Performance improvement is a broad category of management that refers to the systematic approach of identifying, measuring, and improving the efficiency and effectiveness of processes. It can be applied to an individual or organizational performance, such as athletics or commercial business.
In organizational development, "performance improvement" refers to a systematic approach in which managers and governing body of an organization put into place and manage a program to improve the "performance" of a person or organization as measured by predetermined metrics. First, the organization determines which metrics to track and measures their current level of performance. It then generates ideas for modifying organizational behavior and infrastructure, which are implemented to achieve higher output. At the organizational level, performance improvement usually involves softer forms of measurement, such as customer satisfaction surveys or reviews, which are used to obtain qualitative information about performance from the viewpoint of customers for improvement.
In business, organizations attempt to influence performance in sales, operations, and employee engagement through reward-based systems, sometimes drawing on motivational theories such as Maslow's hierarchy of needs. Some organizations use reward systems as part of performance improvement initiatives. These systems may include monetary and non-monetary incentives and are intended to influence employee morale. Some supporters of non-cash awards argue that they differ psychologically from salary-based compensation, although empirical evidence for their effectiveness varies by context. Non-cash awards are thought to motivate higher achievement and drive greater returns on investment. Cash as a reward can also be spent on day-to-day items like food or gas and does not create the increased "psychological reward" of achieving special items or points to acquire items.
There is evidence that monetary rewards are not effective outside the context of repetitive work. In some cases, monetary incentive plans may decrease employee morale, as seen by Microsoft's stack-ranking system, where the total reward amount is fixed and employees are graded on an artificially fitted distribution.
If an employee's performance is unsatisfactory, the employer may set out a performance improvement plan (PIP) to help the employee improve. This may be because the employee is failing to meet the goals for their role or due to other problems such as poor behavior and/or interpersonal skills. A PIP is typically a written document outlining clear expectations for the employee, explaining how the employee is failing to meet them, laying out what improvements are expected, explaining whether and how managers will support the employee in improving, and indicating what the consequences will be if the employee fails to improve. These requirements are typically specific and measurable and consequences for failing to meet them might include a transfer, demotion, or termination.
Typically, the employee's manager and someone from human resources would meet with the employee to discuss the PIP. According to Donald L. Kirkpatrick, a PIP should be developed by the manager and the employee together, because it requires both's participation in order to be successful. The American Society for Human Resource Management recommends that "a PIP should be used when there is a commitment to help the employee improve", not just as a way to prepare to terminate the employee. In practice, however, many companies do opt to use PIP as a means to start or accelerate a desired termination.
Performance is an abstract concept and must be represented by concrete, measurable goals or objectives. For example, a baseball player's performance is abstract, as it encompasses various activities. Batting average is a concrete measure of a particular performance attribute for a particular game role, batting, for the game of baseball.
Performance may involve an individual or a group acting collectively. The performance platform refers to the infrastructure, tools, or systems used to carry out the activity.
Performance improvement can be approached by optimizing the use of existing platforms or by modifying the platform itself in order to enable more effective outcomes.
For instance, in several sports such as tennis and golf, there have been technological improvements in the apparatuses used. The improved apparatus in turn allows players to achieve better performance with no improvement in skill by purchasing new equipment. The apparatus, the golf club and golf ball, or the tennis racket provides the player with a higher theoretical performance limit.
Performance is a measure of the results achieved. Performance efficiency is the ratio between effort expended and results achieved. The difference between current performance and the theoretical performance limit is the performance improvement zone.
Another way to think of performance improvement is to see it as improvement in four potential areas:
Business performance management and improvement can be thought of as a cycle:
In his study of innate human needs, psychologist Abraham Maslow in his concept of a hierarchy of needs identified esteem and social fulfillment, garnered by recognition by family and peers, as a basic human need, and therefore able to be tied to structured programs that increase performance. Abraham Maslow, on âÂÂThird Forceâ psychology, combines aspects of behavioral, cognitive, and emotional psychology, and accounts for the impact of culture and society on behavior.