According to the James W. Smither and Manual London, authors of the book Performance Management, Putting Research into Action, Performance Management serves 6 key purposes in an organization.
Performance Management links the organizational goals with individual goals, therefore reinforcing behaviours consistent with the attainment of the organizational goals.
It is a valid and useful source of information about employees including salary adjustments, promotions, employee retention or termination, recognition of superior performance, identification of poor performers, layoffs and merit increases.
It allows employees to be informed about how well they are doing, to receive information on specific areas that may need improvement, and to learn about the organizations and supervisor’s expectations and what aspects of work the Supervisor deems most important.
It includes feedback which allows managers to coach employees and help them improve performance on an ongoing basis.
It yields information about skills, abilities and promotional potential, historical assignment history of current employees to assist in workforce planning and assessing future training needs, evaluating achievements at the organizational level, evaluating the effectiveness of human resource interventions (such as whether employees perform at higher levels following training programs).
It yields data that can be used to assess the accuracy and merit of administrative decisions and can be particularly useful in the case of litigation.
Putting a Performance Management System into place requires resources with focus on the organizational business goals and a hands on approach to implementation. Knowing where to start is always one of the biggest challenges. But starting is the first step to solid business results, engaged and motivated workforce and accountability overall.