It is important to remember that good Human Capital management is about maximising the value of each individual within a business. It’s about what motivates people, what drives improvement in their capability, what keeps them engaged and how they are treated by the business as a whole person.



One of the best ways to manage an individual, to enhance their performance and their relationship with the organisation they work for is through Performance Management. So what is Performance Management?

Many people think it is about managing someone out of the organisation.  In fact it is about optimising someone’s contribution when they are with the organisation. Leading experts, Armstrong and Baron, define it as “a process which contributes to the effective management of individuals and teams in order to achieve high levels of organisational performance. It establishes shared understanding about what is to be achieved and an approach to leading and developing people…” Basically it is about having good conversations between a manager and his/her people that helps them get clear on what is expected of them and, as importantly, how they are doing.”

This can include 1:1 meetings, giving constructive feedback to generate the right behaviours, discussing individual objectives and competencies, capturing development plans, encouraging training matched to job requirements and nurturing individual aspirations, whether they are personal or professional.

Quality of dialogue

Good Performance Management gives a business the tools to pro-actively review and discuss an individual and their contribution to the wealth of the organisation. It also gives employees a vehicle to formalise their career aspirations, obtain or give constructive feedback, and agree future aims or deliverables.  Technology can support the management of performance in an organisation by tracking meetings, objectives, agreements and development plans.  However a system alone will not deliver good Performance Management in an organisation. The quality of dialogue between a manager and their employee is critical, along with the discipline of ensuring agreements for development and feedback are followed through on.

Performance Management also needs to be set within a context i.e. that of achieving a wider company strategy, or cultural objectives, or, most basically, financial results. Anyone in the organisation should be able to link their objectives to the objectives of their organisation, which means good Performance Management enables a company to bridge the gap between their corporate objectives  - which can often seem lofty and distant from ‘the day job’ - to what employees are doing on a daily basis.

If a business is going to meet its financial targets, growth objectives and business plans, all employees must be aligned to achieve shared goals. The success of a company is based on the sum of its parts, and the way to ensure company objectives are met is through good Performance Management of the individuals inside an organisation. Each employee can then be motivated, appropriately skilled and targeted to deliver.

Implementing Performance Management

According to the CIPD, “Performance Management is difficult to implement.” The key reason they cite for this is “ownership”, as everybody in an organisation needs to play an active and enthusiastic part in the process to ensure it’s successful and effective. HR departments are often custodians of Performance Management, which ultimately impacts every employee as well as the business results, but they rarely “own” execution. Therefore line managers remain critical to the quality of the process and outcome. 

The CIPD also states that “Surveys suggest individuals and managers in organisations, with Performance Management systems, quite like it…although performance-rating often provokes hostility.” Again, this can make the process difficult; highlighting the importance of effective communication, training and change management aspects of any implementation.

HR can help provide the tools and support to make positive adoption of a Performance Management system or process easier, but they can’t force good Performance Management practices into a business. Every employee, line manager and senior manager must interact with the process and play their part to maximise the value each person can bring to the organisation as a whole.