Rationale for Performance Management
All modern business organisations compete with each other, but the conditions under which they compete are changing all the time. Therefore, it is important for an organisation to constantly monitor and understand its own performance, as by doing so it can achieve its goals faster and more efficiently than its competitors. However, monitoring, and even understanding, are not enough in themselves. In order for an organization to operate efficiently, it not only needs to make the right decisions, but it also needs to make them at the right time. Therefore, a modern organisation needs the right tools to plan, execute and refine its performance management strategy in response to the changing business environment in which it operates. To do this, organizations need reliable, accurate and timely data; these being the fundamental tools of knowledge-based performance management (PM).
Performance management has received extensive attention from both academics and practitioners over the past two decades. In terms of academic research, performance management has been studied closely since the middle of the 1990s. In fact, in certain specific areas, such as in industrial engineering, this academic interest in performance management manifested itself much earlier. Some people see performance management as a silver bullet that instantly fixes every possible problem in an organization but this is not the case. Rather, it is something that most organizations have already been practicing for several years and has gradually evolved into its present form.
What is a traditional Performance Management like?
Performance management is part of business management and the mechanisms that support decision-making. Regarded as such, performance management broadly encompasses all those measures that an organization needs to take in order to achieve specific aims and objectives – the faster, the cheaper, the smarter, the better. In this sense, performance management is the range of methods and procedures that an organisation uses to manage its personnel effectively, so that they take actions that are closely related to the organization’s overall strategy. Consequently, effective performance management aims to integrate all these procedures, methods and measures into a single, organization-wide management system.
How about Knowledge-based Performance Management?
In this website, performance management is discussed specifically from an information and knowledge management point of view, where information technology acts as an enabler and integrator to support the overall performance management initiative in an organisation. Thus, performance management integrates all of an organisation’s processes, measures, information and intangible assets so that they support the different phases involved in implementing a strategy, and thus furnish the decision-makers with all the information they need to make really informed decisions.
However, in some organisations, the concept of performance management means dealing only with the data for certain pre-defined standards and key performance indicators (KPI), but this perception of performance management leaves the rest of the data and information in the organization untouched. Yet, to implement a really comprehensive performance management strategy organizations should leverage their data by adding analytical functions to their traditional measurement and monitoring processes in order to proactively seek out and identify trends, and to create alternative scenarios for what might happen in the business.