The benefits of performance management are as follows:
1) Competitive Business Environment: In comparison to previous years, the current organizations are increasingly required to handle various issues related to performance due to increased competition and the need to perform greater activities with limited resources.
It is only the human resource that can ensure the existence, survival, and success of any organization in the dynamic business environment.
Thus, in comparison to maintenance and collective bargaining, greater preference is given to the performance-oriented human resource management practices.
2) Business-HR Partnership: A lot of pressure is exerted on the human resource managers for proving the worth of human resource activities, mainly in two dimensions.
First of all, the contribution to the bottom line of the business in terms of sales, earnings, profits, and turnover per share and secondly the effectiveness of the various activities of human resource and various activities inefficient operations of the organization with respect to work culture, competence and skills of human resource, and performance of manpower.
By providing greater priority to the performance management practices, value addition can be achieved.
3) Human Resource Need Fulfilment: The majority of employees working in any organization are placed at self-esteem and self-actualization levels in the motivational hierarchy. Their main focus remains on:
- Being involved in a higher level of activities and to deal with professional challenges with flexibility and autonomy.
- Looking for suitable rewards related to their performance which is mostly of non-monetary nature.
- Continuously looking for upgrading the skills.
- Looking for a work environment that can motivate a higher level of performance, including teamwork.
- Looking for transparency and open communication.
All these requirements can be accomplished only when there is an existence of performance-oriented human resource practices.
4) Integrated Motivational Tool: A combination of motivational methods is included in performance management, which can accomplish greater employee performance.
The conversion of hidden capabilities present in the human resources into more tangible and appropriate performance is also facilitated by it.
5) Installing High-Performance Work Culture: The main focus of performance management practices is to develop a unique and constructive work environment.
Empathy, trust, pro-activism, and transparency are supported by it. All these efforts help the employees to improve their performance to an optimum level.
6) Long-Term Impact and Sustainable Outcomes: By implementing the performance management practices, it is possible to attain long-term favorable outcomes for both the organization and employees because both the organization’s long-term and short-term needs and its manpower are effectively handled by performance management.
7) Individual and Collective Development: It is possible to have both collective and individual development in the organization with the help of performance management.
All the performance-driven interventions will be provided to the individual as an employee and as a team member.
Thus, it is possible for an employee to grow and develop with his own special identity along with being a team player when the execution of various activities depends on interdependence.
Both collective and individual form of performance is required in current organizations, and harmony must be prevailing between them to ensure all-round development of employees and the organization.
8) Quantifiable Management: It is a common belief that the things which are not quantifiable cannot be managed. If something is not manageable, then the benefits cannot be obtained from that.
Being unquantifiable and having a questionable efficiency can be seen as the main criticisms related to conventional human resource management practices.
In comparison to this concept, the interventions and drivers of performance management can be seen as highly quantifiable, measurable, and present greater and improved outcomes.
9) Optimising Human Capital: Some kind of human potential pool is maintained by the organizations. But the biggest challenges in front of the organization are to transform these potentials into meaningful skills and competencies, utilizing them smartly for business benefits, and channelizing them towards a defined objective.
The core purpose of performance management activities is based on these challenges.
10) Regular Renewal of Skills and Competencies: There will be a regular requirement of renewing the skills and competencies due to a dynamic technological environment, reduced product life cycles, and fluctuating market demands.
According to the changing business realities, there is also a requirement to redefine the various operational and organizational level competencies.
When sufficient attention is paid towards performance-oriented strategies, drivers, and interventions by the organization, these types of competency and skill renewal are possible.
11) Fairness and Equality in Management: It is possible to ensure fairness in all aspects of the management with the help of performance management. When equality and fairness are implemented, a lot of benefits are achieved by both the organization and employees.
Greater organizational commitment can be obtained by facilitating equality with respect to growth and opportunities, and thus a very strong social association is created.