Key Tools and Techniques for Performance Management

Numerous performance management solutions have been created to make the process easier and more effective. Key Performance Indicators (KPIs) and metrics enable organizations, business units, initiatives, and people to assess their performance concerning their strategic goals and objectives.

Metrics and Key Performance Indicators (KPIS)

The main benefit of any KPI is to allow rich data-driven performance dialogues and improved decision-making. A good KPI should necessarily act in such a way that it shows whether an organization is taking the right path toward its strategic goals or not.

Listed below are a few of the most often used tools −

Evaluations of Performance

Performance assessments and Key Performance Indicators (KPIs) are arguably the most often used performance management tools. When performed correctly, performance assessments effectively align individual ambitions with the organization's strategic objectives. To get the most of this tool, employees must believe that the assessment process is a bidirectional discussion that is regular, honest, fair, and productive.

360° Feedback

An employee's performance may be thoroughly assessed using feedback from people in their immediate environment, such as their supervisor or manager, subordinates and co-employees as well as external customers and suppliers. As a rule, management presents the results of the investigation to the employee.

A 360-degree feedback insights are often employed in staff development and training. When used properly, a 360-degree feedback, helps democratize the review process by evaluating the perspectives of other individuals rather than just the individual's line manager.

This way in case an employee receives a negative feedback or not a good one, still there might be other aspects in which that employee may score better feedbacks. This type of feedback provides justice to both employer and employee.

Management by Objectives (MBO)

Management by Objectives (MBO) is another strategic approach to enhance performance by identifying precise goals and then outlining the steps necessary to accomplish each target, and these conditions are agreed by both employee and employer. However, MOB is adopted by managers to control the employees by implementing series of goals.

Steps in Management by Objectives Process are as follows −

  • Defining organizational goals which are provisional and evaluation of which is expressed by the company within a specific period of set time.

  • Defining employee objectives by one-on-one discussion wherein the juniors will tell the seniors about what targets and goals they can accomplish within a specific time and with what resources will be required to archives those targets.

  • Monitoring the project progress and the performance of employees within the organization

  • Evaluating employee performance by the participation of the managers involved in the project.

  • Providing feedback to the employee on their performance to boost their efficiency and potential, and also it rectifies in case any mistakes have been made.

  • Providing performance appraisal based on reviews by managers on yearly or quarterly basis

Frameworks for Performance Management

Tools such as the Balanced Scorecard (BSC) are quite popular. The BSC tool has been enormously popular over the previous two decades, having been named one of the most important business concepts in the Harvard Business Review.

A Balanced Scorecard is a management strategic tool that assists businesses in three ways, they are as follows −

  • Clarifying their strategy and communicating their business priorities and objectives;

  • Tracking progress by determining the extent to which priorities and objectives are being met; and

  • Defining and managing action plans to ensure initiatives are in place to meet the business's priorities and strategic objectives.

Programs of Reward and Recognition

When employees believe their efforts go unnoticed and unappreciated, motivation plummets, and individuals get disengaged with the performance's overall objective. Thus, reward and recognition programs are critical components of any comprehensive performance management system since they provide a mechanism for recognizing and rewarding exceptional performers.

Personal Development Plans (PDP)

A PDP is essentially a customized action plan based on contemplation and understanding of an individual's performance and requirements, outlining future performance objectives and activities that will aid in personal growth. It assists people in determining how they want to develop and the steps necessary to accomplish that goal. This makes the person feel more involved in the organization and their part in its success.

Investing in or developing performance management tools, approaches, and procedures of this kind is a critical component of fostering a high-performance culture. And it is precisely what any firm, regardless of size or sector, should strive for - great performance at all organizational levels.


Performance management enables firms to increase their performance and maintain a competitive edge. It simply monitors, reports, and controls progress to enhance performance, both individually and corporately.

Updated on: 29-Apr-2022


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