Performance refers to the behaviour of employees and the consequences of this behaviour in a business context. Organisations use performance management as a strategic process that studies employee behaviour in the workplace with the aim of improving performance. The purpose of a performance management system is to support this process for the benefit of an organisation. The main features of such a system are strategic objectives, employee motivation, feedback and performance measurement.
An organisation aligns a performance management system with its strategic objectives that help to establish the content of the system. They are likely to be unique because they depend on individual organisational needs. The more general objectives of a performance management system are to improve the performance of individuals and to encourage each employee to develop. By focusing on improvement and development, a performance management system aims to boost an organisation's overall performance.
The prospect of personal development can act as a motivating force for employees who work within a performance management system. This motivating force also encourages employees to respect what a performance management system seeks to achieve. A manager helps to create motivation by praising an employee and commenting favourably about his or her work. A manager bolsters this approach by linking an employee's motivation to succeed with achieving specific objectives.
A performance management system is effective only when managers show employees how important it is. One way to accomplish this is for managers to provide performance feedback. The feedback compares each employee's performance against organisational standards and objectives. Some performance management systems use 360-degree feedback, which comes from all sources within an organisation and applies to employees and managers alike. The result is a much broader range of comments than a standard feedback system supplies.
A performance management system measures the success or otherwise of objectives, motivation and feedback. It runs comparisons with previously documented results to show whether employee work behaviour has improved. The measurement process consists of performance appraisals for employees. However, the process can be challenging. According to the Handbook of Corporate Management, 70 percent of performance management and measurement systems are unsuccessful. An organisation must integrate performance management and performance measurement and fully understand what is involved.