What are the yardsticks by which to measure organizational performance? How do we establish proper organizational goals? And how can progress toward these goals be monitored and adjustments made to achieve the goals more effectively and efficiently? These are some of the more pertinent questions that business leaders must ask themselves in this era of globalization. Organizational performance management techniques enable managers to lead businesses proactively by analyzing business information, identify performance variances and hence implement actions to resolve these performance variances. As opposed to just appraisals, performance management is a far more comprehensive method of transforming strategies into results. Achieving optimal performance in any organization is thus a longer term undertaking that involves not only individual employee performance, but also the performance of teams, programs, processes and the organization as a whole. Performance management methodology first requires that there be clearly defined and quantified targets to strive for. Furthermore there must be a timeframe within which these targets must be achieved. Another very important aspect of performance management is feedback.
Feedback on the overall performance makes it possible to determine whether an organization is on the right course towards meeting its specific objectives. Feedback also enables managers to understand why an enterprise may or may not be achieving specific targets. It can further be employed to modify expectations and set new objectives and strategies in order to cope with the highly dynamic nature of business environments. Performance management entails the observation and comparison of key performance indicators that have been defined for a particular strategy or process against established targets. In case of deviations then analysis must be done to determine the causes after which corrective action is taken. During the analysis stage, it also imperative that forecasting is done to establish the likely outcomes after the corrective actions are taken. The process then goes back to the initial observation stage thus completing the performance management cycle. Performance management is thus a very powerful technique that enables the performance of organizations to be enhanced through process improvement of functions and the establishment of a balanced set of performance measures that can be used to assess the overall performance of an organization on a continuous basis.