The Benefits of an Effective Performance Management Framework

Performance management is an essential part of any successful business. Through formal and informal processes, it helps organizations align their employees, resources, and systems to meet their strategic objectives. It also works as a control panel, providing an early warning of potential problems and allowing managers to make adjustments to keep the company on track.

Effective performance management

is critical for businesses, as it creates a foundation that unites company objectives, identifies areas of employee development, and drives sales. Too often, companies measure and manage performance through lagging indicators such as meeting monthly production or quality objectives.

To combat this, many organizations are now encouraging employees to provide feedback on their objectives and how they think the process works. For example, an industrial commodity company has implemented a lean manufacturing excellence program that allows employees to indicate “what went well today, what didn't go well today, and what management can do to help managers in their production areas every day.” This provides an opportunity for managers to give feedback on the objectives and for employees to have their say on how they think the process works. The performance management framework establishes important performance strategies and financial requirements for business operations, aligns individual objectives and functions, and collects performance data from various business units. Feedback tools allow managers to set objectives for employees in line with the performance management framework, carry out evaluations to verify that these objectives are being met and, if necessary, hold meetings with these employees to find out why. At the end of each shift in an automotive company, all employees pass the daily production meeting, where they can see the results of their department and the impact on plant performance. Front-line employees can see the “common thread” that connects their daily performance to the performance of their plant or business unit.

This helps them understand how their individual efforts contribute to the success of the organization. Metrics are not a passive measure of progress but rather an active part of the daily management of an organization. In the best performance management systems, the entire organization operates from a single verified version of the truth, and all employees understand both the organization's overall performance and how they have contributed to it. Performance management has moved from a more pyramidal approach to a flatter collaborative environment.