Does performance management matter?

Lots of organisations are measuring performance, but few succeed in effectively managing performance…” – Carl DeMaio (president and founder, The Performance Institute and American Strategic Management Institute).

When performance management is mentioned, some people tend to think of only employee performance appraisals and reviews. However, performance management involves so much more than this and embraces many of the methods and techniques that are so fundamental to a business: strategy, value creation, decision making, and performance monitoring; the impact of a bad performance management system or a poorly structured process will cost an organisation a lot and will deliver very little.

The objective of performance management is to ensure that the organisation’s goals are aligned with employee performance and delivery of results. It is a process that helps ensure that the company achieves its overall business strategy whilst building a high performance culture and workforce. In a nutshell, it is how plans are translated into results.

Many top performing firms manage performance to ensure that employees will follow through on clear performance commitments. The final outcome is expected to be improved operational results. It has been established that performance management is one of the key areas that distinguishes the “best” companies from the rest:

•  Encouraging all employees to focus on key business results and improving the clarity of roles and responsibilities. Employees are clear about the results they need for success;

•  Assisting with measurement of performance against key outcomes, improving productivity;

• Helping the organisation to identify top performers and develop a succession plan;

•  Helping to highlight competency shortages and developing a robust learning and development programme;

There are 4 key steps involved in setting up the Performance Management Process for employees:

1.     Planning: Set clear objectives (using the SMART principles) for all employees, which should be linked to operational goals and business objectives. This has the added benefit of improving motivation;

2.     Monitoring and Coaching: Ongoing assessment and progress on goals, as well as discussion with the required support, and employee development – thus increasing capabilities;

3.     Review: Formal review of performance against set goals and objectives with documentation.

4.     Managing Outcomes: Compensation – (a) Rewarding and recognising good performance and (b) managing poor performance;

It was Preston Atkinson, the COO of Whataburger Incorporated, who said: “Optimum performance will be the only option for the business managers of tomorrow.” The destiny of an organisation is shaped by the skills growth and performance of its workforce.

Statistics show that only 5 percent of company employees fully understand their company strategy. At the same time, 85 percent of executive teams spend more time on operational issues than on strategy. When properly executed, performance management is a most powerful tool that drives the success of both employees and the business.

Ibiai Ani is a human resources management & training consultant with over 25 years of core HR experience (most of these at senior management level in the large corporate private sector – [Shell & Citibank]). As a non-executive director on the board of FirstBank of Nigeria Limited she provided support and guidance on HR matters. She has a background in Law and Interior Design and currently manages and oversees the activities of The Daisy Management Centre, an HR Consulting and Training Firm based in Lagos.