Performance Management Model:- The performance of a company is measured against the objectives set. The performance is positive if it meets or exceeds the objectives. It is negative if it is lower than the objectives. The gap between objectives and performance comes from a voluntary (decision-making) or non-voluntary change (external event). To evaluate changes and performance of the company, performance indicators are used. Good performance management ensures optimal, balanced and sustainable performance of the company. Below are the objectives of performance management model.
Objectives of Performance Management
- Ensure optimal, balanced and sustainable performance of the company
- Develop a comprehensive, systematic, integrated and flexible method of identifying, evaluating, analyzing and managing performance
- Develop best practices for performance management
- Make informed decisions
- Better manage change
Conditions for Good Performance Management
- Performance indicators must be aligned with the company’s strategy
- Performance indicators must support performance management
- Performance indicators should focus on management activities, performance tools, performance conditions, management skills, stakeholder satisfaction
- The performance management system should focus on the most important indicators
- The performance management process must be simple and remain simple and flexible
Groups of Performance Indicators
Performance indicators are grouped into two groups: external indicators (from outside the company) and internal indicators (from within the company).
- External indicators
External indicators focus on changes in the business environment (political, economic, technological, sociological changes, changes in markets, customers, competitors, products, suppliers) that can have a positive influence (opportunities) or negative (risks) on the objectives and strategies of the company.
- Internal indicators
Internal indicators cover changes and management activities of the company’s strategy, processes, resources, performance factors.
Performance Management Process
- Identify the performance indicators
- What are the important changes in the external and internal environment of the company?
- What are the changes that can have a positive or negative effect on the company’s performance?
- What is the performance indicators required to manage changes in the company’s management activities?
- Identify the level of importance and probability of performance:
- Importance of performance
- Probability of a positive or negative effect
- Evaluate the Performance
- Evaluate performance according to its importance and likelihood of positive or negative effect.
- Evaluate the performance of management activities, performance tools, performance conditions, required skills, stakeholder satisfaction.
- Evaluate the performance indicators.
- Analyze the Performance
- Where does the company’s performance come from?
- What are the causes and consequences of performance?
- What is the acceptable level of performance?
- Are the performance indicators adequate?
- Can we give up tracking some performance?
- Develop action plans
- Identify the performance that the significance and likelihood of consequences are high.
- Identify management activities that require performance indicators.
- Identify management activities that require action.
- Develop action plans.
Performance Management Practices
- Enhance performance management across the enterprise.
- Develop an ongoing process of evaluating performance in the company.
- Integrate the process of performance management into processes.
- Evaluate performance against the company’s strategic objectives.
- Set performance objectives, in consultation with those involved, to continually exceed past results.
- Retighten management of performance in all aspects and at all levels of the company.
- Evaluate the performance of strategies, processes, development projects, management tools, management skills, departments.
- Evaluate the performance indicators and re-evaluate them continuously.
- Review and regularly improve methods and tools for identifying, evaluating, analyzing and improving performance.
- Review and regularly improve methods and tools for identifying, evaluating, analyzing and improving performance indicators.
- Perform extreme situation simulations to measure the effectiveness of the performance indicators.
- Involve managers in the process of identifying, evaluating, analyzing and improving performance.
- Organize training courses to master the concepts and tools of performance management.
- Form a Performance Management Committee to approve the performance management policy and tools and to regularly evaluate the changes.
- Develop information systems to provide all the information needed to manage performance.
- Regularly evaluate the performance of the performance management process.
- Communicate the results to the managers