Performance Management is a concept
that has long been used since its inception by Dr. Aubrey Daniels in 1970s. Though
the concept was widely accepted in 1980s for its numerous benefits, it is still
one of the most used phenomena in managing the workforce today.
Performance Management refers to
all those activities undertaken to ensure that goals are met effectively and efficiently
by aligning the organization’s resources, systems and workforce. The goals
could be departmental, organization wide, for employees or even for a specific
process. Organizations tend to use various Performance Management Systems (PMS) to meet their strategic objectives.
PMS and its Elements
PMS is basically a tool with the
help of which organizations can implement strategy, communicate goals to
employees, track individual performances and send feedback. PMS has a cyclical
nature. No matter what Performance Management System an organization is
utilizing, each PMS should have the following elements:
·
Recruiting the right people
for the right job
·
Communicating and sharing
the strategic objectives of the Organization
·
PMS should set goals and
KPIs (Key Performance Indicators) for each employee in order to pursue the
strategic organizational goals:
- · Aligning employee’s goal with that of the organization
- · Tracking workforce performance and sharing reviews
- · Rating the employee’s performance on a performance scale
- · Establish formal and informal ways to recognize the efforts of the workforce
- · Provide continuous feedback
- · Provide opportunities for career development
- · Should be user-friendly
Types of Performance Management Systems:
There are several formal methods
of Performance Management:
Management by Objectives (MBO): A term put forward by the Guru “Peter Drucker”, it is
all about defining objectives in consultation with the management and
employees. The idea is to make everyone aware and understand what needs to be
done and how. It is best used in an organization that has formal methods of
practices in place and where employees are highly motivated to achieve the end
result.
360-Degree Feedback: It is recognized as the best practice for managing
performance. In this sort of appraisal, a 360-degree feedback is obtained. This
is to say that an employee receives feedback not just from the manager but also
from all around the organization. All business stakeholers contribute in the
appraisal process. This method is best used when one has the time, effort and
money at hand.
Self-Assessment: As
the name implies, in this type of performance management, an individual
assesses his own performance concerning the goals set.
Competency Based Assessments:
The two most important components of competency are assessed in this type.
These components are skills and abilities. However, in some jobs, it is quite
hard to assess these, as the outcome cannot be measured. Hence, this method is best to use when
competency can be quantified.
Other
widely used types of PMS include Ranking, Forced Distribution, Behaviorally
Anchored Rating Scale and Graphic rating Scale.
Benefits of PMS
For obvious reasons, PMS has a
number of benefits. Some of these benefits include growth in sales hence
resulting in financial gains, reducing costs, simplifying communication between
management and employees, workforce has a clear idea what needs to be done, no
ambiguities are involved, employees are motivated and there is better
management control and feedback process,
Hence, PMS makes an organization
proactive and helps in accomplishing excellence - read more here
