Performance management is the overall process employers use to evaluate the productivity, creativity, and accomplishments of the organization and its employees. The overall intention is to identify and reward good performers, provide incentives to work harder in the future, and provide feedback to those employees who are not meeting expectations. Different companies use different types of systems and programs, but we will explain the most common approaches to Performance Management.

Generally, there are two elements of an individual’s work that are evaluated:

1. Individual: The goals, qualities or behaviors of the employee, specific to that person’s job and/or the organization.
   Some companies tag these as symbols of job competence and are considered critical to the success of both the employee and the organization. Employees should be given the opportunity to provide input on what their goals will be during the coming evaluation period, and the employee’s supervisor should approve these goals.
   
   Some organizations use the term SMART Goals. SMART stands for Specific, Measurable, Achievable, Rewarding, and Time-based. Goals are measured with results achieved over a pre-determined period of time, and are generally measured with a percentage or rating that describes the degree of completion.

2. Organizational: The company-wide behaviors that are required for the organization to succeed.
   These behaviors vary by organization, from generic and subjective to specific and well described. However, these are specific criteria that are required for the organization to be successful. For example, qualities such as teamwork, entrepreneurship, innovation, etc. are often included in this section. Note the distinction between organizational success and individual success.
   
   One problem with performance appraisals is the way that they often only assess individual achievement and completely forget about how that individual’s contribution is affecting the overall organization. A person could be great at building spreadsheets and doing data analysis, but if they are working on a team and build spreadsheets that others can’t understand or use, then they are worthless to the team, and therefore the organization. In this kind of scenario, everyone fails.

As you can see, the main shortfall of all typical performance management systems is the high degree of subjectivity. One person has to assess the quality of your work. Most of the time, your destiny depends on your boss’ opinion. The better prepared you are to defend your performance with fact-based reasoning, the better your chances of success in the process.

Some organizations have been more proactive in the assessment process and have developed what are known as 360 degree assessments. These types of performance tools are more objective, as the employee is assessed by his/her supervisor, some peers, subordinates (if applicable) and internal or external customers. This type of approach allows employees to have a broader, more objective assessment. The only shortfall is that this type of evaluation only focuses on behavior or competence, not on results or achievements, which are both important factors.