What is performance management?


The performance management is a set of processes and systems that aims to develop an employee so that he performs his work in the best possible way.

Performance management is not about improving every skill. In fact, good performance management focuses on improving the skills that help an employee do his or her job better. This means that it is about the strategic alignment of the team’s work with organizational objectives.

As performance management is a process that aims to align individual goals with the goals of the group and the organization, it is a strategic and formal process. This means that major individual career decisions such as bonuses, promotions and layoffs are all tied into this process.

Performance managements can also be described as a periodic, systematic and objective process. Interesting to note is the difference between performance appraisal and performance managements. Where performance appraisal focuses on the individual, in performance management the strategic objectives of the organization are included.

Let’s take the example of an organization that went through a period of intense change and was able to leverage performance managements to stay ahead of its competition. I changed the features and details for anonymity, but the example remains essentially the same.

Performance managements is a mid-sized consulting firm and has long been a well-respected name in its industry. Clients often approached the company and consulting projects were often long-term commitments that were very profitable for the company. However, after the most recent financial crisis, clients were much less willing to work on long-term consulting projects, opting for cheaper short-term projects with well-defined KPIs.

To survive, Performance managements strategy had to change. After extensive research and customer interviews, the board of directors defined three new key drivers for better business results.

The consultant’s position had changed. They were no longer seen as experts who know everything. Instead, the client was looking for a trusted colleague who would work alongside their employees and could integrate their knowledge into new business processes and transfer know-how to employees.

Consultants had to develop business skills to see tangible opportunities to increase sales. This required them to be constantly on the lookout for opportunities where could add more value to the customer.

Consultants had to learn to produce services. Upon leaving the customer organization, this digital product would remain in place, creating stable and predictable revenue for Performance.

These key drivers required a major shift in the way consultants work and the skill they needed to do their jobs. The consultant’s attitude had to change, the consultant had to develop a more commercial mind-set, and the consultant had to learn about digital service production – something they hadn’t worked with before.

The board of directors clearly understood that the key to this change would be to change the people who ran the organization. By translating these new requirements into consultant skills, Performance  was able to implement a new performance  policy focusing on three elements.

New approach to Performance management of human resources


Traditionally performance management is well-defined internal roles change based on the new skills required to be a successful consultant. A successful consultant at AAA was a trusted advisor, was commercially savvy, and was able to conceptualize a vision for digital products that add value.

One-on -one training and coaching

Employees were assessed, trained and mentored in their business and digital skills of performance. Outstanding individuals were promoted more quickly, clear benchmarks for individual performance were set, and suboptimal performance would result in demotion or exit.

Changing the hierarchy

Because of these changes, the traditional hierarchy in Performance management has also changed. People with more business and digital experience were promoted more quickly and often, while people who couldn’t develop those skills quickly were let go. This fundamentally changed the company’s values ​​and identity to something that represented the kind of consultant the company needed much more closely.

The Performance despite the fact that this major change in company culture created a lot of initial tension and people gave up, Performance management resulted in  being considered one of the most innovative companies on the market just a few years after implementing this new policy and creating a more stable revenue stream, ensuring its competitiveness for the future.

How to do performance management?

There are many ways to conduct performance. In the literature, there are two approaches when it comes to performance evaluation.

Behavioral approach employees are evaluated based on their behaviors and effort made. Behaviors are identified and evaluated. This approach is well suited to providing detailed feedback on behaviors and mapping desirable future behaviors. This approach is suitable when individual results are difficult to measure. Examples include individual players on a team, support staff, and (often) HR professionals.

Results-oriented approach: In this approach, employees are evaluated based on objective criteria. The focus is not on input, but on output, both in terms of quality and quantity. This approach is suitable when there are multiple ways to get the job done. The end result is the key, not how it was done. Examples include call center employees with specific success metrics as criteria. The focus is not on input, but on output, both in terms of quality and quantity. This approach is suitable when there are multiple ways to get the job done. The end result is the key, not how it was done. Examples include call center employees with specific success metrics as well as sales professionals. The appraisal of lawyers and accountants is also highly results-oriented as they track your billable hours. A second element to focus on is extra-role/job behavior. These are behaviors that go beyond the job description.

What is the difference between performance management and performance appraisals?

Performance appraisal is the one-on-one session between the employee and the manager. This usually happens annually. Performance  is a periodic, systematic and objective process of developing an employee to perform his/her job in the best possible way. Performance appraisal is therefore part of performance managements.

What is the downside of results-oriented performance management?

The downside of results-oriented performance  is that data is not sufficiently considered. Someone who is working hard to learn the job may not have the right results yet, but they may in the future. This information can be lost when we focus only on results-oriented performance management.

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