Advantages and disadvantage of performance management

Performance management

Definition: “A strategic and integrated approach to increasing the effectiveness of organizations by improving the performance of the people who work in them and by developing the capabilities of teams and individual contributors”.

Reason why 1. Administrative reasons which are related to compensation

2. Developmental reasons which are related with performance appraisal


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 :

1. Direct financial gains

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

2.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

3.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

The PM offers several advantages to organizations.

At first, it would help the organization have more effective employees, able to meet increased product market competition; secondly, it offers greater opportunity for employees to share in the organization’s vision and the way to realize that vision; the third one is the pushing of key decisions down the organizational structure to line managers and supervisors. The fourth one is that there is a greater acceptance of accountability by line managers of the necessity to make such decisions. The last one is there is a reward structures that forge a clear link between individual and or group performance.

The PM also has advantages in public sector.

Firstly, there is a balancing quality service provision against costs; secondly, it can help the public sector to achieve sustainable development. Thirdly, it is accountable and transparent, by engaging with the local community. Fourthly, it can ensure equal opportunities. at last, it can continuously improve the outcomes of the services they provide.

Disadvantage if the PM is handled solely by the HR department

There are NO advantages to performance management being handled solely by the HR department.
It has to be about a partnership integrating Senior Management, HR, Line Managers and the employees – organizations benefit from the “grandfather” approach (line manager’s manager) and it has to be a continuous process.
HR have several contributions to make – ensuring fairness and equality, coaching for best practice, designing and evolving appropriate systems, etc. but NEVER should it be solely managed by HR even when it is a HR manager appraising an HR manager, there should be the connectivity to the rest of the business too.

Input needs to come from all levels of supervision down to team leads.

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