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Performance Management > towards a successful business

Performance Management > towards a successful business

By Virginia Fabris

Published: 2 May 2025

How to effectively achieve corporate business objectives and ensure successful business management? There are numerous measures that can be implemented at the organisational level. Among them is performance management, a practice that is increasingly in vogue to ensure that a company's productivity increases.

But what is it? What is performance management and what are its aims? And how is this practice implemented within the company?

Let's discover together the secrets of Performance Management, which has now become a must to achieve business success!

What is Performance Management? > Definition

The term Performance Management refers to the communication process that takes place between the employee and his or her supervisor and which involves the evaluation of his or her performance.

Performance Management is a process of exchanging information between managers and employees in order to arrive at a definition of the quality of their performance in the light of the company's predetermined discoveries. It is a process of analysing performance in order to check whether individual behaviour is in accordance with the company's objectives.

Project Management is therefore configured as the set of methodologies and processes developed to measure the degree of alignment between the company's strategic objectives and the performance of its employees, as well as the set of criteria and techniques for evaluating the performance of the workers themselves.

Performance Management System

Thus, to define the performance management process, reference is also made to the Performance Management System, or the network of techniques, procedures and criteria applied to promote the evaluation and implementation of employee performance.

The purpose of the Performance Management System is to set targets and make the competences expected by the company from each individual employee evident.

What is Performance Management used for? > Purpose

Performance Management serves to promote the personal development of the employee in order to ensure, through his or her growth, the development of the business itself.

Performance Management is a process based on the principle of investing in the company's human capital in order to foster the growth of economic capital.

In fact, Performance Management pursues the objective of continually improving the performance of the human resources employed in a company, because it is based on the conviction that the growth of the business itself is guaranteed first and foremost by the quality of the employees' performance.

Thus, performance management systems are procedures aimed at implementing employee performance, based on the conviction that this is the basis on which a decisive increase in company turnover can be carried out.

From this perspective, personal growth of employees and economic growth of the business are two closely linked concepts.

The benefits brought by the application of performance management are obvious: let us see them together.

Performance management...

→ Creates greater motivation in employees

😊 Performance Management, when properly applied, creates increased motivation among employees.

Communication with the supervisor results in a growth opportunity for the employee. Indeed, the point of Performance Management is that the employee must be able to emerge from the confrontation with his supervisor enriched in terms of motivation and sharing the company's values. He or she must feel incentivised to improve and spurred on to display his or her best professional qualities.

→ Retains talent

👑 Human resource development can have a positive impact in terms of retaining talented human resources within the corporate landscape.

Indeed, if an employee feels humanly regarded and appreciated, he will be more motivated not to leave the company. Not only that, he/she will also be more actively engaged in making the business he/she is part of successful.

In fact, there is evidence that an increase in the employee's degree of personal satisfaction increases his degree of involvement in the company's cause.

→ Encourages increased earnings

💰 Only a motivated employee can result in an actual increase in a company's earnings.

In fact, an employee who is satisfied with his role within the business, not only from an employment point of view, but also from a human point of view, is an employee who can easily provide quality professional services. And it is these that ultimately make the difference in defining the effectiveness of a business.

In fact, it is precisely high quality professional performance that is linked to an increase in a company's turnover. It is well known that satisfied employees are employees who are inclined to provide added value to the company and to devote themselves with particular zeal and creativity to achieving the company's objectives.

Performance Management > How to implement it optimally

→ Promoting internal communication

Developing a good internal communication plan is essential to ensure a good performance management strategy.

Indeed, communication within the company must be constant, fluid, dynamic, clear, easy, consistent and constant.

Evaluation interview

Between supervisor and employee, internal communication often takes the form of an appraisal interview. In it, attention is given to feedback concerning the employee's performance but, unlike traditional appraisal systems, this time the focus is not on the past, but on the future.

This means that the employee is evaluated not so much on what he or she has done up to the time of the interview, but on what he or she will be able to do in the future. In this way, the employee's potential and capabilities are highlighted, not so much what he or she has or has not yet shown.

Important: Performance Management should be based on objective judgements, i.e. based on clear and agreed KPIs. In this type of evaluation, there is no room for the subjectivity of the evaluator.

The feedback is aimed at promoting merit and the possibility of filling any gaps in the employee's performance in a constructive manner, not his or her deprecation. The aim is to foster professional growth, not regression.

→ Developing employees' skills

Thus, the aim of performance management is to stimulate the personal progress of the employee in order to foster the general progress of the company.

As we have already mentioned, the focus is on enhancing the human resources available. Indeed, employees are led, through the performance management process, to develop their skills with a view to increasing company productivity.

In this sense, it is necessary to be clear about the tasks and competences of each employee and in which direction his or her work should go. Indeed, it will be in this direction that professional growth will have to take place. The latter will have to be based on an implementation of both the technical competences necessary to perform the job and the soft skills, which are increasingly important for determining a quality working environment.

In this case, competence mapping can be used, i.e. a tool used in managerial circles to assess the savoir-faire and savoir-être of each human resource.

The mapping of each employee's competencies can help to understand in which areas it is necessary to increase the performance of one's employees in order to achieve corporate objectives.

Performance Management: application in practice > guidelines

Now that we have clarified the advantages of implementing a performance management strategy, let us see how to develop one in such a way that it is successful.

→ Setting goals

The first step towards successful performance management is to set business objectives to be achieved.

In fact, in order to increase an employee's performance, it is necessary to understand what he or she is using his or her skills for. Only in this way will it be possible to have a clear and precise overview of exactly which competences are to be implemented.

→ Define the type of performance expected

Closely linked to the setting of corporate objectives is the definition of the type of performance expected of the employee.

Both for the supervisor and, above all, for the employee, it is important, in fact, to understand what is expected of him or her, i.e. which professional performance is deemed to be the winning one in order to achieve the set goals.

Knowledge of expected performance can be crucial for the employee, as it will enable him/her to calibrate his/her skills and attitudes according to what is expected of him/her.

→ Constantly monitoring results

For performance management to be effective, interviews, hence feedback, must be frequent, i.e. carried out on a regular basis. In fact, appraisal must be carried out on an ongoing basis in order to bring satisfactory results.

Monitoring, evaluation and growth, in fact, must be continuous, not a one-off experience.

→ Evaluation of performance, not of the person

Especially with regard to the expression of criticism, but in general in any kind of evaluation, it should be made clear that feedback should not be given with reference to the person in question, but to his/her professional performance.

This is very important! In fact, an appraisal in a work context never defines the quality of a person and must never be a value judgement of that person.

Instead, feedback is aimed at judging the working method or attitude towards the profession.

☝☝ In the appraisal process, no employee should feel challenged as a person, but should, if anything, be given notes on how to improve his or her approach to the job.

The measures for implementing a good performance management strategy can be varied and diverse, but it is good to keep the points described in this article in mind. They, in fact, constitute the cornerstones, not to say the conditio sine qua non of good performance management.

Do you have any advice or personal experience you would like to share with us? Please do not hesitate to do so by leaving a comment in the appropriate section!

Article translated from Italian