Performance management is the ongoing practice of setting goals for employees, tracking progress against them, and using the results to guide development, reward and, where needed, corrective action. It is broader than the once-a-year review most people associate the term with.
What it means
Done well, performance management runs continuously - goal-setting at the start of a cycle, regular check-ins through it, and a formal appraisal at the end - rather than existing only as a single annual event disconnected from the work in between.
Where it fits in
Performance management is the umbrella over the rest of this category - goals, metrics, ratings, feedback and improvement plans are all mechanisms within it, and its outputs (a rating, a merit increase recommendation) often feed back into HR's compensation processes.
Key rules
- PM = performance management, a continuous process, not a single annual event.
- Spans goal-setting, ongoing tracking and a formal review.
- The umbrella term for every other concept in this category.
- Outputs commonly feed into HR's compensation and reward decisions.
