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Performance Management Issues: Types and Factors


To make elaborate management decisions, there is a need for organizations to analyze large volumes of information and be able to quickly assess the state of the organization in various aspects. In this connection, performance management serves as a beneficial tool to ensure an appropriate developmental direction. Performance management is a system of activities, which implies setting clear objectives of assessing the qualifications of employees and continuous review of the effectiveness of the organization in general (Martocchio, 2011).

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The paramount aim of performance management is to ensure the effectiveness and growth of the organization. The above aim is implemented through the definition of strategic objectives and management activities to achieve goals using the optimal amount of resources (Martocchio, 2011). An achievement of the goal is realized through the operational planning processes and performance analysis. There are some concepts to refer to this type of management including Corporate Performance Management (CPM), Business Performance Management (BPM), and Enterprise Performance Management (EPM).

Types of Performance Management Plans

Performance management focuses on several management plans, the most prominent of which are strategic plans and administrative plans. The first type refers to long-term strategic planning to ensure the effectiveness of the organization in the future (Axson, 2010). In other words, strategic performance management sets goals it plans to achieve in perspective. It allows considering external factors to evaluate the external environment of the organization. As a rule, competitors, current economy and politics, and culture compose the establishment of future projects. As a result, the organization can adjust its performance to forming requirements.

Another type of administrative performance management plan aims at ensuring effectiveness at present. It focuses on the internal factors of the organization (Axson, 2010). At that, employees and resources are the two focal issues that guarantee the organization’s successful operation. Hence, administrative plans promote employees’ engagement and appropriate use of resources. Also, this type of plan focuses on employee’s performance improvement that contributes to the increase of productivity. The impact of strategic plans is primarily devoted to the organization while administrative plans focus on employees.

Performance Management and Compensation

Compensation is a reward received by employees in return to their work. It is the key motivator allowing performance management to encourage competition and effectiveness within the organization. Having a competitive compensation, employees strive to become the best performers (Martocchio, 2011). As a result, one might note benefits both for the organization and staff. The employees possess job satisfaction, and the organization receives increased performance and sales.

It should be taken into account that employees’ motivation is associated with the overall compensation system accepted in the organization that can provide a huge stimulation of labor intensification. In the organization and outside it, a set of events that will block the connection between the results of the work and the reward can occur.

In this regard, one of the most powerful tools for the formation of the link between job performance and a reward is a comprehensive program of compensation and stimulation of work. The comprehensive program should include additional rewards and other measures that can sometimes significantly strengthen and complement the current compensation program meeting the needs of employees.

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The inefficient reward system may cause dissatisfaction of employees as far as the size and method of remuneration are concerned. This, in turn, always entails a reduction in productivity and quality decrease. Dissatisfied with the compensation, employees may enter into conflict with the leaders of the organization or even stop working. Thus, the effectiveness of compensation determines the performance, economic efficiency, and profitability of the organization.

Factors to Implement Performance Management

A successful implementation of performance management requires several factors, each of which should be performed promptly. First, managers should realize that performance management is a continuous process involving a range of significant decisions (Martocchio, 2011). Consequently, communication within the organization plays an integral part of this type of management. Performance managers should ensure the engagement of all the members of a team (Axson, 2010).

Also, there is a need for both employer-employee and employer-employee communication to achieve collaboration and create an appropriate working environment. The evaluation of options, the definition of the problems, and assistance to team members to give feedback to each other matter as well. In general, communication in a long-term perspective helps employees to understand their responsibilities and expected performance.

Second, it is essential to determine the performance standard so that the desired goals would be clearly stated. In particular, the measurement system and other requirements should be identified in advance (Axson, 2010). For instance, an appraisal system of self- and team-assistance might be utilized. In any case, the measurement system should be specific, feasible, and reliable.

Third, the next factor to be considered in performance management implementation is the informal performance appraisal. This factor involves training and coaching, the aim of which is to prepare employees for the formal appraisal. It should also be mentioned that feedback related to employees’ current performance should be provided. It would help them to enhance and adjust to requirements accepted in the organization. Finally, discussing employees’ progress and defects, the employer might significantly improve the implementation of performance management.


Axson, D. (2010). Best practice in planning and performance management. New York, NY: Wiley.

Martocchio, J.J. (2011). Strategic compensation: A human resource management approach (6th ed.). Upper Saddle River, NJ: Prentice Hall.

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