Business 101 – What Is Performance Management?
The goal of nearly every business is to make money. In order to make money, it is necessary to meet all of the goals that are specified by the company’s business plan. Each year, the company should re-evaluate the plan and see if the company is headed in the right direction. This is where performance management comes into play. Performance management is defined as the monitoring of the performance of a company in meeting or exceeding its goals. There are a few different ways that performance is monitored and they are examined in further detail below
How Performance is Monitored
Monitoring performance can be done in several different ways. The most common way that managers monitor performance is by using specialized software that is designed to consider all of the factors involved. Sales based companies will use sales performance factors to determine if their goals are being met. Sales is not the only type of business that monitors performance, however, all businesses do in one way or another. Knowing what defines success is crucial in order to develop performance management software. The software must be able to align all of the factors that go into achieving the business’ goals and objectives.
Management’s Role in Performance
Managing the performance of a company begins with the managers themselves. It is important that the managers of a company are adequately trained and know how to both motivate employees as well as carry out the goals established by the company’s owners. In some cases the owners are the managers, but it may often take an analyst to come in and evaluate the business as a whole and offer an objective opinion.
Monitoring Employee Performance
Another type of performance management is monitoring an employee’s performance. For example, new employees who are hired have to go through a probationary period to see if they are an appropriate fit for the company. All employees, regardless of the type of company they work for, are expected to meet certain goals. Telemarketers are expected to sell while accountants are expected to be able to reconcile accounts appropriately. It is up to management to ensure that their employees are striving toward their goals. It is also crucial that employees are given the proper tools to succeed; otherwise performance management methods will be irrelevant.
It is a collaborative effort between the company owners, management and the employees themselves. All of these are critical components to performance management and overall, the business’ success.
Daniel Ruyter is a project manager and agile ScrumMaster and writes on behalf of dinaliC.com – a Philadelphia business consulting and staffing firm.