The overall business result of the company depends of aggregated performance of all employees. Performance management, as a management tool, is the ongoing, collaborative relationship between employees and their supervisors. This relationship is focused on continuous and systematic planning of activities, setting of expected results, providing the right feedback and establishment of mutual understanding. All this is with purpose of developing employee’s capacity to perform tasks and to develop within the position and organization.

The performance management is the process where the employee is creating value for the company and opportunity for professional development. The delivered value is reviewed by tracking the key performance indicators ( KPIs ). From the perspective of the company, performance management is the opportunity to recognize contributions and achievements of employees. The company is rewarding the employee for the achievements, through the compensation & benefits package.

The performance management has two main elements: Objective Setting and Performance Review.

Objective setting have the aim to create objective, align targets and to complete tracking and measurement details. Objective setting is done according the business objectives of the organization. The objectives are cascaded down to the level of particular employee. Objective setting is the process where the immediate supervisor manager and employee are aligning about goals and expectations that should be delivered during the period defined by objective setting process.

Objective setting is addressing the important business objectives from the areas of management, financials, people development, leadership, relationships, innovation and corporate social responsibilities. The areas of objectives are prioritized depending of the function. Objectives should target achievable targets, but challenging as well. Stretching of targets is leading to company growth. Without challenging targets the company can not grow and can not protect the market position on the long run. Objective setting should be conducted at the beginning of the period, usually one business year.

Performance review has the aim of periodic reviews, self-review, manager\’s review and annual performance review. Performance review has a goal of measuring how individual employee is performing versus previously defined objectives. The Fishbone Diagram is one of the tools for root cause analysis. The output of performance review is the input for compensation & benefits.

Why is performance review important? It is a formal opportunity of employee and manager to review performance in a structured way, with setting, tracking and review. They can review what the output versus target is. During the performance review both manager and employee agree about rate of implementation of objective. The overall score of implementation is the basis for calculation of compensation. Additionally, the half-year review and adjustment can be organized. It is not recommended to set the objectives for employees who just come to position, until the new cycle starts.

The performance management has multifunctional importance. It recognizes individual performance and gives opportunity for individual development of every employee. It supports the organization toward achievement of targets and continuous growth. The performance management is opportunity for organization to recognize the contribution of employee and to respond through compensation & benefits programs.

Key Performance Indicators and Fishbone Diagram are important tools for Performance Management of employees. More on biz-development.com

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Author Bio: Key Performance Indicators and Fishbone Diagram are important tools for Performance Management of employees. More on biz-development.com

Category: Business Management
Keywords: performance management, fishbone diagram, key performance indicators