The Benefits of Performance Management

Performance management is a managerial style where individual employee performance goals are written to align with and achieve the company's overall goal. Dr. Aubrey Daniels first used the term "performance management" in the 1970s. Daniels defined performance management as tracking employee behavior and results, which together contribute to performance. A company wishing to use the performance management model would take its mission statement and write individual goals for each employee that are designed to work collectively toward accomplishing that company's mission statement. The number of departments, managers, and employees determine the levels of performance management each company utilizes.

Direct Financial Gain

By writing individual goals out to accomplish the company's overall mission statement, a road map, essentially, with the most direct route is drafted to get everyone within the organization from Point A to Point B. When goals are outlined in this manner, it is easier to determine the workforce and related costs required to achieve the overall mission. This, in turn, saves money. Sales and cost forecasting is employed to determine the company's desired financial gain; how to achieve the financial gain is outlined for everyone involved.

Such detail allows managers to stay on track and avoid cost and time overruns. It also helps the company reassess its position internally should the current performance management plan prove to be inefficient. The overall goal of a performance management plan is to align the employees with upper management. This gives upper management the ability to weed out costly employees who aren't achieving their individual goals and get the overall plan back on track. The less time spent trying to figure out why the company isn't meeting its mission statement saves the company tremendous money in the long run.

Motivated Workforce

When employees understand without question what is expected of them, they can easily determine if that role fits within their overall career aspirations. Unhappy employees can move on and be replaced with ones who better fit within the overall performance management plan. In addition, employees willing to stay yet concerned about their ability to succeed within their individual game plan, can easily determine what assistance they need to achieve their goals and communicate those needs to their managers. This form of transparency gives both employees and managers the ability to determine who is struggling with what and what needs to be done to fix it so the overall mission is met.

Employers are also able to encourage employee performance by providing incentive bonuses to all employees who meet or exceed their detailed goals. As projects are planned out, bonuses can be set at certain levels of task fulfillment, giving employees additional motivation to exceed what is expected of them throughout the project, not just at the end. This also lets all employees know who is getting what, which creates a sense of fairness, as there is no secrecy to the bonus incentive schedule. Employees who feel they are a part of the CEO's overall picture and make a difference, and who are given specific goals and the tools to achieve them, tend to be far more motivated than employees left to their own devices. Particularly in today's internet age when temptation to do things other than assigned work runs rampant.

Improved Management Control

Much like employees who can easily understand what's expected of them, managers, too, need to have a clear picture of what, not just who, they are expected to manage. When a manager is assigned specific departmental goals, he or she is more readily capable of divvying out defined responsibilities to each of the employees within the department. The manager then goes over the overall department goals, and the employee's goals within the department, with each subordinate. At that time, the two of them can come with up with a detailed game plan of exactly how the employee will see his or her responsibilities through to aid the department in achieving its overall goals. This saves the manager a tremendous amount of time and grief when it comes to employee reviews.

The manager knows exactly what the employee was directed to do and can easily see if the tasks were accomplished according to instruction and schedule. If not, the manager is able to quickly identify where the employee diverted from the game plan and take the necessary steps to get the employee back on track. Performance management also motivates the manager to keep his or her employees on track, because the manager might also receive bonus incentives and definitely feels a sense of accomplishment when awarding his or her employees their bonuses.