Performance management is a well-established, all-encompassing term used to describe the practice that drives decisions about performance, remuneration, promotions, disciplinary procedures, terminations, transfers and development needs within an organisation.

Performance management is a much broader concept than performance appraisal or a disciplinary process. It aims to improve organisational, functional, team and individual performances. Effective performance management measures the progress being made towards the achievement of the organisation's business objectives. It does so by planning, establishing, monitoring, reviewing and evaluating organisational, functional, team and individual performance.

Performance management may incorporate job design, recruitment and selection, training and development, disciplinary procedures and counselling, career planning, compensation and benefits and performance appraisals.

  • A successful performance management system should:
  • incorporate performance improvement, development of teams and individuals, and behavior management to ensure productive working relationships
  • have structures which support the effective functioning of the performance management system.
  • ensure that employees:
  • know and understand what is expected of them in their job role (i.e. performance objectives and performance standards)
  • have the skills and knowledge required to deliver on these expectations through implementing development plans and learning and development activities
  • are given feedback and an opportunity to discuss their work performance
  • are rewarded for their performance through a reward and remuneration strategy
  • are counselled for underperformance and/or behavior which is out of alignment with organisational values and/or inconsistent with achievement of organisational goals
  • are supported by the organisation to achieve optimum performance.


A well-structured and implemented performance management system provides a number of benefits to the organisation, management and employees. These benefits include:

  • establishing group and individual performance objectives to ensure that their performance is aligned with the organisation's strategic and operational objectives
  • linking performance evaluation and employee development and rewards to motivate individuals
  • assisting the organisation in improving its productivity and efficiency
  • regular monitoring of progress toward achievement of performance objectives
  • identification of specific training needs across the organisation
  • improved salary administration
  • improved communication and relationships between managers and staff members
  • improved guidance and assistance in developing capabilities and potential of staff members.