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LOVELY INSTITUTE OF MANAGEMENT

DEPARTMENT OF MANAGEMENT

Term paper

OF

GLOBAL HUMAN RESOURCE MANAGEMENT

ON

PERFORMANCE MANAGEMENT SYASTEM IN MODERN ORGANISATIONS

Submitted to Regards

Dr.Krishan Gopal Jessica

REG. – 10900618

RT1902B53
ACKNOWLEDGEMENT

Accomplishment of any task, howsoever small it may be, is

Not possible without the blessings of the Almighty and without the active

Help of certain individuals.

My special thanks toDr.Krishan Gopal, Who motivated me to take up this Term paper. I’m
highly grateful to him for guiding me so affectionately.

And …… last, but not the least, I’m indebted to teachers

For their help and moral support. I hope and wish; I can repay their efforts half as much as they
have effort for me.

- Jessica
Contents

• Introduction

• Advantages and Disadvantages of Performance Management System

• 4 Key Benefits of Performance Management

• 15 Other Benefits of Performance Management

• Concerns About Performance Management

• Organization As Network: A Modern Approach to Performance Management

• Performance Management is Collective Responsibility

• Performance Management Methods

• Inputs Required for Performance Management

• Conclusion

• References
Introduction

Performance management (PM) includes activities that ensure that goals are consistently being
met in an effective and efficient manner. Performance management can focus on the
performance of an organization, a department, employee, or even the processes to build a
product or service, as well as many other areas.

Performance management as referenced on this page is a broad term coined by Dr. Aubrey
Daniels in the late 1970s to describe a technology (i.e. science imbedded in applications
methods) for managing behavior and results, two critical elements of what is known as
performance.

Application

This is used most often in the workplace, can apply wherever people interact — schools,
churches, community meetings, sports teams, health setting, governmental agencies, and even
political settings - anywhere in the world people interact with their environments to produce
desired effects. Armstrong and Baron (1998) defined it as a “strategic and integrated approach to
increasing the effectiveness of organizations by improving the performance of the people who
work in them and by developing the capabilities of teams and individual contributors.”

It may be possible to get all employees to reconcile personal goals with organizational goals and
increase productivity and profitability of an organization using this process. It can be applied by
organizations or a single department or section inside an organization, as well as an individual
person. The performance process is appropriately named the self-propelled performance process
(SPPP).

First, a commitment analysis must be done where a job mission statement is drawn up for each
job. The job mission statement is a job definition in terms of purpose, customers, product and
scope. The aim with this analysis is to determine the continuous key objectives and performance
standards for each job position.

Following the commitment analysis is the work analysis of a particular job in terms of the
reporting structure and job description. If a job description is not available, then a systems
analysis can be done to draw up a job description. The aim with this analysis is to determine the
continuous critical objectives and performance standards for each job.

Benefits

Managing employee or system performance facilitates the effective delivery of strategic and
operational goals. There is a clear and immediate correlation between using performance
management programs or software and improved business and organizational results.

For employee performance management, using integrated software, rather than a spreadsheet
based recording system, may deliver a significant return on investment through a range of direct
and indirect sales benefits, operational efficiency benefits and by unlocking the latent potential in
every employees work day (i.e. the time they spend not actually doing their job). Benefits may
include:

Direct financial gain

 Grow sales
 Reduce costs in the organisation
 Stop project overruns
 Aligns the organization directly behind the CEO's goals
 Decreases the time it takes to create strategic or operational changes by communicating
the changes through a new set of goals

Motivated workforce

• Optimizes incentive plans to specific goals for over achievement, not just business as
usual
• Improves employee engagement because everyone understands how they are directly
contributing to the organisations high level goals
• Create transparency in achievement of goals
• High confidence in bonus payment process
• Professional development programs are better aligned directly to achieving business level
goals

Improved management control

 Flexible, responsive to management needs


 Displays data relationships
 Helps audit / comply with legislative requirements
 Simplifies communication of strategic goals scenario planning
 Provides well documented and communicated process documentation

Organizational development

In organizational development (OD), performance can be thought of as Actual Results vs


Desired Results. Any discrepancy, where Actual is less than Desired, could constitute the
performance improvement zone. Performance management and improvement can be thought of
as a cycle:

1. Performance planning where goals and objectives are established


2. Performance coaching where a manager intervenes to give feedback and adjust
performance
3. Performance appraisal where individual performance is formally documented
and feedback delivered

A performance problem is any gap between Desired Results and Actual Results. Performance
improvement is any effort targeted at closing the gap between Actual Results and Desired
Results.

Other organizational development definitions are slightly different. The U.S. Office of Personnel
Management (OPM) indicates that Performance Management consists of a system or process
whereby:

1. Work is planned and expectations are set


2. Performance of work is monitored
3. Staff ability to perform is developed and enhanced
4. Performance is rated or measured and the ratings summarized
5. Top performance is rewarded.

Advantages and Disadvantages of Performance Management System


Advantages

1. Performance based conversations

Managers get busy with day-to-day responsibilities and often neglect the necessary interactions
with staff that provide the opportunity to coach and offer performance feedback. A
performance management process forces managers to discuss performance issues. It is this
consistent coaching that affects changed behaviors.

2. Targeted Staff Development

If done well, a good performance management system can be a positive way to identify
developmental opportunities and can be an important part of a succession planning process.

3. Encouragement to staff

Performance Appraisals should be a celebration of all the wonderful things an employee does
over the course of a year and should be an encouragement to staff. There should be no surprises
if issues are addressed as they arise and not held until the annual review.

4. Rewards staff for a job well done

If pay increases and/or bonuses are tied to the PA, process staff can see a direct correlation
between performance and financial rewards.

5. Underperformers identified and eliminated

As hard as we try, it is inevitable that some employees just won’t “cut the mustard” as they
say. An effective PA process can help identify and document underperformers, allowing for
a smooth transition if the relationship needs to be terminated.
6. Documented history of employee performance

It is very important that all organizations keep a performance record on all employees. This
is a document that should be kept in the employee’s HR file.

7. Allows for employee growth

Motivated employees value structure, development and a plan for growth. An effective
performance management system can help an employee reach their full potential and this is
positive for both the employee and manager. A good manager takes pride in watching an
employee grow and develop professionally.
Organizations should take a global look at their performance management system and have very
objective goals that are tied to strategic initiatives and the performance management process.
Successful organizations have learned the secret to this and while not always perfect, a constant
striving to improve the process can help organizations reach their Vision.

Disadvantages

1. Time Consuming

It is recommended that a manager spend about an hour per employee writing performance
appraisals and depending on the number of people being evaluated, it can take hours to write
the department’s PA but also hours meeting with staff to review the PA. I’ve know
managers who had 100 plus people to write PAs on.

2. Discouragement

If the process is not a pleasant experience, it has the potential to discourage staff. The
process needs to be one of encouragement, positive reinforcement and a celebration of a
year’s worth of accomplishments. It is critical that managers document not only issues that
need to be corrected, but also the positive things an employee does throughout the course of
a year, and both should be discussed during a PA.
3. Inconsistent Message

If a manager does not keep notes and accurate records of employee behavior, they may not
be successful in sending a consistent message to the employee. We all struggle with memory
with as busy as we all are so it is critical to document issues (both positive and negative)
when it is fresh in our minds.

4. Biases

It is difficult to keep biases out of the PA process and it takes a very structured, objective
process and a mature manager to remain unbiased through the process.

4 Key Benefits of Performance Management

1. PM focuses on results, rather than behaviors and activities


A common misconception among supervisors is that behaviors and activities are the same as
results. Thus, an employee may appear extremely busy, but not be contributing at all toward the
goals of the organization. An example is the employee who manually reviews completion of
every form and procedure, rather than supporting automation of the review. The supervisor may
conclude the employee is very committed to the organization and works very hard, thus,
deserving a very high performance rating.

2. Aligns organizational activities and processes to the goals of the organization


PM identifies organizational goals, results needed to achieve those goals, measures of
effectiveness or efficiency (outcomes) toward the goals, and means (drivers) to achieve the
goals. This chain of measurements is examined to ensure alignment with overall results of the
organization.

3. Cultivates a system-wide, long-term view of the organization.


Richard A. Swanson, in Performance Improvement Theory and Practice (Advances in
Developing Human Resources, 1, 1999), explains an effective performance improvement process
must follow a systems-based approach while looking at outcomes and drivers. Otherwise, the
effort produces a flawed picture. For example, laying off people will likely produce short-term
profits. However, the organization may eventually experience reduced productivity, resulting in
long-term profit loss.

4. Produces meaningful measurements


These measurements have a wide variety of useful applications. They are useful in
benchmarking, or setting standards for comparison with best practices in other organizations.
They provide consistent basis for comparison during internal change efforts. They indicate
results during improvement efforts, such as employee training, management development,
quality programs, etc. They help ensure equitable and fair treatment to employees based on
performance.

15 Other Benefits of Performance Management

1. Helps you think about what results you really want. You're forced to be accountable, to
"put a stake in the ground".

2. Depersonalizes issues. Supervisor's focus on behaviors and results, rather than personalities.

3. Validates expectations. In today's age of high expectations when organizations are striving to
transform themselves and society, having measurable results can verify whether grand visions
are realistic or not.

4. Helps ensure equitable treatment of employees because appraisals are based on results.

5. Optimizes operations in the organization because goals and results are more closely aligned.

6. Cultivates a change in perspective from activities to results.

7. Performance reviews are focused on contributions to the organizational goals, e.g., forms
include the question "What organizational goal were contributed to and how?"

8. Supports ongoing communication, feedback and dialogue about organizational goals. Also
supports communication between employee and supervisor.
9. Performance is seen as an ongoing process, rather than a one-time, shapshot event.

10. Provokes focus on the needs of customers, whether internal or external.

11. Cultivates a systems perspective, that is, focus on the relationships and exchanges between
subsystems, e.g., departments, processes, teams and employees. Accordingly, personnel focus on
patterns and themes in the organization, rather than specific events.

12. Continuing focus and analysis on results helps to correct several myths, e.g., "learning means
results", "job satisfaction produces productivity", etc.

13. Produces specificity in commitments and resources.

14. Provides specificity for comparisons, direction and planning.

15. Redirects attention from bottom-up approaches (e.g., doing job descriptions, performance
reviews, etc., first and then "rolling up" results to the top of the organization) to top-down
approaches (e.g., ensuring all subsystem goals and results are aligned first with the organization's
overall goals and results).

Concerns About Performance Management

Typical concerns expressed about performance management are that it seems extraordinarily
difficult and often unreliable to measure phenomena as complex as performance. People point
out that today's organizations are rapidly changing, thus results and measures quickly become
obsolete. They add that translating human desires and interactions to measurements is
impersonal and even heavy handed.
Organization As Network: A Modern Approach to Performance Management

Third-generation strategies can't thrive in second-generation organizations with first-generation


management. Sumantra Ghoshal, who was a professor of strategic management at the London
Business School, made this point years ago — yet the lag he saw in the evolution of management
is still institutionalized in most businesses' performance management practices. In fact, the gap
between the modern business model and the way we try to manage it grows every day.

In many industries, customers can directly access systems within the companies they do business
with. Think of Internet banking or online check-in for air travel. Processes like these save the
organization money, while ensuring high data quality. They also strengthen the value proposition
for many customers. Some companies combine this model of customer self-service with mass
customization so that every transaction is tailored to the buyer's specific needs. New car orders
include seemingly endless choices on options. Most PCs are built to order. Amazon.com
produces personalized home pages, and Build-A-Bear Workshop allows children to make their
own teddy bear.

The classical value chain, as depicted in section A of exhibit 1 has reversed directions. Section B
of the exhibit shows the reality of many businesses' relationships with their customers today.
Customers are effectively running the organization's processes. They choose which contact
channel is used, and they take advantage of that channel at whatever moment is most convenient
for them. There is no longer any difference between the front office and the back office; systems
are integrated and transparent to the customer. Doing business is a process of continuous
interaction and collaboration.

At the same time, many organizations are outsourcing activities such as accounting, IT, logistics,
manufacturing, call centers, and even R&D. Some do so to save costs, but increasingly
companies are outsourcing to gain access to new markets, faster time to market, or specialized
skills. A modern organization's true value chain usually looks like section C of exhibit 1. Many
physical products never even touch the organization. For example, most Nike shoes never see the
inside of a Nike facility, and most Philips TV sets are not even touched by a Philips employee.
The flow of information is what connects all the elements.
For some businesses, even innovation is no longer a core competency. There are countless
examples of organizations collaborating with external stakeholders to create competitive
differentiation. Consider a marketing department that asks customers to submit homemade
commercials to YouTube or an organization that includes, as part of the product it sells,
technology that it has licensed from an external business partner. Frequently new products or
services are created through the collaboration of multiple distinct companies. Collaboration
between Nike and Apple resulted in Nike+ shoes; Douwe Egberts and Philips jointly developed
the Senseo coffee maker; and Adidas and Goodyear worked together on sports shoes with special
soles. Sometimes even competing companies come together to offer a joint service; airline
loyalty programs oneworld, SkyTeam, and Star Alliance are examples.

Despite the high level of interconnectivity among businesses today, our business intelligence
(BI) and performance management processes remain hierarchical in nature. We “roll up”
financials and “drill down” budgets. We “cascade” scorecards throughout the organization.
Budgeting, Economic Value Added (EVA), and the Balanced Scorecard — to name just a few
performance management methodologies — focus primarily on meeting the needs of
shareholders, even though optimizing results for a single category of stakeholders doesn't
necessarily optimize the company's results for everyone involved in the value-creation process.
Nor does that approach take into account how a range of stakeholders contribute to the
organization's performance.

Many decisions that significantly impact business performance are made outside the
organization's walls. Insurance policies are often sold via associated banks or intermediaries;
these organizations drive the insurer's sales. Likewise, customer service is often outsourced to
contractors, who have a large impact on customer satisfaction. And the challenge of improving
process efficiency to drive margins spans the complete value chain. Performance management
initiatives that concentrate on performance within the corporate entity, based on an old-fashioned
notion of the organization, usually come up short.
When a business operates in a network of closely interrelated, though legally distinct,
organizations, it cannot pay attention only to its internal operations. Its performance management
initiatives should focus on the impact that all of its various stakeholders have on the
organization's results. Instead of asking “How can we optimize our performance for one group of
stakeholders?” leaders of a performance management improvement effort should consider the
question “What do our stakeholders contribute to our success?” However, this question can be
asked only if the organization also considers the opposite question: “What do we contribute to
the success of our stakeholders?”

To effectively guide decision-making within a modern, networked business, performance


management must be applied between organizations and among parts of the same organization.
Companies need to monitor their success within the context of their performance network. They
need to understand the nature of the relationships between the organization and its many
stakeholders; they need to work on their transparency; they need to develop new performance
indicators; and their performance management efforts must focus on building trust, instead of
just control.

NATURE OF THE RELATIONSHIP

Relationships between organizations are not all the same, although all are important. Some
relationships are very transactional, such as managing the cafeteria or logistics. Other business
relationships add more value, and require more advanced management, because they support the
core competencies of the firm or lead to innovation through co-creation of products or services.
Within a performance network, companies may have three different types of relationships with
other businesses: trans-actional relationships, added-value relationships, and joint-value
relationships. They must implement different strategies as they manage relationships of the
different types.

Within a transactional relationship, performance managers should focus on the way in which use
of the partner organization's standard processes enables their company to sell its products and
services, profitably, to as many customers as possible. Just because a relationship is transactional
doesn't mean that it doesn't involve innovation. Many highly innovative organizations focus on
transactional relationships. One example is the way in which Dolby Laboratories licenses its
surround-sound system to consumer electronics firms.

Added-value relationships are those that improve a company's supply chain and sales distribution
channels. Companies often focus on performance of their added-value relationships as they move
from product selling to solution selling, adding services that complement their product. The goal
in solution selling is to provide a package that becomes part of the customer's everyday life or
business processes, creating a high level of customer loyalty and sustainable customer
profitability. Because customers are different, solution selling often requires the solution to be
adaptable to buyers' unique needs. A partner network helps make adaptation possible. Think of
the numerous third parties that offer Apple iPod accessories, or consider how suppliers to a
supermarket can earn preferred status by integrating with the supermarket's logistical systems.
Every party in an added-value relationship has its own objectives, but goals are aligned, leading
to mutual success.

In joint-value relationships, parties collaborate to create a new product or service that they could
not have developed on their own. Their objectives are the same: joint success in the market.
Think again of the example of Senseo, a one-touch espresso system for which Philips builds the
machine, while Douwe Egberts supplies coffee pads. Each firm brings crucial skills to the
product. Section D of exhibit 1 illustrates the way in which value chains merge for two
companies working together in a joint-value relationship.

TRANSPARENCY

In a performance network, no single CEO hands out marching orders that are then cascaded
down throughout a cohesive (and hierarchical) organization. Business success is achieved
through communication and collaboration. Information is an asset that a company must deploy
and optimize within its relationships in the same way it uses assets like capital and materials.
Collaboration is impossible without information exchange. Therefore, business partners must
share information to optimize relationships, knowledge transfer, and traffic of their other assets.
The efficient sharing of information in a performance network enables stakeholders to identify
opportunities and bottlenecks in the network and to move from suboptimization to optimization.
Within transactional relationships, transparency consists of the exchange of operational and
financial information, derived from the flow of transactions. Operational information typically
comprises data on the status of transactions — for instance, tracking within logistical
environments or monitoring the approval status of transactions within the back office. Financial
information typically consists of invoice and payment information.

Within added-value relationships, transparency requires sharing of management information in


addition to the operational information; the goal is to enable other stakeholders to better manage
the relationship. Examples of information sharing in added-value relationships include the
corporate strategy information that a company gives its shareholders, scorecards its gives
suppliers, and sustainability reporting for the general public. However, the killer business case
for transparency comes from sharing information with customers, such as a utility company's
sharing of energy-use data or a benefits outsourcing firm providing information on activity
within a customer's employee benefits program.

In joint-value relationships, transparency consists of a full set of management information,


similar to what a company would require from its internal operations teams. These relationships
involve the exchange of operational information as well, but emphasis on operations can lead to
transactional behaviors. In addition to management information, transparency in a joint-value
relationship consists of the free flow of certain organizational capacity. This might include
exchange of capital or sharing of skills and staff, materials, or facilities. Asset sharing can be
formalized within a joint venture, but that is not necessary. Managing joint-value relationships
requires a voluntary and open exchange.
RECIPROCITY

A company should use key performance indicators (KPIs) to monitor and manage the
relationships in its performance network, but these metrics must not focus myopically on
optimization of the company's own, internal performance. They should be reciprocal, showing
both what the stakeholder adds to the organization's performance and how the organization
contributes to the stakeholder's performance. Extending the traditional stable of top-down
metrics to a wider audience of stakeholders makes no sense. The Performance Prism, developed
at Cranfield University in the U.K., is helpful in defining reciprocal performance indicators.
Exhibit 2 identifies facets of success with each of an organization's key stakeholder groups.

Companies that revamp their KPIs in the brave new world of performance networks must
develop metrics that reflect performance for their full spectrum of stakeholders. Monitoring only
shareholder returns or customer satisfaction surveys no longer represents an acceptable level of
performance oversight if a company's processes — or very business — is defined by diverse
relationships with an array of individuals and other organizations. For each stakeholder that it
deems important, a company should monitor not only what it is getting from the stakeholder (for
example, the benefits listed in exhibit 2's “needs of the organization” column), but also what it is
providing to the stakeholder (in the “needs of the stakeholder” column). To make sure they stay
on the right track, companies need to keep their eye on what is important to stakeholders. Failure
to do so leads to loss of stakeholder satisfaction; if the costs of switching to a competitor are
relatively low, it also leads to stakeholder defection.

Within a transactional relationship, the purpose of reciprocity is to optimize one's own


performance. Reciprocity within added-value relationships has a bigger impact on an
organization's performance. To achieve reciprocity in added-value relationships, the organization
needs to track its stakeholders' success. Performance indicators should point out how much
money the company saved a stakeholder, how much return it generated, how much opportunity it
created, or similar gauges of the relationship's results. Ultimately, the success of an added-value
relationship for one partner impacts the bottom line of the other partner as well. For joint-value
relationships, an organization's performance indicators should measure the same things the
company is measuring to gauge its own success. Because they share objectives, all parties are
looking for success in the same areas, but each organization should measure not what it has
achieved for the benefit of itself or the other organization, but rather what it has achieved for
advancement of the relations

TRUST

Every successful organization is built on trust. Employees trust the company's management, and
vice versa. Without a basic level of trust, a business cannot be productive. The same kind of trust
— probably even more — is needed between organizations. Trust, more than control, fuels
performance within any relationship (even a transactional one). In fact, too much accountability
can hurt strategic relationships. An atmosphere of strong accountability does not fit well with the
idea of creating trust; an atmosphere of open commitment does. A relationship that does not
involve open commitment between parties can be terminated at any time because accounts can
be settled easily. The costs of switching to a new partner are lower, and behavior tends to be
more transactional. This is not to say that an organization should not take action to control and
measure success in its relationships. But the aim of performance indicators and management
processes should be to build trust, thus lowering the costs within its relationships.

Transactional relationships require contractual trust, meaning that all parties involved believe
that contractual obligations will be met. Simple performance indicators reflecting the results of
service delivery, as put forth in a straightforward service-level agreement, suffice. But successful
added-value relationships, in which one organization relies on the processes and systems of
another organization, require greater trust. They demand competence trust, which means all
parties believe not only that their partners will meet contractual obligations, but also that they
have the right skills, technologies, and other resources. Performance indicators reflecting the
level of competence trust focus on the inputs of the service — how processes have been
performing, how people have been trained, how resources have been allocated, etc. — not just on
the outputs. Competence trust requires much more transparency than contractual trust.

A final level of trust, goodwill trust, develops when a party knows that its partners will represent
it fairly and, when representing it, will make the same decisions it would make. This high level
of trust between organizations can occur only when the parties involved share the same norms
and values. Goodwill trust should be present in joint-value relationships, where organizations
share intellectual property — along with resources such as capital, staff, information, and
facilities — and where materials flow freely between the organizations. A joint-value
relationship puts an organization in an intrinsically vulnerable situation.

The link between performance and trust is complex. Different stakeholders have different
expectations for an organization. If a company's strategy is aimed at cost leadership and it is
doing a good job, then its cost-related performance indicators will have excellent results. But this
doesn't necessarily mean the organization is trusted. Stakeholders who measure the company
based on quality, rather than cost, may give it bad grades regardless of how well it is executing
its chosen strategy. Trust is earned only when the organization's strategy matches the external
stakeholder's expectations. A well-known anecdote — which is not true, yet makes a great point
— illustrates how customers' trust in a brand might have little to do with how the organization is
actually performing. It describes two car companies that perform a similar recall on a specific
line of cars. Both companies send a letter advising all owners of cars in the faulty line to report to
their dealer and have their car serviced free of charge. Owners of the more prestigious brand
applaud their carmaker for being diligent and quality-oriented, while response to the less-trusted
manufacturer is negative; for owners who expected quality problems, the recall proves them
right.

It's important to note that the relationship between performance and trust is not always
symmetrical. In some services, good performance is not noticed, while bad performance leads to
immediate distrust. Think of an outsourcing company that processes payroll. Its service is either
considered to meet expectations but draw no kudos (100 percent accuracy), or is considered to be
poor (less than 100 percent accuracy).

When developing KPIs that can enhance trust across a performance network, companies should
keep in mind that financial and operational metrics are not the only factors stakeholders use to
evaluate an organization's performance. Shell's image took a hit during the Brent-Spar affair of
the mid-'90s. The company felt that sinking the oil platform was its most economical and
environmentally friendly option, but the public disagreed. Shell's products and services were not
compromised by its decision; still, the company suffered from decreased trust.

MANAGEMENT OF TODAY'S BUSINESSES

All stakeholders in an organization's performance network — its business partners, shareholders,


government agencies, unions, customers, and employees — are interdependent. They need one
another to be successful. And the contributions of all these stakeholders are part of the
organization. A company needs to optimize the performance of all stakeholders to stay profitable
in the long term.

Performance management is more crucial now than it was during the boom years; accurate
insight into what's working, and what's not, may mean the difference between survival and
failure over the next few years. To gain accurate insight into the factors truly driving their
success, many organizations need to reconsider the focus of their performance management
activities. Monitoring, and responding to, factors outside the scope of traditional, introspective
performance metrics may become imperative. An organization that separates its partnerships
based on the nature of the relationship — then pays close attention to the transparency,
reciprocity, and trust in each relationship — should find itself in a much better position for
survival of the downturn, and for success once the global economy rights itself.

Frank Buytendijk is a vice president and fellow in Oracle's EPM group and a visiting
fellow at Cranfield University School of Management.
Performance Management is Collective Responsibility
Performance Management does not pertain only to the work-efficiency of individual employees.
Performance Management is rather broad in its context and emphasizes various departments
like administration, marketing, finance, production, materials and human resources. It monitors
different processes like budgeting, billing, inventory, cash flow and IT support services. The
whole exercise is to achieve organizational effectiveness and organizational effectiveness cannot
be brought about by any one unit but only through collective efforts.

It is common knowledge that with the advent of the free market economy, most organizations
have to contend with fiercer competition and stiffer challenges. Businesses must become more
efficient and adopt right strategies to stay in business. Every employee in the organization must
perform optimally to ensure strategies are implemented effectively. This situation also demands
that systems and processes within the organization are set in the right way to achieve results.

Performance Management Aims


It is accepted that Performance Management comprises of a series of step by step processes as
outlined below:

• Systematic planning of work and determining objectives


• Constant monitoring of work performance
• Required man-power deployed to perform
• Performance is continually measured and ratings provided
• Motivating performance through rewards

Performance Management Methods

• Business Performance Management (BPM) is a series of processes to enable businesses


to understand and make efficient use of their various budiness functions, such as
financial, human and material resources. Operations Performance Management (OPM)
puts stress on devising the methodology to enhance overall business efficiency across the
entire organization.
• Integrated Business Planning (IBP) focusses on the comprehensive planning methods
integrating all units across the enterprise to improve organizational coordination.
• Application Performance Management (APM) is 'systems' management that focuses on
monitoring and managing the performance and availability of software applications.
APM refers to the IT tools deployed to detect, diagnose, remedy and report on application
performance to ensure it supports the attainment of the company’s business goals.

Inputs Required for Performance Management

• Management capability to adapt by continually adjusting and aligning to the


changingneeds of the organization
• Leadership quality to set direction for the organization and to guide all operations to
strictly pursue that direction
• Resources utilization is the ability to ensure effective and optimum use of all available
human and material resources in the organization
• Technical competence depends on the particular type of products and/or services
provided by the organization.
Conclusion

Performance Management does not pertain only to the work-efficiency of individual employees.
Performance Management is rather broad in its context and emphasizes various departments like
administration, marketing, finance, production, materials and human resources. It monitors
different processes like budgeting, billing, inventory, cash flow and IT support services. The
whole exercise is to achieve organizational effectiveness and organizational effectiveness cannot
be brought about by any one unit but only through collective efforts.
Performance management is more crucial now than it was during the boom years; accurate
insight into what's working, and what's not, may mean the difference between survival and
failure over the next few years. To gain accurate insight into the factors truly driving their
success, many organizations need to reconsider the focus of their performance management
activities. Monitoring, and responding to, factors outside the scope of traditional, introspective
performance metrics may become imperative. An organization that separates its partnerships
based on the nature of the relationship — then pays close attention to the transparency,
reciprocity, and trust in each relationship — should find itself in a much better position for
survival of the downturn, and for success once the global economy rights itself.
References

http://en.wikipedia.org/wiki/Performance_management

http://thethrivingsmallbusiness.com/articles/what-are-the-advantages-and-disadvantages-of-
performance-management/

http://managementhelp.org/perf_mng/benefits.htm

http://bpmmag.net/mag/bpm-organization-network-modern-approach-0301/index.html

http://www.suite101.com/content/performance-management-a82356