Performance Management explained

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Performance Management: this article explains Performance Management in a practical way. Next to what it is (definition), this article also highlights an aspect of human behaviour, the Performance Management process including self-propelled performance process (SPPP), Analysis as a tool and the benefits of performance management. After reading you will understand the basics of this powerful management tool. Enjoy reading!

What is Performance Management?

The definition of Performance Management

Performance Management includes all activities which ensure that objectives are achieved in an efficient and effective manner. Performance Management focuses on the performance of the entire organization, departments, production processes, employees, etc.

The principles of Performance Management are necessary wherever people integrate with their (work) environment so that the desired results can be achieved.

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Human Behaviour

Cultures may be different but human behaviour is identical all over the world. A strategic and integrated approach will ensure an increase of the effectiveness of companies. By improving the performance of employees, people will develop their individual capabilities and the capabilities of the teams they work in.

Performance Management Process

In order to motivate the employees, it is important that their personal goals are in line with the organizational objectives.

In addition to considering the individual SMART Goals, Performance Management can also be applied at department level. When people are inspired to perform better, a self-propelled performance process (SPPP) is set in motion.

A number of SPPP characteristics are listed below:

  1. method for career development and promotion
  2. successful method for career planning
  3. the most advanced application of performance management
  4. the best integration of human behaviour research
  5. computerized method for organizational change, development, growth, performance and profit
  6. method for increased motivation, productivity, growth, performance and profitability both for the individual and the organization.
  7. inspiring method in which people start searching actively for their own talents and initiatives

Analysis as a tool

In order to set to work functionally, it is important that an individual mission statement is drawn up and analysed which ensues from and is linked to the strategic plan of the organization.

This analysis forms part of the job description that is focused on the ultimate goal, customers, products and scope.

The standards of Performance Management can therefore be determined for each job. Moreover, this performance analysis can be used to draw up a job description, when this is not available. This analysis is about the determination of continuous critical objectives and performance standards for each job.

Benefits of performance management

By activating and motivating employees, they are sooner capable of achieving their own operational and strategic objectives.

In addition, an integrated software system can be used in which the employees have a clear insight into their responsibilities and their performance. As a result they are (more) work and result-oriented and they are capable of organizing their working hours which will be beneficial to the company. Time recording is a much used component of such software.

A large number of benefits are:

  • Direct profits
  • Growth in sales
  • Lower costs
  • It discourages expenditure overruns
  • Operational objectives are immediately linked to strategic objectives
  • Time-saving

Motivated employees

  • Personal objectives produce a positive (financial)incentive
  • Higher and better performance
  • Increases employee engagement
  • Creates transparency in the achievement of objectives
  • Personal development plans (PDP´s) are directly aligned with strategic objectives

Improved management control

  • More flexible responses to the needs of employees and customers
  • Linking of data to people
  • Meets legislative requirements (quality marks)
  • Improves translation of strategic objectives into operational objectives
  • Provides well documented and communicated process documentation

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It’s Your Turn

What do you think? Is Performance Management still applicable in today’s modern organizations? Do you recognize the practical explanation or do you have additional information that you would like to share? What are your success factors for the good performance management set up?

Share your experience and knowledge in the comments box below.

More information

  1. Amerstrong, M., & Baron, A. (1998). Performance Management: The New Realities. Institutes of Personnel and Development.
  2. Daniels, A.C. (1999). Bringing out the Best in People. McGraw-Hill.
  3. Rummler, G.A. & Brache, A.P. (1995). Improving Performance: How to Manage the White Space in the Organization Chart. Jossey-Bass.
  4. Zaffron, L. & Steve, D. (2009). The Three Laws of Performance: Rewriting the Future of Your Organization and Your Life. Jossey-Bass.

How to cite this article:
Van Vliet, V. (2010). Performance Management (PM). Retrieved [insert date] from Toolshero:

Original publication date: 07/12/2010 | Last update: 07/24/2023

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Vincent van Vliet
Article by:

Vincent van Vliet

Vincent van Vliet is co-founder and responsible for the content and release management. Together with the team Vincent sets the strategy and manages the content planning, go-to-market, customer experience and corporate development aspects of the company.


One response to “Performance Management explained”

  1. Aahana Laghari says:

    Nice article. All the points mentioned by you in the article are great. They are having good value in the market and are giving a big helping hand to the organisation. Lately, organisation are relying on online performance management software tools as the tools are saving time with increasing productivity. They are increasing the pace of tasks which has to be performed by the employee.

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