Performance management is a management tool used to measure employee performance and extend rewards to employees who achieve company objectives. Many companies implement a performance management system to set standards and expectations for employees at all levels in the organisation. Performance management systems take the subjectivity out of individual employee reviews and performance rewards conducted by managers. Performance management systems also create a broad sense of equality since any employee can achieve the performance rewards by following the expectations and goals set forth by the company.
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Job Expectations & Goals
An important component of a performance management system involves the job expectations and goals for each position in the company. Each department in the company usually has different expectations for its employees based on the requirements for the positions in the department. Clearly defined expectations and goals give employees the greatest opportunity for advancing in the company. Managers will also discuss the review and feedback process of the performance management system.
Timely Reviews & Feedback
Performance management systems do not benefit a company unless a timely employee review and feedback system is implemented in the program. Timely employee reviews and feedback sessions are dependent on the company’s business operations and human resource guidelines. These review sessions will inform employees how well they are performing in their position and what areas need to be corrected or improved. Most companies have an annual review process, although six-month reviews are often used.
Performance awards are an important part of the performance management system. Employees are best motivated by the thought of earning rewards for their actions, whether financial rewards or another form of benefit. Companies will usually link an employee’s performance review with his financial bonus or pay raise; this ensures that the company gets the best performance out of each employee.
Other rewards may also be offered to employees for their job performance. Extra time off, special company-paid vacations, gift tokens, gifts for years of service or recognition banquets are common non-financial performance awards.
Training & Coaching
Employees that do not meet the standards for performance rewards may need additional training or coaching by their superiors to improve their job skills. Performance reviews will be used as a starting point for the additional training; subsequent performance reviews may be scheduled to see how well the employee improved from the initial review. Performance management systems are ineffective if they only reward employees for good work performance. The system also needs to include training or coaching processes to ensure all company employees are able to improve their performance.
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