Performance management is a corporate business practice that entails the monitoring and maximization of employee work output by management and leadership.  The practice can take many forms (one of which is performance review, a topic that we are releasing articles on concurrently), but the key principle of performance management is to get the most out of your business by using analysis and strategic modification of workflow.  The idea of performance management is to view the business’s function macroscopically and to tweak particular elements of its function in order to align it and maximize its progress toward a given goal.  This goal can be as broad as minimization of waste or as fine as increased sales in a certain sector over a given quarter, but the key is that performance management is carried out relative to an overarching goal.  

Goal Setting

From the perspective of the manager, performance management starts with a clear and well-defined goal or set of goals.  Each level of a business’s power structure can apply performance management principles to the personnel they manage, so each stratum in the hierarchy must have a well-defined goal or series of goals to work towards.  For instance, The highest level of a corporation’s hierarchy could set more general goals for mid-level management whereas middle management could set more specific goals that are relevant to their respective departments.  All this is to say that goal setting is an antecedent and foundational action required to make any real headway with performance management.  If goalposts are not clearly defined, the analysis of performance that you subsequently carry out will lack meaningful context and will be of little use, and may even serve to your detriment if acted upon.  Goal setting starts at the absolute highest level of authority in a business, where executives must clearly delineate the general direction of the institution to their subordinates.  From there, the direction trickles down and is transformed for all levels and departments. 

In the performance management sphere, One key permutation of goalsetting called the Absolute performance standard is used frequently as a guideline.  The absolute performance standard is a hypothetical performance standard wherein efficiency is absolute and there are no wasted actions and no losses.  if this standard were to become a reality, a business would perform at 100% efficiency and all employees would output at their highest potential.  This hypothetical is of course impossible, but it is used as a touchstone with which to analyze efficiency in a system.  If performance management staff can move a business closer to their absolute performance standard, they are succeeding in their task of making the business more efficient.  The absolute standard doesn’t have to be a rigid goal, it can even be something as simple as the sales department closing 100% of leads.  The idea is to provide your team with an ideal scenario to work towards.  In this way, the absolute performance standard is a great way to give context to more concrete goals like quarterly sales goals or loss limits.

Performance Review

After goal setting, another major component of any competent performance management system is the performance review.  Performance reviews are a practice in which the superior or dedicated HR staff carry out a review of an employee’s output and impact on their business.  These reviews are an opportunity for the personnel responsible for performance management to interface directly with their human power and an excellent place for the two parties to discuss direction and goals.  This interaction is to be used as a data point that fits into the overarching performance management strategy of the business and can give great insight into how employees are outputting relative to the aforementioned goals of the business. 

Culture and Values

Core values and by extension company culture are often overlooked yet very powerful driving forces in a business.  A company culture that promotes and rewards excellence is likely to produce higher-caliber employees that output more effectively.  Performance management is an excellent way to promote that winning culture because it adequately recognizes good work.  In a business where there are no strong review processes, there is no real incentive for good work, so one can’t really blame an employee for not outputting at a high level.  promotion of strong corporate values and culture are components and in a way results of a holistic and strategic performance management system, and can bring powerful positive change to a business.

Performance management is a very important tool in the executive's toolbelt in this day and age and really can make all the difference in a business.  All institutions, whether public or private, require oversight and performance analysis in some way or another in order to be the best possible iterations of themselves.  Without performance management, businesses subject themselves to directionless listing and coasting, wasting time and resources in sometimes terribly inefficient workflows without making any real progress.  You would never run a business with weak or nonexistent fiscal oversight, so why do the same with personnel and workflow?  As you can imagine, there are various digital tools on the market today that can facilitate the performance management process in ways that analog approaches just cannot match, and in the next article I’d like to explore some of the best options; but for now, if you have any questions or would like to read further, feel free to reach out to us or explore our extensive archive.  

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Performance Management System is a crucial oversight tool in the toolbelt of any executive or HR department, so putting your best foot forward with the best digital solutions is prudent. This product will be the first in a series of out-of-the-box customized solutions that we will develop and release in subsequent months, so stay tuned for further product releases. In the meantime, if you have any questions about the platform or performance management, please reach out to us here at Infowise, or explore our extensive documentation archive.