Management by Performance

The basis of management by performance is rooted in the objectives. Without a clear purpose or goal, any action made is undirected and for all intents and purposes, meaningless. The vision steers all concerted efforts into a heading and that is the key to management by performance—the desired end.

Performance is a difficult thing to measure, but with an objective in mind, your action receives some clarity. The same is true for management but with the metrics of management by performance, it is turned into something more solid; a comprehensible idea that can show how near or how far a person is from achieving his goal.

Comparing Results

With an objective in mind, any action under this style of management will produce two results. The first is the result desired by the objective, and the second is the result from the action itself. And by comparing these two results, a metric is achieved—a system of measurement where any difference between the two results is an almost numerical value of how much more is needed to be done, in terms of performance.

A very good example of this system of measurement is by comparing periodic business reports. By using a certain report as a standard, such as a business report for the first quarter of 2010, the performances of the succeeding first quarter reports until the present can show if the activities of the company are nearing its objectives with positive profits and performances, or if it is creating an even wider gap from the objectives because of poor numbers and performance.

It must be said, though, that the standard for measuring must be chosen with utmost care. If the chosen standard is one of the poorest performances, any report will always have positive values. If the standard is average, the company's performance evaluation may have some more meaning. On the other hand, choosing very high standards will always show poor performance from the activities of the company, even if the efforts have been of increased positive values.

The Meaning of the Difference

In performance development, the difference between desired and actual results is a call to action, depending on the degree of difference. The goals have been measured and the actual results have been measured, with the difference telling the company, department, group or individual precisely what needs to be done.

If the difference is too great, there can be two conclusions drawn. Either the standards set are too high, or the group is simply not being responsible enough to do the assigned tasks, which in turn, leads to poor performance. The former is a problem for management alone, and the goal must be changed to something that is more realistic. The latter is a management as well as a group problem, and poor performance is only the effect of the poor relationship between these two.

In this case, the US Office of Personnel Management or OPM has documented a series of steps in order to remedy the problem. These are:

• Goals are made in a clearer language with more realistic terms, and the tasks set are more tangible and broken down into simpler processes.


• The tasks are followed closely under the assumption that a person or a group can identify more readily where the bottleneck is at, for each process.


• Training might be necessary to reduce the possibility of failure as well as to minimize time wastage in completing a task.


• Performance ratings are given so that management can reward those with above-par performances, and to encourage or retrain those with poor performances.

The Necessity of Big Brother

It is always important to be able to monitor the performance of a company, department, group, or individual, even in the other styles of management, but in management by performance it is a more of a necessity than anything else. It is that element in this style of management that allows a reaction or response to a changing situation as quickly as it is needed to be.

The ability to know of and be informed of the performance of a unit is essential to any business. While a goal or vision is always general in terms, the circumstances a unit comes across with in everyday situations are very specific. There are always many variables at play, and an ordinary task may become quickly crucial in a moment, or totally useless and inutile as the conditions change.

By monitoring the performance of the unit, management is quickly able to perceive the changing elements from an objective point of view. Like a general in the battlefield, the overview provides more insights than what those in the front lines can see. And this insight can be used to change the tactics and the tasks needed to be done in a fluid state of flux, making the company as responsive as possible.

The Benefits Derived from the Performance Style of Management

One thing you need to know about management by performance is that all the pieces of information in the field and in the home offices is the same. This means the information is centralized, organized, and up-to-date. This unification of information yields several benefits for all its users.

For businesses strongly oriented toward sales, the information gathered in the field is invaluable and can directly lead to greater sales. Delays or stoppages in any project can easily be seen, and decisions can be made, thereby allowing the company to avoid unnecessary use of resources, or pour in more resources as the conditions dictate. As a result-oriented style of management, the units are encouraged to simply perform, to the benefit of the organization or company.

Performance management or management by performance, like other styles of management, is a means of exerting control over a business or endeavor. By fixing the company’s vision and using the past and present conditions as a guide, the results will firmly be in the company management's own hands and nowhere else.