Performance Management

DEFINITION of 'Performance Management'

The management of employees, departments, and organizations to ensure that goals and objectives are being reached efficiently and effectively. Performance management involves defining what effective performance looks like, as developing the tools and procedures necessary to measure performance.

BREAKING DOWN 'Performance Management'

Performance management involves the way managers evaluate employees, how employees evaluate their managers and fellow employees, and how individual workers evaluate themselves. The ultimate goal of performance management is to improve the quality of work in the most efficient manner possible.

Performance management relies on the analysis of how an organization’s employees have historically accomplished tasks in an effort to improve future performance. Effective managers seek to provide feedback to and receive feedback from employees continuously, rather than rely on occasional appraisals. This allows a manager to determine what motivates employees to work hard, evaluate what obstacles are making it difficult for employees to effectively do their jobs, and make adjustments to employee workloads as necessary.

In some organizations, managers are expected to provide detailed instructions outlining how employees are to approach a specific task. This type of management approach is referred to as high power-distance. The opposite approach allows employees to act more independently in achieving a stated goal. Managers must recognize which approach works best according to the situation and organizational culture.

Globalization has presented companies with new opportunities for growth, but has also increased the complexities of managing the performance of a workforce coming from different cultures. Managers have to ensure that employees are governed according to a company’s policies, but must also ensure that cultural norms are taken into account. Managers must understand what drives employees to work effectively. While monetary compensation may be considered important in some cultures, others may consider empathy towards the employee’s personal and familial well being to be a greater motivator.