Having a performance management program brings value to your organization because it focuses attention on specific and measurable development goals. Most performance management systems focus on rating employees to determine promotions, merit increases and incentive rewards. Performance reviews may also be used to make termination decisions. However, to manage performance more effectively, you should align employee development goals with your strategic objectives, ensure succession planning, motivate employees to pursue career development and improve productivity.


A robust performance management program enables you to align an individual employee’s job tasks with the company’s strategic direction. By creating a comprehensive job framework with clear job descriptions and defined skills and knowledge required to complete job tasks at the novice, expert and master levels, you can then recruit, interview, hire and orient employees to work at your company to achieve your company’s goals.


Use your performance management program to identify talented individuals in your workforce. Provide opportunities for your staff to develop in their roles so they can assume a leadership position later on. For example, to ensure you have subordinates who can take over for retiring leaders, establish leadership development programs and target individuals who show potential in project management, business acumen, team building, customer service and innovation. You also can use your performance management program to identify skill gaps and implement training programs to address shortcomings in areas such as communication, presentation skills and time management.


Knowing that their manager will conduct an annual performance review typically motivates an employee to set attainable goals and work to achieve them. By conducting a 360-degree performance review process and gathering input on the employee from peers, superiors, suppliers, customers and business partners, you get a broad view of the employee’s interactions. This sets clear expectations that all relationships matter on the job. Establishing accountability encourages employees to take ownership of their own careers and success.


Focusing employee attention on improving business results involves educating employees on their role in business operations, such as how the company makes money, solves customers' problems and maximizes customer satisfaction and loyalty. A performance management program brings value to the organization when people understand the overall goals and know how to work toward them in a consistent manner. When employees see that they make a difference, they tend to be more committed to improving their own productivity. Use your performance management program to track productivity and operational improvements. Publish the results in newsletters, and reward high performers to inspire others.