Every business organization has a founding vision and sets its goals, objectives, roadmaps, and milestones in line with what the business hopes to achieve.
Among the key contributors that help meet these objectives is the company’s actual human cap: the employees or the workforce. Despite several structures being put in place, there remains a growing need to smooth performance, harmonize every member of the organization, and to bridge the wide gap between expectations and results.
If the essence of management is to grasp the vital connection between drivers and performance, if strategy is goals and objectives plus the means to achieve them, we can truly say that we are at least half-way along this intricate journey.
Performance measurement is a fundamental part of business management: it allows you to learn from the past, to check where you are today, to plan where we want to go and manage this pathway.
Then if we consider the fact that human resources are becoming an increasingly important factor, bearing in mind that people also behave according to how they are valued, we can fully understand the importance of the issue of performance measurement in the evaluation of human resources, their involvement and motivation.
This is because it takes a well-defined performance management system to ensure that every arm of the business works together to achieve the overall aim of yielding maximum results.
Encourages and motivates employees via recognition and rewards
A key benefit of performance management is that it arouses the employees’ desire to do more. From C-level executives, through middle management, individual contributors, and support staff, everybody has a need to be recognized for their value. When this is done, employees are spurred on to do more.
Drives financial gain
Without pretense, the primary aim of any organization providing goods and services is to make a profit. At the end of the day, employees must be paid, shareholders rewarded for their investment, and opportunities for expansion realized. If the company’s human capital is at maximal functional capacity (not overworked or underutilized), it will have a direct implication on raising levels of profit.
For example, when a salesperson hits their target, or the advertising team comes up with a campaign with good conversion rates, there is no doubt that this will increase income flow and improve the bottom line.
Prevents overlapping roles
Most people function best in a defined and safe environment. A company’s human resource performance management must enable this. It should be clear to every worker what his or her objectives are, how they fit into the big picture, and why things must be done in a particular way.
When more than one employee is assigned to a task, they must be equally informed so that they are equipped to work together, achieving the set target while avoiding interpersonal conflicts. On the other hand, smaller goals and objectives should be assigned to individual members of the team. This provides a deep sense of purpose and responsibility, allowing him or her to work comfortably in their niche.
Increases employee engagement and productivity
The importance of a performance management system lies in that it enhances engagement and productivity in employees. What does this mean? Engagement in this context refers to how much the employee interacts with the company and its structures. Productivity defines itself in terms of increased outcomes and Return on Investment (ROI).
Consider a scenario where the HR manager shows interest in what the social media manager does only at the end of the year. Compare it with how much more of a concerted effort the social media manager would put in when promoting the company under a modern performance management system. The company’s vision, aims, and goals will be evident in each piece of content posted online in the second scenario.
Employee engagement should cut across every aspect of work, even down to whether people contribute to team meetings or not. In fact, employees whose managers are actively involved in performance management are three times more engaged than others.
Makes room for idea generation
In a fast-tracked world, we can’t underestimate the importance of generating new ideas. A company’s sole aim might be to provide affordable housing. However, if there is no steady and inspiring stream of ideas to sell to the public, there will be a plateau and eventual decline in sales.
Now, with a functional performance management system, the burden of idea generation no longer rests solely on the owner or product management team. Ideas can flow more easily, and in the right direction, because every worker knows that their inputs are welcome. Amazingly, this is not just limited to consumer products. Idea generation could also benefit the company, such as suggestions for a better working system, etc.
Creates a platform for employee development
A consistent performance management system invariably results in an active form of employee development. Discussing each employee’s role, past performance, current efforts, strengths, and weaknesses gives you an accurate understanding of what each employee can do. When combined with a agile HR technology, it creates opportunities to steer employees in a direction best suited to their abilities and the company’s goals.
Performance management makes training targeted rather than generalized, and most importantly, employee potential is optimally utilized to the advantage of everyone involved.
Enables proper documentation and record-keeping
We are witnessing a rapid shift from paper and filing cabinets documentation systems to faster, easier, and less burdensome digital ones. There are several digital performance management solutions that help track every aspect of HR.
These HR management tools provide a clear documentation process that can be stored and revisited when needed. It means you have a record of each employee’s past performance at your fingertips. Promotions are scheduled and timely rewards given, and even a history of errors with administrative action is documented.
Proportionate, Transparent and Fair
His views on performance management systems were informed by his values. He stressed the need for systems to be proportionate, transparent and fair.
He did not argue that you can do away with performance management, but that there are strong signs that many organisations need to change the way they manage their processes, and outcomes.
Role of the Bell Curve
He was particularly critical of the use of the Bell Curve to force a normal distribution. There’s a massive discrepancy at the heart of many performance management systems which are reduced to statistical exercises.
Stretch Targets Foster Cynicism
One of his least favourite terms is a ‘stretch target’. People are simply doing more with less. We have to collude in this ridiculous assumption that people are endlessly stretchable.
Obviously we have to have KPIs but worry about the expansion to every human activity from the moment you walk through the door of the organisation. Everything starts to become subject to a performance target.
Another challenge with performance management systems is that employees avoid all tasks which undermine their ability to meet their targets. In effect, it invokes selfish behaviours which do not promote organisational citizenship.
When looking at the HR narratives about performance management, An increasing problem: Narratives are out of sync with the increased hardship reality.