This factsheet was last updated in August 2015.
What is performance management?
At its best, performance management is a holistic process that ensures employees’ performance contributes to business objectives. It brings together many of elements of good people management practice, including learning and development, measurement of performance, and organisational development. For this very reason, it’s complex and often misunderstood.
In their CIPD textbook, Armstrong and Baron1 define performance management as ‘a process which contributes to the effective management of individuals and teams in order to achieve high levels of organisational performance. As such, it establishes shared understanding about what is to be achieved and an approach to leading and developing people which will ensure that it is achieved.’ They stress that performance management is ‘a strategy which relates to every activity of the organisation set in the context of its human resource policies, culture, style and communications systems. The nature of the strategy depends on the organisational context and can vary from organisation to organisation.'
In other words, performance management should be:
- Strategic – it's about broad issues and long-term goals.
- Integrated – it should link various aspects of the business, people management, individuals and teams.
Performance management should incorporate:
- Performance improvement - throughout the organisation, in respect of individual, team and organisational effectiveness
- Development - unless there is continuous development of individuals and teams, performance will not improve
- Managing behaviour - ensuring that individuals are encouraged to behave in a way that allows and fosters better working relationships.
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