1.1 Describe the purpose of performance management and its relationship to business objectives.

Performance management can be defined as “a continuous process, which contributes to the effective management of individuals and teams in order to achieve high levels of organisational performance. As such, it establishes shared understanding about what is to be achieved and an approach to leading and developing people which will ensure that it is achieved” (Armstrong & Baron, 2014). Performance management should be implemented as a strategy which can relate to all aspects of the organisation and it should run in parallel to the organisations HR policies, culture, style and communication infrastructure; hence why it will vary from business to business.

When managing performance it should be taken into account that it can often be a complicated notion, and sometimes difficult to measure. Campbell 1990 suggested that performance is the outcome of three determinants: 1. Declarative knowledge 2. Procedural knowledge and skills 3. Motivation
Therefore then assessing and rewarding performance a number of different factors will have to be taken into account including both outputs (results – i.e. turnover figures etc.) and inputs (behaviours – i.e. motivation).

Effective performance management will ensure that employees working for the organisation will be aware of what the business aims to achieve and their role in helping them achieve these goals. It should also let them know what skills and competencies are required from them to fulfil their role. In turn performance management should further develop individual performance, and highlight areas, which need development to contribute to the overall performance of the organisation. If performance management is carried out effectively employees will be more engaged and therefore more likely to be performing to