Performance management system – Definitions & Concepts

Performance management system has been defined by researchers in different ways.

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”. Other researchers describe Performance management as a technology

for managing both behaviour and results. There is no single definition agreed by all,

however, considering different approaches, one may sum up Corporate Performance

management system as part of the planning and control cycle of an organization where

expected levels of achievement are set for an organization based on its corporate

objectives. These expected targets are expressed both in financial and non-financial

terms and are compared to actual achievement with a view to improve future

performance. “Each system begins with defining the vision or goals of the company.

Next, there is a meshing of key performance indicators within a strategic evaluation

format where managers rate the significant factors which pertain to achieving each

strategic objective. Finally, managers coordinate the measures to develop, track, and

relate those measures to the overall strategic vision continuously”. The purpose of

performance management is not only to know how a business is performing but to enable it to perform

better. Thus the ultimate aim of implementing a performance management system is to improve the

performance of the organization.