Importance of Performance Management in an Organization

By Danni White - Published on August 1, 2019
Importance of Performance Management

In some ways, performance appraisals and evaluation have just become something that we either look forward to or dread, usually once a year. They have long been accepted as something that is done in business, but many people have no idea why. The importance of performance management goes beyond evaluations, raises, and promotions. It has the propensity to make or break an organization.

Importance of Performance Management

Below are some of the reasons that ongoing performance management is so important to every organization.

1. It Provides a Look into the Future

By consistently monitoring and managing workplace performance, leaders can see potential future problems. Like with any type of issue, early detection is key. The earlier problems are confronted the less effect that they will likely have.

For instance, if the company notices that a certain employee is not a team player, they can either move that employee to a position that does not require teamwork, provide training to that employee revolving around teamwork, or let that employee go before it becomes a problem. By acting before the potential problem becomes an actual problem, the organization can prevent unnecessary trouble.

2. Helps Create Development and Training Strategies

As mentioned above, the earlier a problem is detected, the better. One of these problems could be that employees do not know how to perform certain processes correctly. If this continues, the organization might fall apart due to oversight. However, with performance management, this would probably be detected. The organization could then create training programs to change the issue into an opportunity for improvement.

3. Provides Clarity in the Organization

It is a common problem that many employees are unsure of what exactly their role entails, what is expected of them, and who they are to report to. Through performance management, the company can make all of this very clear. A lack of understanding often leads to a lack of productivity. Therefore, by providing clarity for employees, the result will often be increased productivity and confidence.

4. Provides the Opportunity for Exchanging Feedback

A lack of communication in a relationship is grounds for trouble, and this includes working relationships. Quite often, management speaks to employees about their performance, but employees do not very often get a chance to voice concerns or frustrations. Effective performance management provides an avenue through which both the employer and the employee exchange feedback. In addition to gaining insight, employees often feel much more valued when they can voice their thoughts.

5. Increases Employee Retention

Performance management also encourages organizations to reward and recognize their employees. Lack of recognition is a big reason some employees leave a job and look for another. They want to be appreciated for their hard work. In addition to the clarity, the ability to share feedback, and the additional training when needed, rewards and recognition can play an important role in employee retention.

6. Boosts Employee Engagement

Performance management, when it truly involves employees, will boost employee engagement. When there is a disconnect between management and employees, it is almost as though employees are just going through the motions of the day. Their position becomes merely a job as opposed to a rewarding career. However, performance management has the capability of engaging employees fully and making them feel invested in the company. This leads to job satisfaction and employee loyalty, all of which increases productivity.

It is imperative that you and the other leaders in your organization acknowledge the importance of performance management. By avoiding it, you are setting yourself up for disaster. Meet with your human resources department and other leaders to put a performance management plan in place. You might consider asking employees for feedback on what they feel should be addressed. Though it may take some time to put together, investing your resources into developing an effective performance management strategy will be well worth the effort.

Danni White

Danni White | Danni White is the Director of Content Strategy and Development at Bython Media and the Editor-In-Chief at, a top B2B digital destination for C-Level executives, technologists, and marketers. Bython Media is also the parent company of,, List.Events, and

Danni White

Danni White | Danni White is the Director of Content Strategy and Development at Bython Media and the Editor-In-Chief at, a top B2B digital destin...

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