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|Performance Management |
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|Linking Rewards to Performance |
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|Dion Senn |
|3/2/2010 |

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Performance management is a process of defining, measuring, appraising, providing feedback on, and improving performance. This serves as the means to indicate what is expected of employees and to appraise performance of the employee and the organization as a whole. Defining performance in behavioral terms is an essential first step in the process. Once defined, performance can be measured and assessed so that workers can receive feed-back and managers can set goals to improve performance (Cardy). The manager’s work with the employees to develop the performance plan, to implement that plan, and to make changes as needed. The manager also monitors the performance of employees, provides performance appraisals, and rewards those employees who meet their goals or otherwise show superior performance. Lawler (2005) notes that performance management is becoming more important for today’s high performance organizations as the relationship between employees and the organizations they work for has changed, and developing a mutually beneficial relationship is important to achieving more in terms of performance. Strivers (2000) points out the need for rules and guides to govern performance management because of changes that have taken place in the business environment in recent years. In the process of designing and implementing a new performance management system, the manager must play a role in the design process, in educating employees about the importance of the system, in deciding on financial and nonfinancial performance measures, and in reviewing and updating what is set in place. This indicates that the system should reflect the aims, goals, and mission of the employer. Strivers further notes the elements making up the performance management system and how they serve as part of a powerful behavioral tool. Management must measure what it wants to achieve in order to see if it is or is not achieving its goals. The system addresses what are called intangible assets, including such vital elements as the knowledge of the workers and efforts to customize products and services. The creation of a good performance management system means careful design and implementation, with planning as to how the program will work before managers begin using it to evaluate employees. Such a system should provide four basic benefits: to employees: 1. A clear understanding of job expectations 2. Regular feedback about performance 3. Advice and steps for improving performance 4. Rewards for good performance
As one site notes, “The goal of a performance management system is to help boost employee performance and, ultimately, the productivity of the business” (Setting Up a Performance Management System 2007, p. 1).
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