Performance management has a significant role to play in enhancing organisational success by ensuring all individuals remain motivated, understand their expected contribution to business objectives, and are equipped with the skills and support to achieve this.
It should be an ongoing, continuous process rather than just a one-off event (e.g. annual appraisal) which can be, and often is, part of the process. While a performance appraisal is an important part of performance management, it is not in itself performance management but one of a range of tools that can be used to manage performance.
The term performance management can also be confused with the disciplinary meaning of the phrase, where a one-on-one procedure between a manager and employee aims to improve specific issues such as consistently poor performance or unacceptable behaviour. To add further confusion, many Australian organisations incorrectly call their manual annual appraisal systems ‘performance management’, when in fact appraisals only represent one aspect of this meticulous process.
The classic definition of performance management – “a process which contributes to the effective management of individuals and teams in order to achieve high levels of organisational performance” (Armstrong and Baron, 1998) – underlines its ongoing nature, aimed at continuous improvement for the benefit of both the individual and the organisation.