Performance Management: Definition, Characteristics, Principles, Processes, Challenges, etc

Performance Management: Definition, Characteristics, Principles, Processes, Challenges, etc


SMK performance-management system

Definition of Performance Management

Performance management is a way to get better results from organizations, teams, and individuals by understanding and managing performance within an agreed framework of planned goals and specified competency requirements (Armstrong in Tampubolon, 2020, p. 80).



The birth of performance-based management is part of the new public management reforms carried out by developed countries in Europe and America since the 1980s. The focus of performance-based management is public sector performance measurement that is oriented towards measuring outcomes, not just measuring input and output (Pasolong, 2019, p. 201).


Performance management or performance management is a comprehensive or holistic process that is mostly participatory in nature and has the goal of managing, supervising in the workplace as a systematic and organized approach to managing and rewarding performance by generating and maintaining positive management motivation of employees (Tampubolon, 2020, p. 80). Because it must be carried out in a systematic and organized manner, this performance management is also often referred to as a performance management system or abbreviated SMK.



Meanwhile, according to Sadikin et al (2020, p. 105) performance management is an activity that is directly related to the criteria used to determine the assessment of employees who monitor, measure, evaluate and document performance and the results of the progress or decline of the organization.



Furthermore, according to Pasolong (2019, p. 202) performance management is an approach used to improve performance based on a continuous process in setting bureaucratic performance targets, namely collecting data, analyzing, reviewing, measuring performance, and reporting performance as material for improving subsequent performance.


Thus it can be concluded that performance management is an orderly process to improve performance with planned stages such as collecting data, analyzing, measuring performance based on planned goals and well-defined competencies so as to be able to produce a process of change which will ultimately have an impact on performance culture improvement.


Features/Characteristics of Performance Management

Performance Management is a complex concept that covers different dimensions of organizations and people. Performance planning, development and reward systems enable managers to realize their true potential in order to contribute to organizational growth and development. To achieve this, several prerequisites are needed with the characteristics and characteristics that need to be maintained, which include the following.



Organizational goals

Managers need to clearly and precisely lay down organizational goals, objectives and ensure that these are well informed to other managers and employees and make them to realize what the organization expects of them. Organizational goals need to be translated into individual, team, and departmental or divisional goals.


The performance of individuals, teams, departments/divisions needs to be evaluated on an ongoing basis. The organization shall develop an evaluation system and process, designed and developed on a scientific basis.

Cooperate but not control

Managers should maintain the practice of getting work done through systems to gain consensus management control rather than through control or coercion.

Self-management team

Management needs to encourage individuals and teams to self-manage their performance. This procedure was created in managing a sense of responsibility and developing a passion to work with commitment and evaluate its strengths and weaknesses from time to time and plan to reduce performance gaps.

Leadership development

Managers need to identify managers who have leadership potential and regardless of sincerity and honesty to ensure better and more effective two-way communication between managers and managers. Feedback system The organization must have an excellent feedback system for the performance of managers/individuals/teams/departments. Must be monitored constantly and generate feedback for management (Tampubolon, 2020, p. 81).

Performance Management System Components

Experts consider the performance management system as a strategic tool as it relates to the achievement of long-term organizational goals and the effective functioning of the organization in its external environment. Performance Management affects four types of integration namely, vertical, functional, human resources, and objectives.


vertical Integration,

meaning that the performance management component aligns goals at the organizational, individual, and team levels and integrates them for effective performance where individuals and teams agree to dialogue to work within the broad framework of organizational goals and values.

functional integration,

concerned with focusing some functional energy, plans, policies, and strategies into tasks at different levels and parts of the organization.

Human Resources Integration,

this ensures the effective integration of various human resources management (HRM) subsystems to achieve organizational goals with optimal performance. This subsystem includes human resource management, task monitoring, job design, motivation, appraisal and reward, and training and empowerment.

goal Integration,

focuses on conformity between management needs, aspirations and goals with organizational goals and objectives (Tampubolon, 2020, p. 80).

Performance Management Elements

Pasolong (2019, p. 202) states that the elements of performance management are as follows.


The regularity of the activity process.

Performance improvements.

Through regular processes and in the long term.

Determination of performance targets and their measurement.

Performance measurement.

Collect, analyze, review, report and use to improve subsequent performance.

Performance Management Principles

The quality and effectiveness of performance management is a reality in organizations that can only be realized if certain basic principles or management practices are followed. According to Tampubolon (2020, p. 81) some of the principles of performance management include the following.



Decisions related to performance improvement and measurement such as planning, work allocation, guidance and counseling and monitoring, performance review. Must be communicated effectively to managers and other members of the organization.

Employee development and participation

Effective empowerment of employees and managers (individuals and teams) in the decision-making process and treating them as partners in the company. Recognizing employees in managing their services, talents and abilities, rewarding and giving more authority and responsibility.

Fair treatment values

ensuring satisfying satisfaction for the stakeholders in the organization, empathy and trust and treating people as human beings instead of just as employees form the basic foundation, set apart from others.

Traditional work environment

Management needs to create a conducive and pleasant work culture and climate that will help people to share their knowledge and experience information to fulfill managing aspirations and achieve organizational goals. Managers and employees must be informed about the organization’s mission, goals, values ​​and framework for managing and developing individuals and teams for better performance.

External environment

Effective and contextual management of the external environment to overcome barriers and obstacles in an effective managerial performance manner.

Process Performance Management System

Performance Management consists of three important parts, namely:


Planning, Performance Management and Development;

Monitor Management and Development Performance; And

Annual Share Listing.

Planning is made at the beginning of the year while monitoring and mentoring is continued throughout the year as the plan is implemented. The inventory takes place at the end of the year. Each of these phases requires certain concrete actions by managers and managers. These two parties (manager and manager) provide appropriate input keeping the whole process in perspective.


The entire performance management process can be approached in different modes. Planning, review and stock taking can occur throughout the year, more specifically during periodic reviews during the monitoring and mentoring phase. Thus, these three phases are dynamic and continuously interact with each other.


Implementation of Good Performance Management

There are certain special features that will make performance management more effective and qualitative in achieving organizational goals, including the following.


Continuous process

Performance management must be a continuous process and must be carried out throughout the year, in totality, namely performance planning and management development, management performance monitoring and management development assistance and annual stock taking. These three phases should be implemented sequentially.


The performance management process must be flexible and must ensure managers and managers act together. However, each party must have sufficient maneuverability to design their own processes within the overall framework for performance management.


Performance management or performance management systems must be futuristic, because the three parts of performance management are oriented towards planning and improving in the future. The evaluation system provides the necessary input for future actions.


Performance Management is participatory. This provides for regular and frequent dialogue between manager and manager to discuss performance as well as development needs.


Performance Management aims to measure management’s actual performance against planned performance, ie, targets, standards, or indicators.

Behavior in Content

Performance Management is fully trait development and concerns itself strongly with the behavioral aspects of psychological and organizational personality traits, which are important inputs to the performance process. Performance Management determines the personal attributes and behaviors of each of these managers and carefully assesses the context of their contribution to managing performance levels. This paved the way for identifying the manager’s future development needs.

Win-Win Philosophy

Performance Management provides a framework within which managers must support their management to succeed and win.

Performance Management Challenge

Performance measurement in the private sector relies on the financial aspect because the goal is to seek profit so it is easy to measure because it is quantitative and real. However, this condition is different from public sector organizations, where the assessment of the success of public sector organizations in carrying out their functions is the satisfaction felt by the community with the provision of qualitative public goods and services.


Thus, according to Mahsun (in Pasolong, 2019, p. 217) argues that there are several challenges or obstacles that will be faced in measuring performance in performance management, which include the following.


The goal of the organization is not to maximize profits.

The goal of public sector organizations is to improve public services and provide public goods.

The nature of the output is qualitative, intangible and indirect.

The output generated from the activities of public organizations is generally qualitative in nature, intangible and not directly felt at the time so that organizational performance is more difficult to measure.

There is no direct relationship between input and output (discretionary cost center).

In the concept of responsibility accounting, a public sector organization is an entity that must be treated as a responsibility center. Meanwhile, on the other hand, the input characteristics (costs) that occur cannot be traced directly to the output, as are the nature of policy costs (discretionary costs). This makes it difficult to set performance benchmark standards.

Does not operate based on market force so that it requires instruments to replace market mechanisms.

Public sector organizations do not operate as there is market competition so that not all output produced is available in the market. Because there is no independent comparison, in performance measurement, an instrument to replace the market mechanism is needed.

Related to customer satisfaction (society).

Public sector organizations provide services to very heterogeneous communities, thus measuring the satisfaction of people who have diverse needs and expectations is not an easy job.

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