PERFORMANCE MANAGEMENT and MEASUREMENT

What is Performance Management and Performance Measurement? 

Performance Management and Performance Measurement: A Chat Between Two Friends

Rickey: Hey Shaun, what's up? Heard you've been diving into this whole "performance management" thing at work. What's the deal?

Shaun: Yeah, it's been interesting, Rickey. It's basically about making sure everyone is doing their best and helping the company succeed.

Rickey: Sounds like common sense, but I bet there's more to it.

Shaun: You're right! There's a difference between performance management and performance measurement. Think of it like a sports team...

Rickey: Okay, I'm listening. I love sports analogies.

Shaun: Performance measurement is like keeping score in a game. It's about tracking how well each player is doing – how many points they score, how many assists, things like that. It tells you where everyone stands.

Rickey: Got it. So it's just collecting data?

Shaun: Exactly! But performance management is the coach's job. They use the data (the score, the stats) to figure out how to improve the team's performance. Maybe they need to change up the plays, give someone more practice, or even bench a player.

Rickey: So, measurement is knowing the score, and management is using that knowledge to win the game.

Shaun: You got it! Performance management is about setting goals, giving feedback, providing training, and sometimes even making tough decisions about who's on the team. It's all about helping people grow and do better.

Rickey: That makes a lot more sense now. But why is it so important for companies?

Shaun: Well, when everyone performs well, the whole company performs better. It's like a well-oiled machine – all the parts need to work together smoothly. Plus, it can help people feel more engaged in their work like they're part of something bigger.

Rickey: Cool! I never thought of it like that. Thanks for explaining it, Shaun. Now I can sound smart at the next office party!

Shaun: Anytime, Rickey! And remember, it's not just about the numbers. It's about helping people reach their full potential. That's what makes a winning team, whether it's on the field or in the office.

In the above context, Performance Management is the strategic coach whereas Performance Measurement reflects keeping the score.

Thus, Performance management is a continuous process that aligns individual and team objectives with the broader strategic goals of an organization. It encompasses a wide range of activities, including:

• Goal Setting: Establishing clear, measurable, and achievable objectives that contribute to organizational success (Aguinis, 2019).
• Feedback and Coaching: Providing regular, constructive feedback on performance and offering guidance and support for improvement (Pulakos, 2015).
• Training and Development: Identifying skill gaps and providing learning opportunities to enhance employee capabilities (Noe, 2017).
• Performance Appraisal: Evaluating employee performance against pre-defined standards and goals (Murphy & Cleveland, 1995).
• Rewards and Recognition: Recognizing and rewarding outstanding performance to motivate and retain employees (Gerhart & Milkovich, 1990).

Example: A sales manager sets individual targets for each team member, provides weekly feedback on their sales performance, and offers personalized coaching to help them overcome challenges.

Performance Measurement, on the other hand, is a systematic process of collecting, analyzing, and reporting data on individual, team, or organizational performance. It involves:

• Identifying Key Performance Indicators (KPIs): Selecting metrics that are aligned with strategic goals and reflect critical aspects of performance (Parmenter, 2015).
• Data Collection: Gathering data on KPIs through various methods, such as surveys, observation, and automated systems (Kaplan & Norton, 1996).
• Data Analysis: Analyzing data to identify trends, patterns, and areas for improvement (Fitz-enz & Mattox II, 2014).
• Reporting: Communicating performance results to stakeholders clearly and concisely (Franco-Santos, Lucianetti, & Bourne, 2012).

Example: A marketing team tracks website traffic, conversion rates, and customer satisfaction scores to assess the effectiveness of their marketing campaigns.

Key Differences

Table 1. The key difference between performance management and performance measurement. (The table was made in Google sheet and snaped here by the snipping tool)

References:

1. Aguinis, H. (2019). Performance management for dummies. John Wiley & Sons.
2. Fitz-enz, J., & Mattox II, J. R. (2014). Predictive analytics for human resources. John Wiley & Sons.
3. Franco-Santos, M., Lucianetti, L., & Bourne, M. (2012). Contemporary performance measurement systems: A review of their consequences and a research agenda. Management Accounting Research, 23(2), 79-119.
4. Gerhart, B., & Milkovich, G. T. (1990). Organizational differences in managerial compensation and financial performance. Academy of Management Journal, 33(4), 663-691.
5. Kaplan, R. S., & Norton, D. P. (1996). The balanced scorecard: Translating strategy into action. Harvard Business Press.
6. Murphy, K. R., & Cleveland, J. N. (1995). Understanding performance appraisal: Social, organizational, and goal-based perspectives. Sage.
7. Noe, R. A. (2017). Employee training and development. McGraw-Hill Education.
8. Parmenter, D. (2015). Key performance indicators: Developing, implementing, and using winning KPIs. John Wiley & Sons.
9. Pulakos, E. D. (2015). Performance management: A new approach for driving business results. John Wiley & Sons.