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Performance Management

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Performance Management

All high-performance organizations must be interested in developing and utilizing effective performance management systems; since it is only way that they can remain high-performance organizations. As today's business environment challenges organizations to adapt to constant change, the need for organizations to be sure that their projects and activities are aligned with their strategic goals and business objectives is critical. Performance management is the gauge that lets management know whether or not they are reaching strategic goals and which areas need improvement. Performance management spans across various management functions and helps ensure that the people, processes and technology are working together to achieve an organization's missions and goals.

Performance Management

Performance management is a process in which an organizations involve their employees in improving organizational effectiveness through the accomplishment of mission and goals. It directs the business function by justifying budgetary expenditures, documenting progress towards established objectives, identifying areas of both strength and weakness, providing an on-going assessment of the current organizational climate, and driving business improvement. Employee performance management includes: planning work and setting expectations, continually monitoring performance, periodically rating performance and rewarding good performance.

Types of Performance Management Plans

The most prominent types of performance management plans are strategic and administrative plans. Plans established at organizational levels are called Strategic Plans. Whereas, the plans established for a department or area of the firm are said to be administrative plans.

Strategic planning is concerned with long range planning. It also often involves plans which relate to how the firm reacts to the outside environment such as the local business community, the economy, and other external influences. Strategic planning also focuses on where the firm sees itself in the future.

Administrative plans relate to the internal need and pressures of the firm. Administrative plans are most concerned with the organization of a firm's resources; how they are obtained, what they will be used for, and how they will be used. These plans are critical to any firm, as they seek to show how the firm will go about doing what it needs to do.

Impact of performance management on employee and organization

Performance management is an important business system; it makes a difference in organizational performance. As approaches to performance management are changing, managers must be attentive to the systems in their organizations. The implementation of performance management system has many benefits for organizations. The implementation of this system leads to an increase in the effectiveness of employees in an organization

Managers in most organizations are busy and do not have time to interact with their subordinates. This needs to change. Regular check-in discussions, which include status updates, coaching, and feedback, promotes flexibility, allowing managers and the employee to identify problems early and change the course of a project or assignment. By emphasizing that an annual appraisal should simply be a summary of the conversations held between managers and the employee during the entire cycle, it shifts the focus away from performance as an "annual event" to performance as an on-going process. Therefore, the consistent feedback given by managers to their juniors does not only enhance their performance, it also good for entire organization (Cardy, 2011).

The performance management system is a valuable tool to motivate employees to perform better. A motivated employee performs using full potential, which is good for both the organization and employee (Noe, 2007). Management should try to provide financial incentives to motivate the staff so that employees' efforts are awarded. The financial awards can be directly related to the performance of employees (Delpo, 2007).

The performance management system helps the company identify employees who are not able to perform up to their expectations. Warnings can be given to these employees for improving their performance. Even after that, if they are unable to improve their performance; these employees can be terminated on the basis of performance. This is also a way for management to document deficiencies in skills and abilities and avoid wrongful termination lawsuits.

An effective performance management process, while requiring time to plan and implement, can save everyone time and energy. Most importantly, it can be a very effective motivator; since it can help management and the



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