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Updated Dec 15, 2014

General Function of Performance Management Systems

This article describes the general function of performance management systems.

Performance management is a way of improving performance and maintaining high performance of individuals and groups in the organization. The general function of performance management systems covers the following:

  1. Maximized Profits
  2. Higher Employee Motivation
  3. Better Management Control

General Function of Performance Management Systems

Maximized Profits

A basic general function of performance management systems is to help the firm achieve higher financial performance. The firm can use performance management to increase effectiveness of salespeople, reduce waste and excess spending, and speed up strategic implementation. Thus, the general function of performance management systems contributes to business profitability.

Higher Employee Motivation

In improving employee motivation, a general function of performance management systems is to make it easier for managers to determine ways to motivate workers. For example, through a performance management system, a manager can design and apply a better incentive policy, and develop a more transparent and effective communication network in the firm. This part of the general function of performance management systems aims for higher worker performance through motivation.

Better Management Control

The general function of performance management systems in supporting management control aims to increase management effectiveness. This control refers to how managers direct workers to achieve desired output, and impose limits on workers to minimize errors and maximize efficiency. Better control means better firm effectiveness and efficiency. Thus, the general function of performance management systems also focuses on the activity of managers.

What does this general function of performance management systems mean for the firm?

The proper use of performance management can help maximize firm performance through the three main targets of the general function of performance management systems: better business financial standing, better worker performance, and better management effectiveness.

References

  • Behery, M., Jabeen, F., & Parakandi, M. (2014). Adopting a contemporary performance management system. International Journal of Productivity and Performance Management63(1), 22-43.
  • Maley, J. F., & Moeller, M. (2014). Global performance management systems. Journal of Business Research67(1), 2803-2810.
First published Dec 15, 2014. Updated Dec 15, 2014.