Introduction
Performance management is assessing the process of achieving goals and objectives to unsure that it is successful through communication and taking the right action. There are functions for evaluating how equipments behave so that effective work is done through proper performing systems and altering the systems that do not perform well. In the organization, performance is looked at in terms of actual results for the improvement to be done if actual results are less than the desired results. Objectives should be set through proper planning and intervention of managers in giving feedback about the progress that has been made and ensure there is performance appraisal to individuals based on their overall contribution. (Paladino, 2007 pp46 par1-3)
Performance management is used by businesses to attain strategic goals through getting the necessary information for achieving the goals and have networking process that link objectives of individuals who make great contribution to the enterprise with the goals set by the organization. This helps to develop skills that help people to achieve their ambitions and ensure there is increased profitability of the firm through working hard and using their abilities in areas where they are best talented. (Paladino, 2007 pp47 par1-2)
Performance management contributes a lot in ensuring expectations are well set and monitored in order to develop the ability of staff and enhance it. In situations where performance is high, rewards should be given so that the people involved can be motivated to work extra hard because their efforts are recognized and appreciated all the time. Performance management has its focus in monitoring performance and ensuring that all the required tools and application that ensure there is smooth flow of work are in good working condition in order to meet expectations of businesses and end users. Performance management in businesses helps in discovering how material resources and business units can be put into efficient use without incurring financial loss. (Paladino, 2007 pp48 par3-5)
Significance of performance management for business
When running business, employees are very important for efficient and smooth running and everyone should put into consideration the part played by employees. Employees are assigned roles and responsibilities everyday and performance managers ensure that employees work at their best to fulfill expectations so that high quality work is produced that satisfy the consumer need. Good performance management helps to ensure that members of staff utilize their full potential through development of traits that are desired for their progress to be rated in establishing their achievements. (Otley, 1999 pp13-15)
During planning, employees are given a chance to participate and give their own views on how the business can run successfully. This also involves having a focus on ensuring the business tasks are done in appropriate manner through involving all employees and assigning duties to them. This will help employees develop confidence in their daily tasks, boost their morale and ensure there is free communication between them and top management so that they can always be free to make contribution in the business that help in success of business and discuss the challenges they face in their work for a solution to be established. The employees will be in a position to have an understanding of what performance managers expect them to do and what they are supposed to accomplish. (Otley, 1999 pp16 par 2-3)
Proper performance management ensures that all tasks are completed at the right time without postponing some of the tasks to be done later. The budget set is used well to balance the available income with expenditure without having budget deficit. The weaknesses or shortcoming of the staff and business is established early for corrective actions to be taken in order to ensure that everything run smoothly. In making sure that job is done well, performance management helps to instill qualities that are desired in employees for them to work hard with minimum supervision. Business is carried out by people who work as a team and everyone is encouraged to be a team player for the business to grow, expand and benefit everyone. (Otley, 1999 pp17 par 5-6)
Performance management helps to rate and evaluate performance of individual employee in order to know the progress in their work and know the areas where they are supposed to be assigned depending on their capability. This will help in identifying areas of weaknesses and means of strengthening them. Performance reviews are very important so that employees can be informed on the areas where they need to improve in their duties and commend and acknowledge them in areas of their strength. (Clarkson, 1995 pp48 par2-6)
Performance management helps to reward employees so that they can not compromise business performance and their level of performance. This helps to have optimum productivity and increased profitability. Once employees are rewarded for working well, their performance is enhanced and is motivated to continue working hard. The system of performance management is effective in allowing financial goals of business to be achieved. (Clarkson, 1995 pp47 par1-3)
When performance of employees is managed properly, plans for sales delivery are facilitated effectively due to clear correlation in using programs for performance management and improved results for all the sales made. Use of integrated software for recording brings increased return from the investment made through benefits from sales. Performance management has financial gains because it eliminates overpayment, helps to adapt to changes and saves time. Sales force is motivated through good incentive plans, reporting at the right time and confidence in the accuracy of all the payments that are made. (Clarkson, 1995 pp46 par2-3)
Management is able to have improved control because all the data from finance department is easy to trace and understand it because the audit comply with all legislative requirements and keep proper documents of all activities that are carried out in order to give a proper account of how the income is generated and how it has been put into effective use. (Clarkson, 1995 pp45 par1-3)
Performance indicators
Analysis of business data is useful if the enterprise has a clear understanding of its aims and objectives by having direction to be taken by the enterprise in order to progress. Performance indicators look at state of business for the necessary course of action to be undertaken. There are methods used to determine how the business sets priority of their activities so that good management can be established for monitoring performance. (Lebas, pp26 par2-3)
Data should be available all the time for managers to know performance and react swiftly to areas that need their attention. The data should be available at short intervals without delay for the necessary action to be taken at the right so that daily analysis of all the activities can be done to reduce the risk of delaying operations that need to be taken care of immediately. Performance indicators help to acquire new potential customers to the business, retain existing customer and collection of debts from customers who purchase goods on credit. (Lebas, pp27 par1-4)
Availability of information help in decision making about how business can be carried out smoothly through balancing revenue generated with cost so that unnecessary losses in the business are controlled. The trend in operating the business is established and followed to have organized information that help in success of business in the long run and ensure the business continues to the foreseeable future. Customer satisfaction is gauged in order to control their trends and enhance shareholder value. (Lebas, pp28 par2-5)
Program for business performance management
This begins by determining purpose of the program in both short term and medium term. Strategic goals must be addressed and the mission related to it in order to have hypothesis of how the initiative improves the overall performance. There should be recent information on the need to be competent and capability of monitoring origin of important information. The data collected is very important and should be stored well so that it can be used for future reference and statistical parameters of data should show whether it was measured and the variation in it. (Lebas, pp29 par1-3)
Risks and costs show financial consequences that need to be estimated in assessing cost of operations and the risks that the initiative might fail. The assessment of risks involved should be included at the initial stages of planning for the necessary measures of diversification to be established in order to reduce the chances of occurrence of the risks. Once the initiative is established, it is necessary to determine who will benefit and who will incur cost. The type of customers who will have direct benefit is very important and the ones with indirect benefits in order to ensure all customers are satisfied. (Finigan, 1999 pp15 par2-4)
Information requirement is found in metrics that are defined clearly and every information need to have its own metrics. The metrics used should be the best, standardized and have a system for tracking them so that it can be easy to benchmark them against how other organizations perform. There should a procedure for determining acceptable ways for measuring required metrics, methods to be used and frequency of data collection and the industry standards to be used. The program should be monitored well to meet its objectives and make the necessary adjustments and thereafter test for its validity and accuracy. (Finigan, 1999 pp14 par3-5)
Performance management and the future of business
Business environment has become very competitive demanding improvement so that it can keep going and offer high quality goods and services than the ones offered by competitors in order to be profitable and continue with its operations. It is very important to have the knowledge of where the business is going by planning faster and reduce the budget and resources that are used. Every decision made must be precise and efficient in order to comply with all regulatory requirements so that the business is legal and acceptable to everyone. (Finigan, 1999 pp13 par4-5)
The executives are supposed to give first priority to strategic goals for the business to grow, improve investor relations and increase shareholder value. In case of changes in operations, plans must be modified and stakeholders empowered so that they can be in a position to make calculated decisions. Changes that may occur in the performance of an enterprise should be understood through timely reporting, assessing the risks and taking action on the information delivered from different sections within the business including customers and external partners. (Woods, 1999 pp16 par3-6)
The success of operations is shown through reducing the gap between executing operations and strategy by having corporate goals in all the relevant departments through accountability, intuitive modeling and streamlining the strategies. All the required information should be available for use in the organization in order to have proper control of all business operations. The business should be performance driven by linking together data and processes to have common business view. When corporate data is given more value, it is easy to be competitive, visible and more agile. (Woods, 1999 pp11-12)
Relevance of concepts/ theories for business
Performance management tries to utilize human resource and benefit from it through rewards based on high performance and appraisal schemes are used in the process. There is qualitative appraisal system through structured interview where appraiser observes appraise and gives out a report of his performance. In situations where appraiser is employed, a scale is used to rank employees who are good, excellent or inadequate. The appraiser is contacted on regular intervals to be given feedback on how the job has been performed for him to access individuals against the set standards of performance that are according to the job description. (Woods, 1999 pp13 par1-3)
During review meeting, individual targets and objectives are established for a given period of time so that plans for individual development are created indicating how each employee will be able to meet his target. Performance is assessed in the previous periods and later linked to the rewards where employees who meet the target are entitled to pay related to their performance. Appraisal guides in providing framework for developing training programs that aim at improving performance and development goals through learning are significant in the process. Development and learning must be included in the reward system for the employees to see it worthy and of great value to the organization because it is a vehicle for developing employees for them to be more productive. (Woods, 1999 pp14 par2-5)
Pay related to performance is based on giving an extra payment due to the achievements made at work after achieving the objectives and targets. The main intention is to ensure employees are satisfied and determine effectiveness of strategic tools in managing human resource. Findings show that, score cards links outcomes of organization, individuals and all the groups that are involved. (Woods, 1999 pp15 par1-2)
Performance management systems for businesses are able to probe different events and assist in business management. There is information technology and unlimited invention with details of how the business is performing where mechanisms exist for accessing information including e-mail and cell phones. This invention includes execution of business process and how workflow engines are used. (Elaine, 2004 pp36-37)
Control theory determines which inputs are used in executing business process through notion of targets used in business to define how the business is performing. Controller for performance of a business is able to analyze control algorithms and give recommendations about control action that modify inputs for use during the business process. Control action can be automatic or manual and is applied in practical situations to ensure that performance of business is improved.
Information in data warehouse is used by different users in order to manage performance. The assumption is that, appropriate actions will be taken by all users based on the available information for better business management so that control algorithms can be applied on the information to know how inputs can be modified in execution of business process. (Elaine, 2004 pp35par 4-6)
Supply chains are used by manufacturers who sell their own products made from raw material obtained from supplier. Manufacturer requires to be given enough time to be through with his production using production plan to get the materials required in generating requirements of supplier. During each period of production, manufacturer order raw materials from supplier which requires the supplier to have a good plan of his production.
There may be changes in the inputs required depending on balance between supply and demand so that manufacturer may not suffer due to sudden change in demand. Supply data of inputs is forced to change frequently because some of the customers cancel or even modify existing orders depending on their tastes and preference at certain period of time. Commitments of supply tend to change if there is change in supplier plan and ordering policies for supply chain is determined by optimizing performance of businesses under the forecasts that are prone to change. (Elaine, 2004 pp33 par 4-5)
Conclusion
Performance management is important in improving performance of a team by applying the appraisal system, taking action for improvement, monitoring employees as they perform their assigned duties and measuring the efforts made depending on the quality of work that is done. Performance management manifest itself in various forms depending on the purpose it is intended to accomplish such as to improve good performers and encourage them to continue with the same effort or deal with the underperformers so that they can put more effort and improve their performance. (Paladino, 2007 pp49 par2-5)
Performance management is applicable when dealing with teams so that every individual can contribute to the overall performance of the team. Groups also work together to accomplish common goal and organization ensures that every member of makes solid contribution to the overall success of entire organization. In order to achieve the objectives, managers support through articulating the goals and ensuring that every member is responsible and management skills are improved all the time. Effective communication is necessary so that everybody can give opinion and share the challenges that they face in the course of duties in order to develop a sense of belonging to everyone without favor or discrimination. (Elaine, 2004 pp34 par 1-2)
Bibliography
Otley D. (1999): Performance management, Management accounting research: Elsevier, pp. 13-17.
Clarkson M. (1995): Analyzing and evaluating corporate social performance, Toronto: Academy of management review, pp. 45-48.
Lebas M. (1995): Performance measurement and performance management: International journal of Production economics, pp. 26-29.
Wood S. (1999): Human resource management and performance: Blackwell Synergy, pp. 11-16.
Finigan K. (1999): Performance management for competitive edge: Albany, pp. 13-15.
Elaine P. (2004): performance management, A new approach for business: Personnel decision research institute, pp. 33-37.
Paladino B. (2007): Key principles of corporate performance management: John Wiley and sons, pp. 46-49.