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Performance management is a forward looking process for setting goals and regularly checking progress toward achieving those goals. It is a cyclic feedback loop whereby the observed outputs of a system are continually measured and compared with the desired goals or outputs. Any discrepancy or gap is then fed back into changing the inputs of the process, so as to achieve the desired goals. Any such management control system involves communicating the required change and promptly taking action to effect the desired change. This helps the system or organization being managed to achieve the required goal or the strategic plan. Performance management has a wide variety of applications such as employee performance, software performance, business or corporate performance and so on.[1]
A key aspect of performance management is Performance measurement. Whatever the process being driven with performance management, clear and concise measures are required in order to properly define the desired goals. Most performance management systems fail to achieve the desired goals of the process owner or project sponsor because goal measurement is ambiguous, not specific enough, poorly communicated or because results cannot be measured effectively.
Performance management is often confused with Performance appraisal, the latter only forming the final part of the performance management cycle. Performance appraisal is a backwards looking process and a Lagging indicator of financial performance, only measuring what happened in the past. Performance management is a forward looking process and a Leading indicator of financial performance because it drives a system or organisation towards a desired future goal.
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History
Russell Currie claimed that elements of performance management can be traced back to the 13th century.[2] Certainly, instruments of performance measurement have contributed to the development of commercial companies over the centuries and large information systems were deployed in the public sector in the 19th century. The behavioral aspects of performance management are now receiving attention from leading organisations, software vendors and consulting firms around the world......
Types
- In network performance management, (a) a set of functions that evaluate and report the behavior of telecommunications equipment and the effectiveness of the network or network element and (b) a set of various subfunctions, such as gathering statistical information, maintaining and examining historical logs, determining system performance under natural and artificial conditions, and altering system modes of operation.[3]
- In organizational development (OD), performance can be thought of as Actual Results vs Desired Results. Any discrepancy, where Actual is less than Desired, could constitute the performance improvement zone. Performance management and improvement can be thought of as a cycle:
- Performance planning where goals and objectives are established
- Performance coaching where a manager intervenes to give feedback and adjust performance
- Performance appraisal where individual performance is formally documented and feedback delivered
- A performance problem is any gap between Desired Results and Actual Results. Performance improvement is any effort targeted at closing the gap between Actual Results and Desired Results.
Other organizational development definitions are slightly different. The US Government's Office of Personnel Management indicates that Performance Management consists of a system or process whereby:
- Work is planned and expectations are set
- Performance of work is monitored
- Staff ability to perform is developed and enhanced
- Performance is rated or measured and the ratings summarized
- Top performance is rewarded[4]
- Employee Performance Management (EPM) refers to a forward looking system of strategic alignment and employee objective setting with regular reviews and reporting and is distinguished from employee appraisal insofar as the latter does not include a goal setting process and is an open-ended management process with no feedback against clearly defined strategic goals
- Application Performance Management (APM) refers to the discipline within systems management that focuses on monitoring and managing the performance and availability of software applications. APM can be defined as workflow and related IT tools deployed to detect, diagnose, remedy and report on application performance issues to ensure that application performance meets or exceeds end-users’ and businesses’ expectations.
- Business performance management (BPM) is a set of processes that help businesses discover efficient use of their business units, financial, human and material resources.
- Operational performance management (OPM) focus is on creating methodical and predictable ways to improve business results, or performance, across organizations.
- Integrated business planning (IBP) refers to the technologies, applications and processes of connecting the planning function across the enterprise to improve organizational alignment and financial performance.
- Project Performance Management is a sub-discipline of Project Management that seeks to establish measurements of project performance, such as performance of project scope, performance according to a time schedule and/or performance according to a project budget. It seeks to use such measurements to inform project stakeholders, lead the project team and improve project performance. Earned Value Management is notable method of Project Performance Management.
- Business Transaction Management (BTM) refers to the discipline within systems management that monitors business transactions across the datacenter in order to manage IT performance
- Customer Performance Management (CPM) refers to the practice of managing the effectiveness of all the business activities and processes related to handling customer relationships, to a common set of financial and customer focused goals and objectives. This includes all aspects of creating and maintaining a master source of customer related data.
Benefits
Managing employee or system performance facilitates the effective delivery of strategic and operational goals. There is a clear and immediate correlation between using performance management programs or software and improved business and organizational results.
For employee performance management, using integrated software, rather than a spreadsheet based recording system, may deliver a significant return on investment through a range of direct and indirect sales benefits, operational efficiency benefits and by unlocking the latent potential in every employees work day i.e. the time they spend not actually doing their job. Benefits may include :
- Direct financial gains
- Grow sales
- Reduce costs
- Stop project overruns
- Aligns the organisation directly behind the CEO's goals
- Decreases the time it takes to create strategic or operational changes by communicating the changes through a new set of goals
- Motivated workforce
- Optimises incentive plans to specific goals for overachievement, not just business as usual
- Improves employee engagement because everyone understands how they are directly contributing to the organisations high level goals
- Create transparency in achievement of goals
- High confidence in bonus payment process
- Professional development programs are better aligned directly to achieving business leval goals
- Improved management control
- Flexible, responsive to management needs
- Displays data relationships
- Helps audit / comply with legislative requirements
- Simplifies communication of strategic goals scenario planning
- Provides well documented and communicated process documentation
References
- ^ Bourne, M.,Franco, M. and Wilkes, J. (2003). Corporate performance management. Measuring Business Excellence 2003; 7, 3; p. 15.
- ^ Currie, Russell Mackenzie (1959). Work Study. London: Pitman International.
- ^
This article incorporates public domain material from the General Services Administration document "Federal Standard 1037C" (in support of MIL-STD-188). - ^ A Handbook for Measuring Employee Performance, by the US Office of Personnel Management
External links
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