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Does Performance Management Generate Superior Business Results? (Report Date: January 2003, Full Report: 20 pages) Summary This report discusses whether performance management systems are conducive to business success. It establishes a strong link between effective performance management and overall business results, and lists the key components of an effective performance management system. A common misperception is that performance management is a synonym for performance appraisal. Although employee appraisals and reviews are central components of performance management, a performance management system should also include various approaches which positively reinforce employees and enable them to perform to their best abilities. However, implementing an effective performance system is not an easy task for companies. For example, a recent survey by The Conference Board, based on responses from HR directors and executives, revealed that as many as 90% of respondents believed their performance measurement and management approaches needed to be improved. Furthermore, one of the greatest challenges that companies face in their attempts to improve their performance management system is gaining support from top management. This current lack of support by senior executives is an unwise stance considering the significant link between performance management and superior business results. However, making a worthy case in favour of performance management requires more than simply convincing those senior executives that performance management leads to healthier bottom line results. It also requires showing them how to devise an effective performance management system. This report describes the link between performance management and organisational success, and identifies the key features of an effective performance management system.
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