The field of performance management can comprise two separate types of management. In one aspect of performance management, an analyst may view the performance of a company as a whole, and also evaluate the effectiveness of the managers and heads of companies in reaching goals. In another sense, performance management may be a system of evaluating employees to help them reach reasonable goals and thus ensure that the company performs better. This discussion will focus on the latter definition.

Performance management of individual employees differs. It generally includes the following: planning work, setting goals, offering feedback and reviews, offering opportunities to learn more in one’s field, and rewarding employees who perform well.

Employee performance management works best when work is planned and goals are consistent. This may mean having a clear way to communicate regarding work expected at the moment and upcoming work. Planning also includes defining expectations of the employee so that he or she is not broadsided by evaluation criteria not included in planning.

Planning and setting goals in performance management also creates a system of predictable rewards for good performance, and consequences for poor performance. This way the employee can reasonably assume the consequences of work performance, whether good or bad.

Performance management also involves giving feedback to employees on a more consistent basis than the average annual review. Instead, an employee’s ability to exceed or failure to meet goals may be monitored on a monthly basis. This provides the employee with either the opportunity to receive compliments and rewards fairly regularly, or to make behavior changes sooner if performance is not up to par.

Often employees feel that end of the year reviews contain criticisms of work in the past year that were never openly discussed with the employee. The employee benefits from a more consistent model of performance management evaluation, since this gives a person time to address issues and change problem issues.

In a performance management model, employees must also be given ways to grow and develop in their field. This means giving opportunities to work on harder projects, pairing less-skilled employees with expert employees, and offering team models where employees can direct and make decisions. Greater responsibility and opportunities to advance in one’s field are essential to maintaining happy and productive employees.

Rewards are also a huge part of performance management. The greatest part of this is rewards of monetary nature, either in bonuses or raises, when employees perform well. As well, employees who actually are now qualified to work in a high level of their field should be placed in positions of greater responsibility, and receive a greater share of pay. Performance analysis should focus as much or more on positive performance than it does on negative performance. Rewards for positive performance must be real and tangible, or else the company runs the risk of becoming a “negative action” company only.

Employee performance management may be taught to companies who have difficulty maintaining performance of employees or who have a long history of unhappy employees and turnaround. Companies may hire experts in performance management to learn how to model its concepts.