Purpose of Performance Management for Business Organizations

March 31, 2012 by  Filed under: Management 

Performance management means measuring the progress of the organization against its set goals and taking suitable steps for improvement. It involves evaluation, analysis of the progress made by a company in a given time period against the targeted achievements. Measurement of achievements is necessary for a company to find out whether the company is moving in the right direction or not. The purpose of performance management is multi fold.

Measuring achievements helps a company to find out the overall efficiency of the organization. If the current progress of the company is below the targeted goals, it implies that the efficiency of the company is not utilized at the optimum level. Based on this report, the company can make necessary amendments in its future activities to improve the efficiency so that it attains its goals within the specified time limit in the near future.

Performance measurement also depicts the productivity of an organization. It gives a clear picture about the overall production capacity against the actual production at all levels. If the company observes a fall in its productivity, it will have a negative impact on its working which will increase its cost of production.

Similarly, if the productivity of the organization is increased, it will experience decrease in cost and increasing profit which is the main aim of any business organization. Tracking progress enables a business to measure its productivity and a company can make changes in its strategies and policies to increase the productivity of its business.

Keeping track of progress enables a business to find out loopholes in its strategy. These loopholes act as main obstacles for the success of any business organization. Based on the report, the company can sort measures to tackle loopholes and bring the company on its right path of progress.

Measuring efficiency and effectiveness of employees is another aim of performance management. By identifying the causes and reasons for ineffectiveness, the company can take appropriate steps to motivate its employees and improve their individual progress. This will induce workers to work at their fullest strengths which is important for increased productivity and efficiency of a business enterprise.

In the modern competitive world time means money. Managing activities of a business in an optimum way is necessary to get the desired results on time. By utilizing all resources of the organization, a company can get the best possible results. This cannot be achieved without tracking and managing progress at all levels. A thorough evaluation of the resources, in depth analysis of the implemented strategies and policies is necessary to find out whether the company is reaching its desired objectives and goals within the allotted time. If the company is not performing well, managers can take suitable steps to bring the company on right track.

Thus, the main purpose of performance management is to earn better profits by employing all resources of the organization in an efficient manner. Businesses that do not track their performance fail to make desired progress and lag behind in competition. On the other hand, companies that witness big success are often those that keep track of their progress and make suitable changes for improvement.

About the Author

Dr. Doreen McGunagle is fiercely committed to guiding corporate and non-profit leaders who are serious about making corporate culture shifts to boost profits, performance, and growth as world-class service organizations. For more great information visit http://www.globalstrategicmgmt.com/blog

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