Why Is Performance Management Important?

What is the importance of performance management in the organisation

Performance management is important not only for the company and its employees Important to have a high performance but also for all the established strategic objectives to be successfully achieved. So, performance management happens to improve the performance of people and the organisation, individually and collectively.

 This process also provides valuable information about Important potential internal issues and allows managers to make necessary adjustments quickly and efficiently.

 Another point is that performance management establishes methods to ensure high levels of employee motivation and satisfaction. Consequently, it generates performance improvements, helps in retaining talent and maintains the company’s position in a highly competitive market.

 The Difference Between Evaluation And Performance Management

Performance management and performance appraisal are complementary, but not the same thing. Therefore, evaluation is the last stage of the management cycle and is the most analytical part , being used to measure the quality of results and the behaviour of employees.

This assessment is very important for the company, as it uses indicators to measure performance and individual and collective competences in a clearer, more efficient and objective way.

 On the other hand, performance management is the whole, from the part that defines the strategy planning, execution, monitoring and even the part of implementing improvements. And it happens continuously, when one cycle ends, the next one begins.

 The two dimensions of performance

Generally, performance is divided into two dimensions, namely:


Behaviours (means) have to do with the skills that employees have and how they arrived at their results. Here competences, whether technical or behavioural, are analysed. 


Results (Outcomes)

The results (ends) have to do with what the employee delivers, it is the part linked to his goals. In this dimension, the responsibility and quality of the tasks performed by each one of the team are evaluated, including whether or not all goals were achieved. 

 Another way to better understand the difference between behaviours and results is to associate that results are “what” the person accomplished. Behaviours are “how” the person achieved these results.


How to do performance management

Performance management can be designed in several ways, depending on what the organisational culture is like . However, normally, it works in 4 cycles. Get to know each of them now:


  1. Planning

The first step is to perform performance planning. In it, a meeting is held between evaluator and evaluated to discuss the following activities:


Definition and alignment of expectations between manager, company and employee;

Agree on the key responsibilities and main tasks that each person will have;

Development of the set of goals and objectives that must be achieved;

Identification of the most important competencies that have to do with the functions of each one;

Creation of the individual development plan ( PDI ).

In addition, communication needs to be clear and assertive so that there are no doubts in the future about the goals and strategy outlined. Each team member needs to be clear about their role, responsibilities and what is expected of them in order to achieve results.


It is very important to pay attention to this step because employees will know exactly what behaviours are expected of them. In this way, they will be able to direct their skills and efforts towards the right thing.


Monitoring goals, indicators and tasks

Within performance management, it is crucial to define goals, objectives and indicators. This is the most common way of defining what is expected of the employee and measuring their performance.


In this sense, performance indicators (KPI’s) are used to measure the efficiency of the tasks performed. Goals, on the other hand, are what quantify an objective and, therefore, need to be SMART .

  1. execution

This stage of the cycle is when you start to put into practice what was established in the planning. 

 For leaders, there are some responsibilities, such as creating favourable and motivating conditions for the employee, keeping track of the strategy, correcting possible performance problems, among others. 

 As for the subordinates, the actions are more focused on the operational, having to fulfil the established goals and objectives, and requesting some feedback or training .


  1. evaluation 

This stage is when evaluations begin to understand and measure the performance of everyone on the team. Here, the evaluation form is filled in and valuable results are obtained for a more effective decision-making and inputs for the development of employees. 


  1. review

In the last phase of the cycle, the entire strategy is reviewed and the evaluation document carried out is discussed. In this meeting between leader and team member, individual performance during the evaluation period is reviewed.  

In addition, the PDI verification is also performed. These plans are intended to boost employee performance for the next cycle. The plan should contain all the skills that employees need to develop to help the company achieve its goals.

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