Performance Management


Performance management is a very important strategy to manage the organization, and for the continuity of business.


And here is why:

  • Performance management is linked to success, that means that if an individual does better, then his/her team does better, therefore, if teams do better, then the entire organization is doing better, which is one of any business’s objectives.
  • Performance management is owned and driven by line managers, and it measures people’s performance, it also helps in managing the employees by defining the process for a shared understanding, also it is a great development tool to develop employees both for short term goals and long term goals, and this helps the business in identifying potential successors, as well as knowing the who really needs what training.


Performance management consists of various components, below are some of those components:

  • SMART objective setting: SMART Stands for:

Specific — enough to establish clear expectations

Measurable — in cost, quantity, quality, or timeliness

Agreed-upon — to ensure coordination and buy-in

Realistic — as a goal which can be attained

Trackable and Time-Linked — through ongoing review

In order to get the results that are expected of the employee, the objective setting has to be clear, the objectives have to be clearly mentioned, and the purpose of the objective has to be clear for the employee, and most importantly a time line has to be clearly mentioned, both for the objective itself, and for the review of the objective mentioned.

  • Informal performance reviews: Typically, a performance appraisal is done once a year, but it is always healthy to do an informal review with the employee on a quarterly basis, this helps both the employee and the line manager to follow up on the objectives set in the beginning of the year, also, it helps in having no surprises when the employee comes for the official performance review at the end of the year.
  • Learning and Development planning: If performance management was done properly, then it will make for a very intelligent and business oriented learning & development plan that is cost efficient and actually developmental for the employee.


Performance management has been set taking in consideration motivational theories, and if you consider any motivational theory you will see how they are linked, below are some examples:

  • Needs Theory: one of the most famous needs theories is Maslow’s Hierarchy of Needs theory. Maslow’s theory is a pyramid based needs theory and it is as follows:
 Maslow’s Hierarchy of Needs(Image from Wikipedia:


As it shows, at the base of the pyramid there are the basic needs, and as they are satisfied, they stop being primary and the next needs above it becomes the primary one, and so on and so on. The relationship here is clear; the performance management – if done correctly- can identify the actual needs for an employee to fulfil the employee’s needs.


  • Reinforcement Theory: This is quite a simple theory, where the positive actions are rewarded and the negative actions are punished. This can be reflected in the informal performance reviews to keep the employee updated on his/her performance.


Rewards are a key point of the performance management, taking the above two theories in consideration, when an employee does a positive action they are to be rewarded with one of their needs to continue on the positive actions.

  • Reward should always reflect the amount of effort that the employee put in.
  • Delivering the reward should be as soon as possible.
  • Calculation of the reward should be:
    • Simple.
    • Transparent.
    • Available to all.


A total rewards system should include different types of rewards, for example:

  • Financial Rewards:
    • Commission: This usually fits more the sales and marketing departments in any organization, this component is widely used and is one of the best motivators to increase revenue, as the employees will get as much as they sell.
    • Service Awards: This component is one of the strategy to fight the war against retention, the more the employees stay the greater value reward they will get. (I worked at a company where the 35 years award was a Rolex watch).
    • Bonuses: Usually it depends on the company’s performance, and it helps in giving the company a great push in becoming a preferred employer.
    • Company Stocks: When a company is publicly traded in the stock market a reward option can be to give the employees stocks for superior performance to get them to continue their contribution.
  • Non-Financial Rewards: Not all rewards are financial, in fact some employees only prefer the non-financial rewards, some examples include:
    • Trips: Some employers offer fully paid trips to desired destinations; they might be giving it to the employee who delivered the most of his objectives in the past year.
    • Long Weekends: This is one way to reward an employee, by letting him a day off just before the weekend so that they can enjoy a long weekend with their family/friends, it is a very popular choice especially in a highly social area.

1 comment on “Performance Management

  1. Dan Enthoven

    Informal reviews are so important. If you want to change people’s attitudes and behaviors you need to adjust them slowly, over time. A yearly review is great, but it’s not as if they can flip the switch tomorrow and everything be totally changed.


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