How can efficiency losses be minimized and resources used optimally in a corporate context? This article explains what performance management is, what its goals are, and what methods, tools, and systems can be used to achieve those goals.
Definition and Meaning
Performance management encompasses all processes that deal with managing, measuring, and controlling the performance of employees in an organization. It's about exploiting the potential of employees, continuously improving performance, and achieving the company's goals.
Goals of Performance Management
- Increasing employee performance:
- Clear target agreements and feedback meetings
- Performance-based incentive systems
- Promoting employee development:
- Identification of strengths and weaknesses
- Individual training and development plans
- Improving corporate culture:
- Transparent communication and appreciation
- Building trust and motivation
Process, Tools and Systems
A modern performance management process consists of the following steps:
- Planning:
- Defining the company's goals and strategies
- Derivation of individual target agreements for employees
- Performance:
- Use of objective and transparent key figures
- Regular feedback and coaching from the manager
- Assessment:
- Comparison of actual performance with targets
- Constructive and appreciative assessment of employee performance
- Incentive design:
- Performance-based compensation systems
- Intangible incentives such as training opportunities and flexible working hours
Success Factors and Challenges
Success
- Strategic Direction:
- The performance management system must be aligned with the company's goals.
- Clear communication:
- The goals and expectations must be communicated transparently and comprehensibly.
- Employee involvement:
- Employees should be actively involved in the process.
- Continuous development:
- The system must be regularly adapted to the current needs of the company.
Challenges
- Complexity:
- Implementing and implementing a performance management system can be complex.
- Subjectivity:
- Performance reviews can be subjective and lead to dissatisfaction.
- Time exposure:
- The process can be time-consuming, especially for executives.
Practical examples and best practices
A practical example of performance management in a company could be that the introduction of a new corporate value such as "employee orientation" is decided together in a workshop. This new value is now set as a target for all performance levels and concretized by specific behavioral and action instructions in order to be measurable. For example, an instruction could be: "Employees should have more feedback meetings" and these conversations should take place at set times, such as before, during, and/or after projects. In addition, these conversations should focus on the following three questions: "What went well?", "What went less well?" and "What could still be improved?"
In this way, the aligned objective is transparently supported and supports a partnership-based change accompaniment. Instead of experiencing uncertainty and pressure to perform, employees experience appreciation and solidarity through feedback meetings. The time spent together for reflection and exchange enables the recognition of achievements and commitments, the response to development opportunities (an active and open error culture) and the common alignment of focus. In this example, metrics such as the number of feedback sessions, timing, consideration of the three questions, project outcomes, and other factors could be measured and monitored.
Conclusion and outlook
Performance management is an indispensable tool for business success. A modern system can increase employee performance, promote development, and improve company culture.
To develop a future-oriented approach, companies should:
- Consider the needs of the employees and the company.
- Rely on modern technologies and tools.
- Continuously evaluate and improve the process.
With a well-thought-out performance management system, companies can attract and retain the best talent and ensure their competitiveness in the market.
