Performance Management Levels

 

Traditionally, performance management in an organisational context has been divided into three levels: strategic, operational and individual performance management (Brudan, 2010).

 

For a better understanding of the differences between these various levels of performance management it is important to further analyse their evolution and main characteristics.

 

 

Levels of performance management

Description

Questions that the performance management levels aims to answer

Strategic performance management

 

At strategic level, performance management deals with the achievement of the overall organisational objectives.

 

Practitioners refer to it as corporate, business, organisational or enterprise performance management, this being the highest and most complete level of usage of performance management principles in organizations.

 

Strategic management is a key driver of performance management at this level, as the key processes related to performance management systems are strategy formulation and implementation.  

 

de Waal (2007) presents in one of his papers a method which increases the chance of successful implementation and use of a performance management system at strategic level. The method is called the strategic performance management development cycle, which consists of three stages: design a strategic management model; design a strategic reporting model; and design a performance-driven behavioral model.

Is the strategy being implemented in order to achieve the organisational objectives?

Is the organisation delivering the expected results?

 

Operational performance management

 

Performance management at operational level is linked to operational management, as its focus is on the achievement of operational objectives. Although aligned with corporate strategy, the focus here is more functional / tactical.

 

The evolution of operational performance management is linked to the evolution of accounting and management in history. This is due to the fact that operational performance was evaluated in terms of efficiency and effectiveness. And the easiest way to do this is by using financial indicators, provided by the accounting function in organizations.

 

Over time, as internal and external operating environments became more complex, organizations started to look at nonfinancial indicators of performance. This made the connection with operations management and other aspects of the general management discipline.  

Is each department and project meeting the targets?

How are operational activities supporting the organizational strategy?

Are activities and projects efficient enough or is optimization necessary?

 

Individual performance managementt

 

The traditional level at which performance management is used in organizations is the individual level, looking at the performance of individuals in an organizational context. It is perhaps the level with the longest evolution in
history, as it mirrors the level of organisational maturity. (Brudan, 2009).

 

At individual level, performance management is represented by an integrated and planned system for continuously improving the performance of all employees.

 

It involves defining work goals and standards, reviewing performance against these standards, actively managing all levels of performance, and maximising learning and development.  

How are individuals performing?

How can individuals improve their own performance?

 

References

  • Brudan, A. (2010), Rediscovering performance management: systems, learning and integration, Measuring Business Excellence, Vol. 14, No. 1, pp. 109-123.
  • Brudan, A. (2009), Integrated Performance Management: Linking Strategic, Operational and Individual Performance, available at: http://www.pma.otago.ac.nz/pma-cd/papers/1090.pdf (accessed 12 August 2010).
  • de Waal, A., A. (2007), Successful performance management? Apply the strategic performance management development cycle!, Measuring Business Excellence, Vol. 11,  Iss: 2, pp. 4-11.

Integration : Introduction

 

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