What is a performance management system

Career & Salary

The demands on management and employees are constantly increasing in times of digitization. In addition, the complexity of the tasks increases while the processes are shortened at the same time. German companies are aware of the importance of taking advantage of digital change and the opportunities that come with it, but this is often still inadequately implemented.

Above all, the employees are moving into focus as a result of the digital transformation - but here, too, those responsible are not exploiting the available potential. Too often they are helpless in the face of challenges. Managers are required to create the right conditions to respond to the modern demands of the workforce, to motivate their employees at all times in order to bind them to the company and to increase the company's performance and efficiency. So-called performance management can offer a path to success.

Performance management - definition

Every product and every service is associated with a service or a benefit. This has to be achieved in the best possible way by everyone involved in order to be successful in the market in the long term. For this reason, it is of particular importance to keep the motivation and motivation of the employees high at all times, true to the motto:

"There is achievement without success, but there is no success without achievement" (Fran├žois de La Rochefoucauld (1613 to 1680)).

This is where performance management comes into play. Both sub-terms are derived from English and are to be translated as follows: While performance means performance, success, results, execution and efficiency, management is on the one hand the definition of goals of the organization and on the other hand the development of a strategy to achieve goals. It also means the organization of the production factors and the management of the employees.

In summary: Performance management refers to the performance and improvement of employees through appropriately installed framework conditions. It is therefore one of the most important human resource instruments and specifically promotes employee motivation. In addition, performance management makes a significant contribution to achieving strategic corporate goals.

Quality and quantity

Performance management is becoming more and more important. With the help of an effectively used and designed performance management, those responsible enable their employees to achieve top performance. This includes, in particular, the creation of suitable framework and working conditions in which employees can focus on their tasks and thus use their skills and competencies in a targeted manner. In this way, the agreed standards and goals are achieved in the best possible way.

The basis for this is the measurement of the quantitative and qualitative performance of a company - this includes all individual areas as well as the employees. The variable salary, for example, serves as an incentive. In order for the company's success to be increased, however, this must be based on previously defined goals. Because: If the performance of the employees increases, this also has positive effects on the entire organization of the company. In combination, performance management leads to continuous optimization of business processes in the long term.

On the right track

Performance management is to be understood as a system for controlling and influencing corporate and individual employee performance. There are two approaches to the procedure: on the one hand the regulation and on the other hand the control of the performance management. The former refers to the achievement of a certain level of the variable to be regulated. The basis for the analysis is provided by feedback on the current degree of target achievement.

Subsequently, an attempt is made to find a solution to possible problems, to take measures and to compensate for disturbances after their occurrence. The control approach also focuses on achieving a certain value of the relevant size, but with the aim of striving for a feedforward process. This method ensures that solutions can be planned at an early stage. The right choice of framework conditions ensures that the goals can be achieved.

Select instruments

Executives use a wide variety of instruments for successful performance management. This includes competency and potential assessments as well as target agreements and performance assessments. Target agreements are particularly popular with companies: They are drawn up between employees and managers and contain the goals to be achieved within a certain period of time. As an incentive to achieve this, those responsible often rely on variable remuneration.

In addition to target agreements and performance reviews, competency and potential assessments are established. These approaches are used primarily in management and with employees who are not employed by collective bargaining agreements, and the "assessment" instrument comes to the fore. Direct employee appraisals are particularly suitable for this. In this way, managers show their employees that they are committed to the well-being of their employees and that they are always interested in further development. If these discussions take place shortly after the end of a project, they also promote the motivation of the workforce.

It is important that constructive feedback is always given, in which both positive and negative aspects are addressed. Because: Employees must also draw positive approaches from mistakes in order to develop further. Companies that threaten their employees with fines are more likely to receive negative than positive performance increases. Rather, in this way they fuel mistrust on the part of their workforce and stir up fears.

Variable remuneration

The so-called variable remuneration as an incentive to increase motivation will continue to be popular with managers in the future. What was previously mostly applied personally to the individual employee is now also to be applied to teams. Collective and team-related bonus components therefore move further into focus. In addition to success-oriented remuneration, bonus systems are becoming increasingly important. These promote a performance-oriented corporate culture and also increase the attractiveness of the employer.

In the meantime, however, financial aspects are no longer the only incentives to increase employee motivation. More flexible working hours and the option to work from home can also be mentioned in this context. This means: There must be a balance between monetary and non-monetary offers that is interesting and appealing to the employees.

  1. How is working in the home office efficient?
    Unify gives some practical tips that employees can use to make their home office as productive as possible.
  2. Set limits - at home too
    There are numerous distractions lurking in your own home: dishes that have not been washed, the refrigerator, radio or television have unexpected attractions and disrupt productive work.
  3. A defined work area ...
    ... which is separated from the rest of the living space, also helps to create clear boundaries in the head. The risk of distraction is reduced.
  4. Book a window seat
    Stress slows productivity. A look out of the window offers variety, even more so if you go directly into the countryside. It also makes sense for VDU workers to regularly look into the distance, at least a few meters behind the monitor.
  5. A window seat ...
    ... reduces the strain on the eyes and thus also the stress at work. Tip for everyone who has no space at the window: Indoor plants or an indoor fountain also create a relaxed atmosphere.
  6. Playing with colors
    Color is an important factor in any office space, whether in the company or at home. Colors have a major impact on mood.
  7. Neutral colors have a calming effect, ...
    ... while some orange and yellow tones even promote a feeling of hunger. Lemon tones, pastel blue or cream colors are particularly recommended for a productive work environment.
  8. Pay attention to an ergonomic workplace
    Employees can only be productive if they are healthy and have a comfortable place to work.
  9. The office at home ...
    ... should also be set up according to ergonomic guidelines in order to stay healthy and productive. Here, too, employers are in demand: They should make sure that all of their employees receive the necessary information about ergonomics in the workplace.
  10. Provide flexibility
    Even if the home office should have its permanent place in the apartment: screwing down the chair and desk doesn't help either.
  11. On the other hand, it promotes creativity ...
    ... to occasionally change the position and thus the perspective on the current work. It is also helpful to be able to rearrange things or rearrange the work - there should also be space for this in the home office.

Underestimated resource: employee ideas

The influence of digital transformation on work processes must also be taken into account in connection with performance management and increased employee performance. The constant change of employees between project and day-to-day business as well as overarching areas of activity and responsibilities make it difficult for the managing directors and department heads to keep track of the respective responsibilities and the respective workload. The result: lack of transparency, overworked specialists and a lack of opportunities for innovation and creativity.

In order to ensure the motivation of their employees at all times, managers have to create freedom. Role-based work offers a possibility of granting trouble-free and stress-free time windows. In this way, the employees can concentrate on the task at hand in the respective time periods and are not interrupted during this time. So that departments can still be reached by customers and colleagues, the respective resources must be planned and compiled in an overview. Managers can also see who is working on which task and when, and where possible resources can still be distributed. This methodology also supports innovative strength and the formation of productive ideas in companies by allowing employees to focus on one topic and thus enabling motivated, trouble-free work and thus prompt completion of tasks and an increase in productivity.

This increase in productivity creates freedom and thus opportunities for innovative ideas. They hold the potential for unique new services that create added value for the customer. In addition to our own employees, the most important driver for these innovations today is technology. Managers must therefore consider how they can best use the technologies to design innovative products. But far too often companies do not involve their employees in this process. There is often great potential in their ideas. The further developments implemented make successful idea management lucrative for companies, as do the resulting savings. However, these alone do not drive digitization forward.

Long-term performance management

For managers and employees, performance management offers great support in increasing the company's success over the long term. Those responsible should pay particular attention to two aspects: a balanced strategic alignment of the company both on the competitive environment and on the interests and potential of the employees and a consistent operationalization. This is based on the corporate strategy, i.e. the key figures are defined in such a way that they reflect the degree to which the company's strategic goals have been achieved and allow active management.

This makes it clear that measuring instruments must also be specified on the tactical level to control the most important management disciplines as well as the processes and IT systems. So-called performance measurement is often used here. This is a process in which information relating to the performance of individuals, groups, organizations, systems or components is collected, analyzed and presented. This information is then the so-called key performance indicators, or KPIs for short. Those responsible should limit themselves to a few selected but meaningful key indicators in order to make targeted control with regard to target achievement transparent at all times.

Involve employees

One thing is certain: In order for performance management to be implemented successfully, those responsible must create the appropriate framework conditions - and these differ from company to company. Because in every company there are different prerequisites and processes that need to be adapted. There is no magic formula. Only with the help of optimally interlinked processes is it possible to successfully promote the motivation of the employees and thus increase the motivation of the employees as well as the company's success. Because a successfully implemented performance management significantly strengthens the achievement of corporate goals.