Performance Management in Business

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Performance management is a business or organizational management tool that enhances the effectiveness and efficiency of activities. An organization or company applies performance management tool in analyzing and evaluating the overall performance of the organization or individual employees. The performance management enables an organization to streamline its activities, which in turn reduce inefficiencies at both the individual level and organizational level.

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Since modern organizations experience a complex of challenges that emanate from individual behaviors and management inefficiencies, performance management provides a comprehensive view of organizational challenges and their possible solutions.

As employees are integral components of an organization, performance management “focuses on the provision of feedback to individual employees or groups of employees, with the underlying philosophy of building an effective employment relationship” (Becker, Antuar, and Everett 256). Performance management of employees reflects the performance of the organization because the two correlate. Therefore, this essay examines the benefits of performance management on both employees and the organization.

Benefits to Employees

Performance management is beneficial to employees because it measures the outcomes of organizational activities rather than focusing on the behavior of the employees. Management of employees has been a contentious issue because some management tools focus on the behavior of employees and relate it to the outcomes of organizational activities. Management tools that focus on employees’ behavior have a detrimental effect on the motivation of employees because they create aspects of discrimination. Measurement of employees’ behaviours creates social and psychological issues at work that ultimately affect the performance of employees, as physical attributes determine behavior.

However, performance management focuses on the performance of employees within the capacity of their responsibilities thus eliminating any form of discrimination that may arise. Elimination of personalities in the evaluation of employees enables the management to examine the cause of a problem and provide the appropriate solution without necessarily putting the blame on a single employee. Oestreich and Buytendijk assert that performance originates from the change that occurs in an organizational environment and then moves to employees (6). Hence, organizational performance concentrates on activities in an organizational environment and leaves out personalities.

Since employers and employees have different expectations regarding their objectives, performance management promotes collaboration, which is central to achieving reasonable expectations. Normally, employers have unreasonable demands on the performance of employees, which often creates tension in an organization.

Employers expect employees to perform superbly in spite of the challenges and limitations that exist in an organization. Comparatively, employees have unreasonable demands on the benefits that they expect to derive from an organization. Depending on their experience and education level, employees require commensurate salary no matter the nature of profits an organization makes. In a bid to enhance reasonable expectation between employers and employees, the management should create a communication strategy.

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In this view, performance management creates a friendly working relationship that enhances reasonable expectations and consequently reduces sources of conflicts that often originate from misunderstanding. Mucha posits, “Performance management helps an organization to set expectations and reinforce what almost everyone would agree is a solid approach to decision making” (64).

Through performance management, the management can create a rapport, which is essential in settling disputes and promoting understanding in the workplace. Hence, performance management is a tool that sets reasonable expectations between employees and employers.

Performance management measures the productivity of employees by comparing the outcomes of activities with organizational goals and objectives. Performance management provides an accurate measurement of employees’ performance by considering many factors. Consideration of many factors that determine employees’ performance gives a reasonable assessment of employees. Other performance management tools unfairly assess employees based on a few performance indicators that do not gather all factors that relate to productivity.

Employees often do not like performance assessment because they have reservations that the assessment tool could evaluate them unfairly. However, the performance assessment tool is an excellent tool that measures productivity accurately and reflects individual performance fairly. Use of performance management software enables employees to understand their respective roles and increase their productivity without necessarily overlooking minor tasks that have importance in organizational performance.

Becker, Antuar, and Everett state that performance management is “a means of managing and measuring the performance of individuals or teams by providing clear accountability and measures on which to assess performance” (255). Assessment of employees in an accountable and transparent manner is important among employees because it encourages individual as well as collective participation in the workplace.

As performance management assesses employees in a fair and transparent manner, employees get the freedom to exercise their responsibility and contribute optimally to the development of an organization. Usually, management tools that do not assess employees accurately instill fears among employees, which in turn affect their performance in the workplace. Unfair assessment does not encourage accountability as employees operate in an unfriendly environment that does not consider their respective unique contributions.

Through performance management, employees have the freedom to interact with their managers and supervisors regarding day-to-day activities that seem to be overwhelming. Since performance management outlines tasks and activities in line with organizational goals and objectives, employees get a chance to contribute to organizational performance in an effective and efficient manner. Oestreich and Buytendijk argue that performance management empowers employees to set goals and create plans aimed at achieving organisational goals (8).

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Lack of freedom in an organization is one factor that restrains employees from contributing optimally to organisational performance. However, performance management enhances employees’ freedom and enables them to interact with management constructively. With the freedom to exercise their responsibilities, employees are in a good position to explore their talents and creativity, thus contributing optimally to the development of an organization.

Performance management enables employees to set targets because they can perform self-assessment against organizational goals and objectives. The problem that many organizations have been facing is the inability to set targets for employees to perform self-assessment, as most management tools are not accurate and reliable. The inaccuracy and unreliability of the management tools have made many employees view self-assessment as a complex task that they cannot perform on their own.

However, performance management has made employees realize their worth in an organization because they can perform predefined tasks in an effective and efficient manner. In this view, performance management outlines tasks and their expected outcomes so that employees can assess themselves constantly, thus tracking their progress daily in the workplace. Daily assessment is important as an employee has daily goals and objectives in which if achieved successfully, there is a feeling of accomplishment and satisfaction.

Becker, Antuar, and Everett explain that performance management creates a link between “mission and measures that direct employees towards achieving organizational goals” (257). Creation of this link enables employees to understand their responsibilities in an organization and their roles in achieving set goals and objectives. Therefore, performance management does not only define the duties of employees but also enable them to assess their daily performance, which leads to the achievement of organizational goals and objectives.

Many companies are grappling with ways of motivating their employees. The motivation of employees is central in enhancing organizational performance. Ideally, employees are cornerstones that support the existence of an organization for their level of motivation determines the status of organizational performance. An organization that does not motivate its employees is unable to gain optimally from the talents and skills of employees because they perform sub-optimally. In contrast, an organization that motivates its employees reaps the most out of employees as they perform their duties optimally, thus creating a vibrant organization.

Given that performance management assesses employees, it provides feedback that motivates employees. In an organization that provides frequent feedback on performance assessment, employees gauge their performance in time and make essential adjustments addressing inefficiencies in their work. Essentially, employees can celebrate their work when they see their performance reflected by the performance management tool.

Appropriate application of performance management tool causes motivation among employees (Naqvi, Bokhari, Aziz, and Rehman 8495). Constructive use of performance management tool motivates employees and enhances their career growth. Therefore, performance management is beneficial because it motivates and encourages professional growth among employees.

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Benefits to Organisation

Performance management is a tool that enhances the effectiveness and efficiency of organizational activities. Organizations that do not have performance management experience challenges in management because there is no assessment of individual employees. Moreover, lack of performance management implies that an organization is unable to organize and plan activities toward achieving organizational goals.

Normally, inefficiencies that many organizations grapple with emanate from poor management practices that do not provide for the assessment of employees or organize activities of employees. In reality, “performance management is a crucial element within many best-practice standard government processes” (Macha 63).

Since an organization has many intricate processes of work, performance management streamlines its sequence in a bid to enhance the effectiveness and efficiency of the process. Performance management integrates an overall structure of an organization and ensures that all tasks and activities operate in an environment that is free from any interference. For organizations to improve efficiency and effectiveness of their activities, they should adopt and implement a performance management system.

Increased efficiency and effectiveness of operations within an organization has significant benefits in reducing the cost of management. Management operations cost an organization a lot of resources, especially in instances where inefficiencies exist. Inefficiencies in management operations occur when an organization employs ineffective management tools, which do not consider subtle factors that influence organizational performance. Outcomes of organizational activities are normally dependent on the management style that an organization employs in planning and executing crucial management activities.

In this case, performance management is a proven, cost-effective tool in the management of organizations that have a large number of employees. Macha asserts that although performance management is expensive to adopt and implement, it has long-term benefits on an organization because it reduces the cost of management (63). Performance management reduces the cost of management by delegating responsibilities to employees and reducing the role of supervision. Hence, performance management is beneficial to an organization because it empowers employees to take their responsibilities and reduces the cost of management.

As organizations have numerous projects and activities, performance management comes in handy because it enables proper planning and organization leading to a reduction in project overruns and duplication of activities. Overrun of projects is a major problem that managers are striving to solve daily. Poor management practices normally contribute to overruns of projects, which is a daunting task for management to solve. Application of a performance management tool determines the extent of project implementation and outcomes of the projects.

Hence, managers should apply performance management cautiously. Naqvi, Bokhari, Aziz, and Rehman note, “Without continual and effective monitoring, a control process may fall into a state of despair or fail to be executed altogether” (8497). Depending on the usage, the performance management tool has the potential to break or make the project.

Hence, performance management is a critical tool that managers require to implement projects according to the set-out plans. Moreover, performance management eliminates duplication of activities in an organization that eventually choke the programs of an organization. By streamlining activities, performance management helps managers to prioritize activities, track, and evaluate progress, thus eliminating their duplication.

Organizations have missions and goals, which they always strive to achieve. The management has a noble role in ensuring that employees’ aspirations and interests align with the organizational mission and goals. In this view, performance management is an appropriate management tool that managers use in aligning employees’ aspirations and interests towards achieving organisational goals. If employees’ aspirations and interests are out of phase with organisational mission and goals, the organization is likely to fail because employees direct their energies towards other goals that are not part of the organisational mission and goals.

Thus, performance management enables managers to refocus the aspirations and interests of employees to be in line with organisational goals. In an organization, alignment of employees to organisational goals involves enabling them to own their organization by sharing common objectives and activities that lead to the achievement of a common end.

Oestreich and Buytendijk posit, “To achieve management excellence, every decision-maker should use the same framework and align managers across the entire organization…while empowering everyone to contribute to the success” (14). Therefore, performance management enhances alignment of employees towards the mission and goals of an organization, thus promoting the development.

Organizational growth usually depends on the nature of management and the stipulated plans. Different management strategies determine the extent of organizational change that given management can effect within a certain period. Performance management is an effective management strategy that enables managers to effect changes and transformations within the shortest period possible. Since performance management assesses the contribution of each employee in an organization, it provides an overview of overall performance to the managers.

By use of performance management, managers can anticipate impending challenges, thus overcome many challenges that organizations generally face. Oestreich and Buytendijk assert that strategic change happens when an organization integrates performance management into management strategy (20). When integrated into a management strategy, performance management saves time that is necessary for effecting meaningful changes in an organization. Hence, performance management improves changes within an organization within a short period. It means that projects and activities happen within the stipulated time, thus preventing unnecessary delays associated with poor planning.

As performance management entails constant appraisal of employees, it ensures responsibility and accountability on the part of the management, thus benefitting an organization. Lack of performance management makes managers reluctant in their duties, as they do not have anything that can check their performance. Ideally, management has a noble role in ensuring that employees perform as per the requirement of their job description. However, lack of assessment tools does not indicate whether the management or employees have not done their part.

Hence, performance management enables an organization to assess the performance of managers, which in turn reflects organizational performance. Becker, Antuar, and Everett assert that performance management “introduces greater accountability and link individual and team performance to the organization’s overall goals” (260). Managers have to ensure that there is a link between employees and organizational goals for an organization to transform. Thus, performance management promotes accountability and responsible attitude on management, which leads to the improvement of organizational performance.

Performance management is beneficial as it provides invaluable information necessary for rating employees in an organization in terms of promotions, wages, demotions, dismissal, or transfer. In this case, performance management gives an accurate assessment of employees while rating them fairly according to their performance. Moreover, performance management stores record of employees’ performance in an organization, which provide background information that is critical in gauging employees.

During promotion, demotion, dismissal, and transfer, employees usually have complaints. Lack of appropriate records to show why an organization took certain measures against a given employee complicates matters in human resource management. Therefore, performance assessment information protects an organization from legal charges that employees may launch regarding discrimination and favoritism.

However, since performance management is accurate and fair in the assessment of employees, a study indicates that over 70 percent of employees view performance management as a means of letting the organization appreciate and reward them accordingly (Becker, Antuar, and Everett 264). Hence, through performance assessment records, an organization can take fair measures in rewarding or punishing its employees.

Knowledge and skills that employees have are critical in determining their performance and contributions to an organization. Management style usually determines how managers understand the level of knowledge and skills of their employees. Performance management is essential in analyzing career needs and training requirements of employees.

Essentially, performance management reveals weaknesses among employees and thus provides a view for an organization to recommend further training in various aspects of career development. Identification of gaps of employees enables an organization to plan on how to provide essential training programs and create career development paths. Becker, Antuar, and Everett argue that performance management provides a platform where employees and managers can interact in identifying relevant training programs and choosing career development (266). Hence, performance management is a useful tool that human resource managers use in planning training and career development of employees.


Performance management is a critical tool that managers should employ not only in assessing the performance of their employees but also in evaluating overall organizational performance. Since the corporate world is undergoing rapid changes, organizations should embrace and adopt effective management strategies by incorporating performance management into organizational system.

Performance management has significant benefits on employees because it provides fair assessment, motivates employees, and creates a working environment that is secure. Additionally, performance management enables an organization to enhance the efficiency and effectiveness of organizational activities by streamlining and aligning employees with organizational goals. Overall, performance management is an invaluable tool in the management of modern organizations.

Works Cited

Becker, Karen, Nicholas Antuar, and Cherie Everett. “Implementing an employee performance management system in a nonprofit organisation.” Nonprofit Management & Leadership 21.3 (2011): 255-271.

Mucha, Michael. “Rethinking the costs and benefits of performance management.” Government Finance Review 46.4 (2010): 63-65.

Naqvi, Imran, Syed Bokhari, Shazia Aziz, and Kashif Rehman. “The impact of human resource (HR) performance management on project outcome.” African Journal of Business Management 5.21 (2011): 8491-8499.

Oestreich, Thomas, and Frank Buytendijk. “Introducing management excellence.” Journal of Management Excellence 1.1 (2008): 1-27.

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