Organizations establish
performance management systems in order to meet three broad purposes namely:
strategic, administrative and development. Strategically, performance
management helps the organization to achieve its business objectives. It does
this through helping to link employee’s behaviour with the organizations goals.
Performance management starts with defining what the organization expects from
each employees. It measures each employee’s performance to identify where these
expectations are not being met.
The administrative purpose of
performance management system relates to the ways in which organizations use
the system to provide information for the daily decisions about salary,
benefits, and recognition programme. It may also support decision making about
employees retention, termination for poor behaviour or performance, hiring or
layoff as organizations hardly retain those whose performances is abysmally
poor.
Developmental purpose of
performance management serves as a basis for developing employees’ knowledge
and skills. Effective performance feedback makes employees aware of their
strength and of the areas they need to improve. Noe, John, Barry and Patrick
(2004).
Armstrong (2006) defined
performance management as a systematic process for teams. It is a system of
getting better results through understanding and managing performance within an
agreed framework of planned goals, standards and competency requirements. The
aim of performance management is to establish a high performance culture in
which individuals and teams take responsibility for the continuous improvement
of business processes and for their
own skills and contributions
within a framework provided by effective leadership. It is all
about aligning individual
objectives to organizational objectives and ensuring that individual upholds
corporate core vale.