Performance Management Process and Its Importance

Performance Management Process and Its Importance


An effective performance management process aims primarily at aligning your team, supporting employee development, and enhancing employee performance. It ensures that your organization, its departments, employees, teams, and processes are working towards optimizing organizational goals, all year round!

In today’s business world, performance management is an essential part of any business’s strategy. It is much easier these days for you to gather and analyze data from all touchpoints of your business. As such, setting of Key Performance Indicators (KPIs) and tracking them is not a difficult task.

You can check the below video to explain how to set up a strategy, or skip it to get to the 3 stages of the Performance Management Process.

So what are the stages of an effective performance management process?

  • The Prerequisites phase

    In this phase, your organization’s mission and desired future position are defined as part of setting a strategy. This process is then cascaded across the departments to set targets for each department. Each department should be supporting the achievement of your organization’s main mission.

    Within the department, the targets are then distributed across the teams. The tasks needed, methodologies, knowledge, skills required for each specific job are further identified in the form of a job description.

  • Performance planning phase

    The performance planning phase identifies the results that need to be produced by an employee, the behaviors, and the agreed-upon development plan. It includes areas that require improvement and the goals that need to be achieved in each area.

    An employee has the primary responsibility and ownership of the performance execution phase. The supervisor observes and documents performance on a daily basis, provides resources, feedback on progression towards goals, coaching, and opportunities to engage in developmental activities.

  • Performance assessment phase

    The performance assessment phase evaluates the extent to which desired behaviors have been displayed, and desired results have been achieved. Moreover, the performance review phase provides a formal setting in which an employee receives feedback on past performance, developmental progress, as well as future plans.

    Last but not least, the performance renewal and contracting phase are similar to the performance planning phase except for using insights and information from the other phases.

If your work involves the implementation of projects, then the above process should be used for each project.

The important thing to remember is, you shouldn’t limit performance reviews and assessments to a yearly or quarterly task. Managers and their employees in your organisation, should be regularly reflect on the targets that have been set and in the process do continuous improvements.

The performance management process is ongoing due to the fact that markets, customers’ needs and products are never constant!

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