'capability') as soon as an examination has been made, it offers an instrument for calculating performance and, of course, for providing development activities to help people meet the required standards. To find out more, see our competencies factsheet.

  • Go to our factsheet on Competency and competency frameworks


To improve performance, you will need to know very well what current performance is. Measurement provides the basis for providing and generating feedback, and thus can build the program for even more success or identify where things are going less well so that corrective action can be taken. But what gets assessed? Measure the wrong things, perhaps since they are easy to assess, and a whole performance management system can fall into disrepute. Use too many measures and you can't see the timber for the trees. For measuring performance, the achievement of objectives, levels of competency, requirements of performance, and work outputs are being used but the emphasis varies corresponding to types of staff - for example, a older supervisor would be mainly assessed by meeting objectives, but a production staff member mainly by attaining outputs. Increasingly organisations are employing more sophisticated measuring techniques such as well-balanced scorecards or ROI (return on investment).

Individual and team performance must be capable of being linked in an understandable manner to organisational performance, and there are many methods to this. They include the 'well-balanced scorecard', a couple of measures that talks about the business from customer, inner, learning and financial perspectives; the Western european Basis for Quality Management, which shows that client satisfaction, employee satisfaction, and effect on society are achieved through authority; and other economical options, including traditional financial options. Measures used will be based upon the organisation; for example, open public service organisations are likely to use different measures from private companies.


Performance management is often linked with performance-related pay (PRP), although in no way all organisations boasting to work with performance management have PRP. Nevertheless, PRP can be an important component in many performance management schemes because it is believed to motivate; it is said to deliver the meaning that performance and competence are essential, which is thought to be fair to prize people according with their performance, contribution or competence. Others, though, believe that other factors will be more important than PRP in inspiration; that it's usually predicated on subjective assessments of performance, which it inhibits teamwork due to its individualistic nature, and that it contributes to 'short-termism'. See our factsheet for more information on performance pay.

  • Go to our performance-related pay factsheet

An option to PRP is competence-related pay, which gives for pay progression to be linked to levels of competence that people have achieved, by using a competence account or framework. The difficulty here is calculating competence, plus some organisations use a variety of PRP and competence-related pay. Further possible pay systems are team-based pay, a kind of PRP for groups; and contribution-related pay this means paying for results plus competence, and for past performance and future success.

Performance enable you to determine all or some aspects of pay. In most cases only non-consolidated benefit payments are associated with performance which have a tendency to mirror organisational, team and specific performance whilst salary progression is associated with service, market rates and pay scales.

Many organisations assume that when performance management is associated with pay the grade of performance conversations will undoubtedly deteriorate.

  • Teams

Team working has become an important part of life in many organisations, and where clubs are permanent or for longstanding assignments, steps can be based on team performance. They'll mainly be concerned with result, activity levels (eg swiftness of servicing), customer support and satisfaction, and financial results. Indeed, team methods are not completely different from those for individuals, and undoubtedly associates need to acknowledge their goals and receive responses in the same way as if these were not part of a team. Other associates can contribute towards this, in a process of peer review. See our factsheet on wrking in groups.

  • Go to our factsheet on teamworking

360 degree feedback

360 degree feedback became increasingly talked about in the 1990s, if not widely used. It includes performance data produced from lots of options, who range from the person to whom the individual being assessed records, people who are accountable to them, peers (team co-workers or others in the company), and inner and exterior customers. Additionally, it may include self-assessment. 360 degree feedback can be used mainly as part of a self-development or management development programme, and is believed to give a more round view of people, with less bias than if an diagnosis is conducted by one person. See our factsheet on 360 reviews to find out more.

  • Go to your factsheet on 360 feedback

Performance problem solving

Performance management is a good process, and good systems will create a culture in which success is applauded. Nevertheless, poor performance will can be found. It might be due to inadequate management, bad management or faulty systems of work, in case so, remedies (often relating learning and development) can be placed in place. But individuals may under-perform and advancements can be achieved through continuing responses and joint talk between them and their managers, involving analysing and determining the problem, establishing the reasons for the shortfall, and deciding and agreeing the action to be taken. If all of this fails, disciplinary action may need to be studied, as in virtually any organisation.

CIPD viewpoint

Performance management is challenging to implement. It should be 'possessed' by everyone in the company, and especially series managers - it is emphatically not about guardianship by employees departments. Surveys suggest that individuals and managers in organisations with performance management systems quite like it, and especially its emphasis on personal development, although performance-rating (often associated with PRP) often provokes hostility. Techniques can be over-detailed and require too much form-filling, and there can be too little definition in conditions of what is supposed by performance and how to attain it. Schemes can be less successful than they might be because of insufficient training, especially at the beginning.

In its most positive form, performance management will help individuals not only to know very well what is expected of these but also how they contribute to attaining organisational goals.

The secrets to the successful introduction and request of performance management are:

  • being clear about what is meant by performance
  • understanding the particular company is and needs to maintain its performance culture
  • being very centered on how individual employees will profit and play their part in the process
  • understanding that it's a tool for line managers and its own success will rely upon their capacity to make use of it effectively.


    1. ARMSTRONG, M. and BARON, A. (2004) Controlling performance: performance management doing his thing. London: Chartered Institute of Personnel and Development
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