What is Performance Management in Human Resources

The performance of the organization is always a difficult topic. Each top manager likes the comparison of the organization with the main competitors on the market. Each top manager likes the comparison with the market benchmark. The organization always finds measures, which are better than the competitors’ ones.

However, it says nothing about the performance of the company. It says nothing about the performance of employees. The organization has to set the performance standards; the system measures employees against defined standards.

The performance management (in Human Resources) is a complex HR tool to set goals, follow-up of goals, identifying the development needs and the potential. Additionally, it includes the performance appraisal, which closes the whole cycle and sets the new one.

The performance management is not about measuring doing things. It is about setting clear, and challenging goals (SMART) and it is about the regular evaluation of the progress. The system pushes managers and employees to cooperate on achievements.

The HR has to design the performance management system, which is clearly and visibly connected with the strategic agenda of the organization. The employees will not follow the unrealistic and useless goals. They will not do their best to achieve targets. They will try to avoid goals. Managers do not follow the unrealistic targets; they prepare excuses. The system looks impressive, but it misses its main goal – to support the growth of the business and building the talent and performance pipeline in the organization. Also, it can limit Employee Turnover.

The performance standards are the essential part of the whole system. HR has to cooperate with managers on the definition of the performance standards for each job position in the company. The performance standards are a must for the fair measurement of employees. They have to know and understand the basic requirements.

The performance standards should be reviewed on a yearly basis. HR and managers should evaluate the performance appraisal results against the performance standards. They should be raised, if it is needed. Meeting the performance standards is not a basis for the excellent result. The excellent results in the performance management are based on bringing something extra, which enriches the organization.

The standards define the way for measuring the performance. The standards make the performance management fair to employees. They support the fair calibration of performance appraisals. Managers have to provide the evidence about the real performance of their teams.

The performance management has to improve the organization. Meeting the standards is not about the improvement; it is about the status quo. The organization without the development slowly dies. HR has to bring the tool, which pushes managers and employees in their creativity. The strategic agenda has to be challenging and realistic. The goals have to follow the strategic agenda. The excellent employees make the strategic agenda the reality.