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Performance management is a process where it is assessed whether the organizational goals are met or not in an efficient and effective manner. It focuses mainly on the performance of employees of an organization, department, and/or process to build a product or service, or both, etc.

Performance management is a means of getting better results from a whole organization, or teams and individuals within it, by understanding and managing performance within a framework of planned goals, standards, and competence requirements. 

According to Philpott and Sheppard: “the fundamental goal of performance management is to establish a culture in which individuals and groups take responsibility for the continuous improvement of business processes and for their own skills and contributions” 

In essence, performance management is a shared process between managers and the individuals and the teams they manage. It is based on the agreement of objectives, skills, capacity requirements, performance improvement, and personal development plans. It involves the joint and continuing review of performance against these objectives, requirements, and plans and the agreement and the implementation of improvement and further development plans. 

It concerns everyone in the organization and not just managers. It rejects the assumption that only managers are responsible for the performance of their teams. It replaces this view with the view that not only managers but also team members are responsible for the performance from their side. Managers and their teams are jointly accountable for the results and are jointly involved in agreeing on what they need to do and how they need to do it and monitoring performance and taking action. 

The combined impact of a number of related aspects of performance management may be expected to achieve more to improve organizational effectiveness than the various parts if they function separately. 

Principles of Performance Management: 

• It translates corporate goals into individual, team, department, and divisional goals.

• It helps to clarify corporate goals.

• It is a continuous and evolutionary process, in which performance improves over time.

• It relies on consensus and cooperation rather than control or coercion.

• It creates a shared understanding of what is required to improve performance and how this will be achieved.

• It encourages self-management of individual performance.

• It requires a management style that is open and honest and encourages two-way communication between superiors and subordinates.

• It requires continuous feedback.

• It measures and assesses all performance against jointly agreed on goals.

• It should apply to all staff and it’s not primarily concerned with linking performance to financial reward. 

Performance management should be integrated into the way the performance of the business is managed and it should link with key processes such as business strategy, employee development, and quality management. 

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