Organizational maintenance objectives
Another purpose of performance management systems is to provide information to be used for several organizational maintenance purposes. First, consider workforce planning, which is a set of systems that allows organizations to anticipate and respond to needs emerging within and outside the organization, to determine priorities, and to allocate human resources where they can do the most good. An important component of any workforce planning effort is the talent inventory, which is information on current resources (such as skills, abilities, promotional potential, and assignment histories of current employees). Buying talent is extremely expensive, and top performers know their worth in the market and their value through social media and career sites. In the case of executives, the stock market is a good metric. For example, when Kasper Rosted left his position of CEO at packaged-goods company Henkel to become CEO of Adidas, Adidas gained $1 billion in market cap due to an increase in the share price. Performance management systems are the primary means through which accurate talent inventories can be assembled. Also, these are critical in terms of keeping track of high-potential employees.
Other organizational maintenance purposes served by performance management systems include assessing future training needs, evaluating performance achievements at the organizational level, and evaluating the effectiveness of HR initiatives. For example, accurate data on employee performance can be used to evaluate whether employees perform at higher levels after participating in a training program. This type of evaluation cannot be conducted effectively in the absence of a good performance management system.
Finally, performance management systems allow you to collect useful information that can be used for several necessary — and sometimes, legally mandated — documentation purposes. Performance management systems allow for the documentation of important administrative decisions, such as terminations and promotions. This information can be especially useful in the case of litigation.
Performance Management for Dummies
By Herman Aguinis, PhD
2019, John Wiley & Sons, Inc., Hoboken, New Jersey
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