Performance management (PM) includes activities to ensure that goals are consistently being

met in an effective and efficient manner. Performance management can focus on the
performance of an organization, a department, employee, or even the processes to build a
product or service, as well as many other areas.

Performance management as referenced on this page is a broad term coined by Dr. Aubrey
Daniels in the late 1970s to describe a technology (i.e. science imbedded in applications
methods) for managing both behavior and results, two critical elements of what is known as
performance.

Performance management is a strategic tool used to promote an effective organization. It ensures

that individual employees’ efforts are focused on the priorities and strategies set out in the
corporate and departmental business plans. It directs efforts towards effectiveness and away from
merely being busy.

The Performance Management Cycle

BENEFITS OF PERFORMANCE MANAGEMENT

Managing employee or system performance facilitates the effective delivery of strategic and
operational goals. There is a clear and immediate correlation between using performance
management programs or software and improved business and organizational results.

For employee performance management, using integrated software, rather than a spreadsheet
based recording system, may deliver a significant return on investment through a range of direct
and indirect sales benefits, operational efficiency benefits and by unlocking the latent potential in
every employees work day (i.e. the time they spend not actually doing their job). Benefits may
include:

Direct financial gain

 Grow sales
 Reduce costs
 Stop project overruns
 Aligns the organization directly behind the CEO's goals
 Decreases the time it takes to create strategic or operational changes by communicating
the changes through a new set of goals

Motivated workforce

 Optimizes incentive plans to specific goals for over achievement, not just business as
usual
 Improves employee engagement because everyone understands how they are directly
contributing to the organisations high level goals
 Create transparency in achievement of goals
 High confidence in bonus payment process
 Professional development programs are better aligned directly to achieving business level
goals

Improved management control

 Flexible, responsive to management needs

 Displays data relationships
 Helps audit / comply with legislative requirements
 Simplifies communication of strategic goals scenario planning
 Provides well documented and communicated process documentation
 MOTIVATION

Motivation is the driving force which causes us to achieve goals. Motivation is said to be
intrinsic or extrinsic. The term is generally used for humans but, theoretically, it can also be used
to describe the causes for animal behavior as well. This article refers to human motivation.
According to various theories, motivation may be rooted in a basic need to minimize physical
pain and maximize pleasure, or it may include specific needs such as eating and resting, or a
desired object, goal , state of being, ideal, or it may be attributed to less-apparent reasons such as
altruism, selfishness, or avoiding mortality. Conceptually, motivation should not be confused
with either volition or optimism. Motivation is related to, but distinct from, emotion.

Intrinsic and extrinsic motivation

Intrinsic motivation refers to motivation that is driven by an interest or enjoyment in the task
itself, and exists within the individual rather than relying on any external pressure. Intrinsic
motivation has been studied by social and educational psychologists since the early 1970s.
Research has found that it is usually associated with high educational achievement and
enjoyment by students

Students are likely to be intrinsically motivated if they:

 attribute their educational results to internal factors that they can control (e.g. the amount
of effort they put in),
 believe they can be effective agents in reaching desired goals (i.e. the results are not
determined by luck),
 are interested in mastering a topic, rather than just rote-learning to achieve good grades.

Extrinsic motivation comes from outside of the individual. Common extrinsic motivations are
rewards like money and grades,coercion and threat of punishment. Competition is in general
extrinsic because it encourages the performer to win and beat others, not to enjoy the intrinsic
rewards of the activity. A crowd cheering on the individual and trophies are also extrinsic
incentives.
Social psychological research has indicated that extrinsic rewards can lead to overjustification
and a subsequent reduction in intrinsic motivation. In one study demonstrating this effect,
children who expected to be (and were) rewarded with a ribbon and a gold star for drawing
pictures spent less time playing with the drawing materials in subsequent observations than
children who were assigned to an unexpected reward condition and to children who received no
extrinsic reward.

Self determination theory proposes that extrinsic motivation can be internalised by the
individual if the task fits with their values and beliefs and therefore helps to fulfill their basic
psychological needs.

PERFORMANCE MANAGEMENT INCREASES PRODUCTIVITY

An often overlooked method for achieving organizational success is an effective performance

management system. When used effectively, performance management is one of management's
most powerful mechanisms for increasing productivity and ensuring that employee activity is
directed toward achieving organizational goals.

One of the common misconceptions about performance management is that it is just another term
for performance appraisal. Performance appraisal is merely a method for evaluating an
employee's performance. Performance management, by contrast, is an entire cycle that includes
five phases.

Planning employee performance standards. As a first step in the performance management cycle,
the supervisor and employee review the employee's job duties and responsibilities and the
criteria that will be used for performance evaluation. Together, they decide on acceptable
standards that will measure the employee's performance at the end of the performance
management cycle. To minimize any misunderstandings during the performance review, these
performance standards should be observable and measurable.

Employee involvement in this phase is essential because:

It enhances supervisor-employee communication and minimizes the chances of

misunderstandings;

It gives the employee an opportunity to express and incorporate his or her career or development
goals, thereby enhancing job satisfaction and motivation;

It facilitates employee "buy-in," giving the employee a chance to decide whether the
performance goals are fair and achievable.