Performance management as a tool for organizational development

Performance means, in this context, the measurement of the achievement of objectives that an organization has set.

Performance management is therefore “a set of metrics, tools, approaches to be used to ‘move’ the company as a cohesive structure and grant the ability to evolve to remain competitive over time” (Bugatti and Tottoli, 2011).
This tool can be used mainly in two business areas: HR (staff) and AFC (Administration, Finance and Control).

In human resources performance management is used to motivate employees to achieve the objectives through a system of incentives (also useful in a view of retention), while in administration area it is a tool that is used to identify targeted operational requirements (eg, systems planning and budgeting, reporting, strategic management systems) to allow precise control and continuous production and intervention in case of changes.

The three phases of performance management

1. Assignment of the objectives.
   You need to establish operational goals in an objective way, identifying a suitable criterion of measurement. For example, if you want to improve the relationship with the unions it can be fixed, as a criterion for measuring, the lost hours due to conflict and to establish the goal of reducing the lost hours of X%.
   The study necessary to setting goals is perhaps the most important part of the process, since they must be specific and feasible.
2. Ongoing monitoring.
   Periodically you must monitor the process: controlling the operations, analyzing the changes, identifying the causes of them and, in the case, deciding corrective actions.
   At this stage it is important to have a flexible approach and to be ready to any changes, with a “review and build” perspective.
3.  Final evaluation of the results.
   At the end of the process there is the final evaluation with stakeholders to discover together whether the original objectives have been achieved or not.
   This stage is to be aimed at the growth and improvement both of the people involved and the organization itself.

   
   In conclusion, performance management systems are certainly very effective tools for the governance of companies, both on the side of the staff and of the administration.