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Performance Management

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Performance management is the act of tracking each employee's behavior, productivity, attendance, attitude, and overall benefit to the company. This information is then presented to the employee in the form of an evaluation. Giving employee information on where he or she excels and needs to improve is the best way to get the best out of each member of the team.

How it Works

The best performance management is an ongoing process, but the evaluation as present to the employee is usually done by appointment. Some companies do these evaluations individually and then do a group evaluation. Project teams may be evaluated together, for instance, or entire departments within a company may receive group evaluations in addition to their own person performance evaluations.


Performance management not only keeps a business running smoothly by making sure that each employee is performing his job to the best of his ability and the company standards but also allows for a sense of teamwork and companionship in a workplace when done correctly. Morale can be improved by performance management because it focuses in the positive and accentuates what's right while correcting problems in a helpful, friendly way. When the focus is on the group as a whole, people naturally rise to the challenge and want to contribute.

In the case of employees who are not performing on par with the rest of the group and do not respond well to the process of performance management, the opportunity can be taken to replace those employees with those who will be more productive and contributing members of the team.


The cost of performance management is typically dependent on the time it takes to evaluate an employee's performance since it cuts into the employee's production time. This is hard to quantify because it is an ongoing and long-term process rather than something that takes a set number of hours or resources. The cost can also include rewards and incentives that a company might offer for good and exceptional performance.

Performance management is an investment because it will highlight underperforming employees. Employers will be made aware of where the problems are and are given incentive to correct them, while exceptional employees are boosted by the recognition and reward of a job well done.


Most companies have a formal or official process for evaluating employees' performance on an annual basis. New hires might get an initial evaluation a month, 90-days, or six months after starting on the job. This initial performance management is designed to make sure that a new employee is working out, and to correct any problems in the beginning to allow for a better working relationship between management and the employee.

Last Updated: December 19, 2011
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