Performance Management: A New Approach in Performance Management

Abstract

Performance management is the process of planning, supervising, and improving the performance of individuals, teams, and the organization. The goal is to increase productivity, set performance goals, measure performance, provide feedback, develop performance, and support effective decision making. In performance management, new approaches that are more oriented towards employee development and engagement have replaced traditional approaches that focus on evaluation and control. This research methodology is based on literature review and discusses competency-based approaches, goals, and continuous feedback. Employee involvement in performance management provides benefits such as increased satisfaction, motivation, individual and team performance, skill development, communication, collaboration, and the formation of a motivating culture. Recognition and reward are also important in performance management, as they can improve employee motivation, performance, retention, and long-term contribution in the organization.

1. Introduction

Performance management refers to the process of planning, supervising, and improving the performance of individuals, teams, and organization. This involves identifying performance goals, measuring results, providing feedback, and managing performance development and improvement. Performance management focuses on how to achieve organizational goals through effective and efficient performance.

In general, the definition of performance management is a managerial activity that aims to ensure that organizational goals have been achieved consistently in various effective and efficient ways.

There are also those who define work management (MK) as an activity to ensure that organizational goals are achieved consistently through the process of planning, implementing, evaluating, and evaluating the performance of the organization’s tools. Performance Management is not only related to the performance of employees personally, but also related to the performance of an organization. In other words, MK is closely related to work processes and results based on the strategic objectives of an organization, namely customer satisfaction and contributing to the economy.

According to Bacal [1] the definition of performance management is continuous communication and carried out in partnership between an employee and his direct supervisor. This process includes building clear expectations and understanding of the work to be done. While Armstrong [2] performance management is a strategic and integrated approach to deliver sustainable success to organizations by improving the performance of employees who work in them and by developing the capabilities of teams and individual contributors.

According to Costello [3] performance management is the basis and driving force that is behind all organizational decisions, work efforts, and resource allocation. According to Schwartz [4] performance management is a management style based on open communication between managers and employees regarding the achievement of goals providing feedback from managers to employees and vice versa, as well as performance appraisal. According to Baird [5] the definition of performance management is a work process of a group of people to achieve predetermined goals, where this work process takes place continuously and continuously.

From the above understanding, it can be concluded that performance management is continuous communication between employees and superiors, building expectations and understanding of work that has a strategic approach to developing employee performance and team capabilities, from that performance management becomes the basis of organizational decisions, efforts, resource allocation through continuous work processes to achieve goals set by individuals in the organization.

In addition, performance management is also important in terms of company administration which involves various interrelated aspects. This management also plays a role in managing human resources to achieve company goals. Without good human resource management, business success will be difficult to achieve.

Performance management also serves to develop employee capacity. Through training, underperforming employees can be improved. Performance management also helps improve the company’s work system and improve employee performance.

The benefits of performance management include company leaders who can have a well-thought-out plan and measure individual and team performance. For companies, performance management is useful for progress and continuous improvement. For employees, performance management helps focus and improve ability and performance.

In conclusion, performance management and human resource management have an important role in achieving company targets and goals. This management not only has a financial impact, but also on the human resource aspect.

This research methodology is based on literature review and discusses competency-based approaches, goals, and continuous feedback. Employee involvement in performance management provides benefits such as increased satisfaction, motivation, individual and team performance, skills development, communication, collaboration, and the formation of a motivating culture. Recognition and reward are also important in performance management, as they can improve employee motivation, performance, retention, and long-term contribution in the organization.

2. Performance management objectives

1. Increase productivity: One of the main objectives of performance management is to increase the productivity of individuals and the organization as a whole. Through effective performance management, organizations can identify and eliminate barriers that hinder optimal performance, as well as develop strategies to increase work productivity.

2. Defining performance goals: Performance management helps in setting clear and measurable goals for individuals, teams, and organizations. By setting specific and measurable goals, performance management enables stakeholders to understand what is expected of their performance and provides clear direction for achieving desired outcomes.

3. Measuring performance: Performance management involves measuring the performance of individuals, teams, and organizations. Through the use of appropriate performance metrics and indicators, performance management helps in evaluating the extent to which objectives have been achieved and provides insight into strengths and weaknesses that need to be improved.

4. Providing feedback: One important component of performance management is providing clear and targeted feedback to individuals and teams. Good feedback helps in identifying strengths that need to be maintained and developed as well as areas that need improvement. By providing constructive feedback, performance management allows individuals and teams to grow and improve their performance.

5. Performance development: Performance management also plays a role in managing the development of individual and team performance. It involves drafting a development plan that identifies training, education, or other development opportunities to help individuals reach their full potential. Through this approach, performance management supports professional growth and individual empowerment.

6. Decision making: Performance management provides the data and information necessary for effective decision making. By having a good understanding of individual and team performance, management can make decisions regarding promotions, rewards, career development, or structural changes necessary to improve the overall performance of the organization.

Performance management is an important tool to achieve targets or goals that have been set. With this management, the achievement and implementation of targets can be carried out optimally. Performance management helps evaluate employee performance through feedback provided by superiors.

3. Traditional vs. new approaches in performance management

Performance management is an important part of organizational management that aims to improve the performance of individuals, teams, and the organization. However, there are differences in traditional approaches and new approaches to performance management practice.

Traditional approaches to performance management tend to focus on evaluating performance based on quantitative measures, such as sales targets or individual productivity. Evaluations are conducted periodically, often in the form of annual assessments, and feedback is provided by the immediate supervisor. This approach places more emphasis on control and supervision.

On the other hand, the new approach in performance management is more oriented towards individual development and collaboration. This approach emphasizes open and continuous communication between managers and employees, as well as an emphasis on learning and growth. Performance evaluation is not only carried out periodically, but also through feedback provided continuously and in relevant situations.

New approaches in performance management also include the use of digital technologies and tools that enable real-time data collection, more accurate performance monitoring, and in-depth analysis. In addition, this approach encourages active participation of employees in goal setting, planning, and evaluation of their performance.

Another difference between the traditional approach and the new approach is the shift in focus from performance appraisal to performance development. The new approach recognizes the importance of identifying individual strengths and weaknesses, as well as providing opportunities to develop the necessary skills and competencies.

In adopting a new approach in performance management, companies need to change the organizational culture, ensure management support and commitment, and provide the necessary training and guidance. The integration of technology and the use of appropriate tools are also important factors in the success of this new approach.

Overall, the new approach in performance management offers a more inclusive approach, focuses on individual development, and enables continuous improvement. In the face of constant challenges and changes, organizations need to consider these new approaches to achieve better performance and meet the increasingly high expectations of employees and customers.

3.1 Comparison between traditional approaches and new approaches in performance management

Traditional and new approaches are two different approaches in performance management. Traditional generally refers to methods that have been around for a long time, while new approaches are emerging in response to the changing business environment that is increasingly dynamic. Here is a comparison between the two:

3.1.1 Focus

Traditional: The traditional approach focuses more on periodic performance evaluations, such as annual or semiannual appraisals. The goal is to identify employees’ strengths and weaknesses and provide feedback on their performance.

New approach: The new approach focuses more on continuous, real-time performance management. In this approach, feedback and evaluation are continuous, so improvements can be made quickly and responsively.

3.1.2 Orientation

Traditional: Traditional approaches tend to be more oriented towards appraisal and rating of employee performance. Target achievement and comparison between employees are the focus.

New approach: The new approach is more oriented towards employee development and improving overall performance. The focus is on improving employees’ skills and competencies and facilitating professional growth.

3.1.3 Employee engagement

Traditional: Traditional tends to involve little employee involvement in the performance management process. Feedback often only comes from superiors and performance appraisals are conducted unilaterally.

New approach: The new approach encourages active employee involvement in performance management. Employees have a more active role in identifying goals, drawing up action plans, and providing feedback on themselves.

3.1.4 Use of technology

Traditional: Traditional approaches often rely on manual processes and physical documentation. Performance appraisals are usually done through written forms.

New approach: The new approach leverages technology, such as cloud-based applications, online collaboration tools, and digital performance management software. This makes it easy to monitor, real-time feedback, and track performance electronically [6, 7, 8].

In conclusion, traditional and new approaches in performance management have differences in focus, orientation, employee engagement, and use of technology. The new approach emphasizes continuous performance management, employee development, active engagement, and technology utilization. Companies need to consider their own context and need to choose the appropriate approach to effectively achieve organizational goals.

3.2 Disadvantages of traditional approaches and advantages of new approaches

The traditional approach in performance management has been used for many years, but it has some drawbacks worth noting. On the other hand, new approaches in performance management offer various advantages that can improve the effectiveness and efficiency of the performance management process. Here is an overview of the disadvantages of the traditional approach and the advantages of the new approach:

Disadvantages of the traditional approach:

1. Limited evaluations: Traditional approaches often use limited performance evaluations, such as annual or semiannual appraisals. This results in a picture of performance that is not always accurate or relevant to current conditions

2. Unresponsive: Traditional approaches tend to be unresponsive to necessary changes and improvements. Feedback is only provided periodically, so performance adjustments cannot be made in real-time.

3. Focus on shortcomings: Traditional approaches often focus more on highlighting employees’ weaknesses than leveraging their strengths. This can hinder individual growth and development [1, 9].

Advantages of the new approach:

1. Continuous performance management: The new approach offers continuous, real-time performance management. Feedback is provided regularly, allowing for immediate correction and improvement in employee performance [10].

2. Focus on development: The new approach is more oriented towards employee development. It pays attention to individual strengths and potential, as well as providing opportunities for career growth and upskilling [11].

3. Collaboration and participation: New approaches encourage collaboration between superiors and employees. Employees have a more active role in setting goals, planning actions, and providing feedback on their own performance [12].

4. Flexibility: The new approach allows flexibility in performance appraisal. It can take into account different work contexts, encompassing diverse duties and responsibilities [13].

By utilizing new approaches in performance management, companies can overcome the weaknesses of traditional approaches. The new approach offers better responsiveness, a focus on employee development, greater participation, and the ability to tailor assessments to individual needs and work contexts. Thus, companies can achieve better performance and achieve organizational goals more effectively.

4. Competency-based approach

4.1 Basic concepts and principles of competency-based approach in performance management

A competency-based approach in performance management is an approach that describes the abilities, knowledge, and behaviors of individuals relevant to the work performed. According to Boyatzis [14] a competency-based approach involves identifying, measuring, and developing individual competencies as the basis for achieving organizational success. Competencies include knowledge, skills, attitudes, and personal characteristics relevant to the work performed.

According Spencer [15], the process of competency identification involves job analysis to identify the competencies required in achieving desired results. It involves an in-depth understanding of the duties, responsibilities and requirements of the job as well as engaging relevant stakeholders. In a competency-based approach, competency measurement is done through holistic assessment. It involves direct observation, interviews, tests, and performance evaluations that focus on desired competencies [15].

Competency measurement is done through holistic assessment, including direct observation, interviews, tests, and performance evaluations. This allows objective measurement of the competencies that individuals possess [16]. This approach also involves ongoing competency development efforts. Development programs are designed to improve underdeveloped competencies and strengthen existing ones. This can include training, formal learning, mentoring, and work experience [16].

The competency-based approach encourages continuous competency development through training, formal learning, mentoring, and work experience. It helps individuals improve underdeveloped competencies and strengthen existing competencies [15]. According to Ulrich and Brockbank [17] a competency-based approach emphasizes the importance of organizational integrity in identifying, measuring, and developing competencies. The competencies identified should be relevant to the strategic objectives of the organization, and the performance management process should be grounded in the principles of fairness, objectivity, and transparency.

Linkage to Organizational Goals ensures that competencies measured and developed are in line with organizational goals. The competencies required by employees should support the strategy and success of the organization as a whole [17].

The advantages of a competency-based approach bring several advantages, including a clearer understanding of job expectations, more effective selection and placement of employees, targeted career development, and better performance and individual adaptability in the face of change [15].

5. Goal-based approach

5.1 Principles and steps of a goal-based approach in performance management

A goal-based approach in performance management is a method that focuses on setting specific goals, measuring performance based on goal achievement, and developing and providing feedback to improve performance. The following are the principles and steps of a goal-based approach in performance management.

Principles of a goal-based approach

1. Goal agreement: The goals set should be mutually agreed upon between superiors and subordinates to increase engagement and motivation.

2. Specific and measurable: Goals must be clear, specific, and measurable in order to be objectively evaluated.

3. Challenging and realistic: Goals should be challenging yet realistic in order to encourage employees to achieve better results.

4. Specified time: Each goal should have a set time limit to ensure accountability and effective monitoring.

Steps of a Goal-Based Approach:

1. Goal setting: Superiors and subordinates work together to set goals that are specific, measurable, and related to duties and responsibilities.

2. Monitoring and measurement: The performance of an individual or team is measured regularly based on the achievement of predefined goals.

3. Feedback and evaluation: Constructive feedback is given to individuals or teams based on the results of performance evaluations to assist in improvement and development.

4. Development planning: Through the identification of development needs, individual or team development plans are created to improve competencies and performance in the future [13, 18, 19].

By implementing a goal-based approach in performance management, organizations can create a clear focus, increase accountability, and drive better goal achievement individually and in teams.

5.2 Menetapkan tujuan SMART (specific, measurable, achievable, relevant, time-bound)

Setting SMART goals is an effective approach to performance management to ensure goals are clear, measurable, achievable, relevant and time limited.

SMART objectives:

1. Specific: Goals should be clear, focused, and specific in order to give individuals or teams clear direction.

2. Measurable: Objectives must be quantitatively or qualitatively measurable in order for progress and achievement to be assessed objectively.

3. Achievable: Goals should be realistic and achievable with available resources and capabilities.

4. Relevant: Objectives must be relevant to the organization’s tasks, responsibilities, and strategies to ensure a significant contribution.

5. Time-bound: Each goal should have a set time limit in order to have clear monitoring and increased accountability.

Steps to Setting SMART Goals:

1. Define objectives: Set objectives clearly and in detail to provide a common understanding to all relevant parties.

2. Set measurement criteria: Define measurable indicators to clearly evaluate the achievement of goals.

3. Feasibility and achievement evaluation: Consider the availability of resources and capabilities to achieve the goals set.

4. Relevance to context: Ensure that the goals set support the organization’s overall vision, mission, and strategy.

5. Set time limits: Set specific deadlines for achieving set goals [20, 21, 22].

By applying the SMART goals approach in performance management, organizations can ensure clear, measurable, and effectively achieved goals. This helps improve focus, performance, and achieve better results for individuals and teams in the organization.

6. Continuous feedback-based approach

A continuous feedback-based approach is a strategy in performance management that emphasizes the importance of continuous and continuous feedback in improving individual and overall organizational performance.

Continuous Feedback-Based Approach:

1. Feedback continuity: This approach promotes providing feedback on an ongoing and regular basis, not just during annual assessments or special events.

2. Engagement and communication: Involves interaction between superiors and subordinates in providing feedback, as well as facilitating open dialog to improve understanding and problem solving.

3. Continuous improvement: This approach aims to encourage continuous improvement through feedback provided periodically, so that individual and organizational performance continues to improve.

4. Skills development: Provide in-depth and specific feedback to aid the development of individual skills and competencies.

Benefits of a continuous feedback-based approach:

1. Performance improvement: By getting feedback continuously, individuals can gradually improve their skills, understanding, and performance.

2. Potential development: Regular feedback helps identify an individual’s development potential and provides appropriate direction to optimize that potential.

3. Improved relationships: Open communication and constructive feedback can improve the relationship between superiors and subordinates, creating a positive work climate.

4. Strategy adjustment: Continuous feedback helps organizations to adjust the strategies and tactics used in achieving business objectives [13, 23, 24].

By applying a continuous feedback-based approach in performance management, organizations can create a culture focused on learning, development, and continuous improvement. This provides individuals with the opportunity to continuously improve their performance and helps the organization achieve higher goals.

6.1 Why continuous feedback is important in performance management

Continuous feedback is an important element in performance management that plays a role in improving the quality of individual performance and achieving organizational goals. According Anseel et al. [23] the database continuously provides specific and clear information to individuals about their performance. This allows them to correct weaknesses, strengthen strengths, and direct their efforts in a more effective direction. Continuous feedback helps individuals to identify areas of development that need attention. By getting constructive and continuous feedback, individuals can focus on developing relevant skills and improving their competencies [24].

According DeNisi et al. [25], continuous feedback can provide a motivational boost to individuals. When individuals feel that their performance is recognized and valued, they will feel more motivated and engaged in achieving organizational goals. Continuous [24] feedback helps individuals to make adjustments and improvements in their work. By gaining information about successes and failures, individuals can take the necessary corrective actions to improve their performance. Continuous feedback facilitates open communication between superiors and subordinates. This allows for the creation of stronger, understanding, and collaborative working relationships, which in turn affects the success of the team and the organization as a whole [23].

By providing quality continuous feedback, organizations can improve individual performance, motivate employees, and achieve set goals. Constructive and continuous feedback is key in creating a culture of learning and continuous improvement in performance management.

6.2 Techniques and practices of providing effective feedback

Providing effective feedback is an important skill in performance management. The process of providing good feedback can affect an individual’s motivation, development, and performance. The following are some techniques and practices for providing effective feedback.

1. Choose the right time: Choosing the right time to give feedback is crucial. Choose the right moment where the individual can receive feedback openly and not feel threatened or stressed [26].

2. Be specific and focused: Effective feedback should be specific and focused on the observed behavior or performance. Avoid general or ambiguous feedback that does not provide clear clues about what needs to be improved or improved [24].

3. Given regularly: Providing feedback regularly helps build an ongoing feedback culture. Feedback provided regularly and consistently allows individuals to make continuous improvements and improve their performance over time [23].

4. Based on observation: Providing feedback based on direct observation or real observation will provide a solid foundation. Make objective observations about individual performance and provide concrete examples to support that feedback [23].

5. Focus on behaviors and outcomes: When providing feedback, focus on concrete behaviors and observable outcomes. Avoid giving direct judgments of individuals, but provide feedback related to actions and their impact [27].

6. Objective and fact-based: Make sure the feedback provided is objective and based on measurable facts. Avoid subjective judgments or assumptions that can lead to conflict or dissatisfaction [25].

7. Positionative and constructive: Effective feedback not only focuses on weaknesses or problems, but also recognizes individual achievements and strengths. Convey feedback with a positive attitude and offer constructive solutions or suggestions to improve performance [25].

8. Use a positive and constructive approach: Convey feedback with a positive and constructive approach. Give appreciation for good achievements and show support in helping individuals develop themselves [26].

9. Focusing on improvement: The main purpose of providing feedback is to assist individuals or teams in improving their performance. Therefore, ensure that the feedback provides constructive suggestions and solutions for implementable improvements [24].

10. Immediate and routine: Providing feedback immediately after an event or situation can help improve understanding and improve performance quickly. In addition, it is also important to provide feedback regularly as part of continuous communication [24].

11. Given with an empathetic attitude: Providing feedback with an empathetic and understanding attitude can help reduce an individual’s defenses or resistance. Listen carefully, show understanding, and convey feedback in polite and respectful language [23].

12. Provide opportunities for dialog: Create an atmosphere of open dialog and encourage individuals to participate in discussions about feedback. By listening to their perspectives, you can gain a better understanding and assist in designing effective remedial actions [27].

13. Give opportunity for response: In providing feedback, give individuals the opportunity to give their feedback or opinion. By engaging individuals in two-way dialog, it can build better understanding and increase engagement [23].

By using effective techniques and practices in providing feedback, managers and leaders can assist individuals in developing their potential, improving performance, and achieving the goals set in performance management.

7. Employee engagement in performance management

7.1 The importance of employee involvement in the performance management process

Employee engagement is a key factor in achieving successful performance management in an organization. When employees are actively involved in the performance management process, they feel a responsibility towards achieving organizational goals and are driven to improve their performance, why is employee engagement such an important factor in performance management? According to Locke and Latham [28], employee involvement in the performance management process can increase their level of satisfaction and motivation. Involving employees in goal setting, performance monitoring, and appraisals provides a sense of ownership to their work, increases intrinsic motivation, and creates a more positive work climate. According to Bakker et al. [29], employee involvement in the performance management process can increase motivation and job satisfaction. When employees feel empowered and involved in goal setting, performance appraisals, and career development, they feel valued and have control over their future within the organization. Involving employees in the performance management process can increase their job satisfaction. This is because they feel heard, have an active role, and have the opportunity to contribute to setting goals and designing action plans to achieve expected results.

Employees involved in the performance management process tend to be more motivated and engaged in their work. They feel a sense of responsibility and personal involvement towards achieving organizational goals, which can increase morale and productivity. According to DeNisi and Pritchard [30], through involvement in the performance management process, employees have the opportunity to develop their skills and potential. With open dialog between employees and managers, there can be an exchange of knowledge, constructive feedback, and identification of development needs to improve performance. Through involvement in the performance management process, employees have the opportunity to identify and develop competencies necessary to achieve organizational goals. The dialog and feedback process provides an opportunity to identify strengths and areas of development that need attention. Through open dialog, employees can convey expectations, needs, and problems at hand, while managers can provide the guidance, feedback, and resources necessary to effectively achieve organizational goals [31]. Involving employees who have knowledge and experience in their field in evaluating performance, setting goals, and formulating action plans can lead to better and more informed decisions. According to Macey and Schneider [32] by providing participation opportunities to all employees, regardless of level or position, organizations encourage fairness, diversity, and a strong sense of ownership among team members.

Employee involvement in the performance management process can increase their level of satisfaction and motivation. Involving employees in goal setting, performance monitoring, and appraisal provides a sense of ownership of their work, increases intrinsic motivation, and creates a more positive work climate [28]. Through active participation in goal setting, work planning, and evaluation, employees can have a clearer understanding of organizational expectations and goals, and can identify opportunities for development and performance improvement [30] open communication between managers and employees, employees can get constructive feedback and get information about development, training, and promotion opportunities that can advance their careers, pay attention to perspectives and input from employees, managers can combine diverse views and knowledge that contribute to better and more accurate decision making [33]. By providing opportunities for employees to participate, share ideas, and provide input, organizations can build strong relationships between employees and management, improve mutual communication, and strengthen the spirit of cooperation [34].

By involving employees in the performance management process, organizations can create a motivating culture, build strong relationships between employees and managers, a more productive work climate, improve individual and team performance, motivate employees, and build a collaborative culture that supports the achievement of overall organizational goals and improves individual and overall organizational performance.

7.2 Encourage active employee participation in setting goals and planning performance development

Active participation of employees in setting goals and planning performance development is an important factor in achieving successful performance management. When employees are actively involved in this process, they feel a sense of responsibility and are highly motivated to achieve organizational goals. Actively involving employees in setting goals and planning performance development is an important practice in effective performance management. When employees are involved in this process, they feel a personal responsibility towards achieving goals and have the opportunity to develop their skills and potential. Employees who have the opportunity to participate in setting goals and planning performance development, feel ownership of those goals. This can increase intrinsic motivation and desire to achieve desired results [35]. According Locke and Latham [28], when employees have the opportunity to participate in setting their own goals, they feel more involved and have higher motivation to achieve desired results. This can increase employee engagement in their work and affect performance positively.

In the process of participation, employees have the opportunity to identify the development needs of their skills and potential. They can contribute in planning training, self-development or assignments that can help them achieve better performance [36] in setting goals and planning performance development, there is better interaction and communication between employees and managers. This helps build strong relationships, increases engagement, and allows for a constructive exchange of ideas and feedback [37].

Employee participation in setting goals and planning performance development brings diverse perspectives and innovative thinking into the process. It can improve the quality of goals and plans made, as it involves the collective thinking of individuals who contribute to the achievement of organizational goals [38].

By involving employees in setting goals and planning performance development, organizations create opportunities for employees to feel a sense of commitment to organizational goals and values [39]. This can result in higher retention rates and create a more solid work environment.

Active participation of employees in setting goals and planning performance development provides an opportunity for them to identify necessary areas of development and take concrete steps to improve their skills [25]. This can help employees reach their maximum potential and support their career growth. Through participation in goal setting and planning performance development, employees and managers can engage in open dialog and information sharing [40]. It can improve communication and collaboration between employees and managers, help strengthen team relationships, and optimize overall performance.

8. Periodic performance planning and appraisal

Periodic performance planning and appraisal is an important practice in performance management to measure and evaluate the achievement of objectives and employee performance periodically. This process involves setting clear goals, monitoring progress, providing feedback, and conducting systematic performance evaluations. There are several important things about planning and periodic performance appraisals:

1. Setting clear goals: Periodic performance planning helps organizations set specific, measurable, and affordable goals [19]. With clear goals, employees have better guidance in carrying out their duties and focus on achieving desired results.

2. Measuring progress: Through periodic performance appraisals, organizations can measure the progress achieved by employees in achieving their goals [41]. It provides important information about the extent to which employees have achieved their goals and helps identify areas where improvements are needed.

3. Identify development needs: Periodic performance appraisals also help identify employee development needs. By looking at current performance achievements, organizations can determine the training and development needed to improve employee skills and competencies [41]. This helps create relevant and effective development programs.

4. Directing employees towards goals: Periodic performance planning helps direct employees towards achieving predefined goals. By planning specific, measurable goals, employees have clear guidance on what is expected of them and can focus on relevant tasks [42].

5. Improve employee performance: Periodic performance appraisals allow objective evaluation of employee progress and achievements. By providing constructive feedback, employees can identify areas for improvement and develop action plans to improve their performance [43]. This helps drive continuous employee growth and development.

6. Identification of training and development needs: Through a periodic performance appraisal process, managers can identify employee training and development needs. By evaluating individual competencies and performance, organizations can design appropriate training programs to enhance the necessary skills and knowledge [44]. This contributes to the development of effective and competitive human resources.

7. Informative decision making: Periodic performance planning and appraisals provide data and information that are important in the decision-making process related to employee promotion, compensation, and career development [45]. Objective, evidence-based evaluations help managers make decisions that are fair and based on real merit.

8. Feedback and reward: Periodic performance appraisals provide an opportunity for managers to provide constructive feedback to employees about their strengths and areas of development [25]. It helps employees understand expectations, improve their performance, and feel valued for their contributions.

8.1 Performance planning process and periodic performance appraisal

The process of performance planning and periodic performance appraisal are two interrelated stages in performance management. Performance planning involves setting clear goals and expectations, whereas performance appraisal is concerned with evaluating the achievement of employee goals and performance. The following is the process of performance planning and performance appraisal periodically:

Performance planning:

1. Goal setting: The performance planning process begins with setting specific, measurable, accomplishable, relevant, and time-limited (SMART) goals for employees [46]. Clear goals help direct employees and provide guidance in carrying out their duties and responsibilities.

2. Expectation setting: In addition to goals, performance planning also involves setting expectations or performance standards expected of employees. These expectations include competencies, behaviors, and expected results in their work [18]. Clear expectations help clarify expectations and provide direction for employees.

3. Action plan creation: After goal and expectation setting, the next step is to design an action plan to achieve those goals. The action plan includes strategies, concrete steps, and resources to be used to achieve performance objectives [18]. Action plans help in planning and organizing the necessary tasks.

Periodic performance appraisal:

1. Data collection: Periodic performance appraisals involve collecting data and information about employee performance. This data can come from a variety of sources, including direct observation, performance records, feedback from colleagues and superiors, as well as measurable achievement against set goals [47].

2. Performance evaluation: After data collection, the next step is employee performance evaluation. This evaluation involves comparing the actual performance of employees with predetermined goals, agreed expectations, and relevant performance standards [18]. Performance evaluations help identify strengths, weaknesses, and areas of development for employees.

3. Feedback and coaching: After a performance evaluation, it is important to provide constructive feedback to employees. This feedback should focus on achieving goals, behavior, and developing the employee’s potential [24]. In addition, it requires coaching or developing employees to help them achieve goals and improve their performance.

Periodic performance planning and appraisal is an integral part of effective performance management. This process involves setting clear goals, monitoring progress, providing feedback, and conducting regular employee performance evaluations.

1. Specific goal setting: The performance planning process begins with setting specific, measurable goals. Goals should be clear, measurable, and relevant to the organization’s vision and strategy [22]. Clear goals help employees focus on the right priorities and increase motivation to achieve desired results.

2. Monitoring and measuring progress: During the planning period, progress against goals should be continuously monitored and measured periodically. Managers and employees must monitor the achievement of targets and evaluate whether there are any changes or adjustments that need to be made [18]. Regular monitoring allows for quick corrective action if needed.

3. Constructive feedback: The periodic performance appraisal process involves providing feedback to employees about their performance. Feedback should be provided in a constructive manner, focused on achieving goals, and providing recommendations for improvement [25]. Effective feedback helps employees understand their strengths and areas for improvement.

4. Objective performance evaluation: Performance evaluation is an important part of the performance appraisal process. Evaluation should be conducted objectively based on pre-established criteria, such as competence, deliverables, and contributions to organizational goals [47]. Fair and accurate evaluations assist in decision-making regarding employee development and awarding.

8.2 Use valid and reliable assessment instruments and tools

In performance management, the use of valid and reliable appraisal instruments and tools is essential to ensure accurate and objective performance measurement. The right instruments and tools can provide quality data for decision-making related to employee development and awarding.

1. Validity of assessment instruments: Validity refers to the extent to which assessment instruments measure what they are supposed to measure. A valid assessment instrument can accurately assess the targeted characteristics or competencies. Validity can be obtained through content analysis, construct validity, and criterion validity [45]. The use of valid assessment instruments helps ensure the data obtained reflects the actual quality of performance.

2. Reliability of assessment instruments: Reliability refers to the consistency of results obtained from assessment instruments. Reliable assessment instruments produce stable and reliable data. Reliability can be tested using methods such as retest and internal consistency [18]. The use of reliable assessment instruments ensures that performance measurements are reliable and not influenced by random factors.

3. Instrument adaptation needs: Every organization has a unique context and needs. Therefore, it is important to ensure assessment instruments and tools can be properly adapted to the work environment and organizational goals. Customizable instruments allow organizations to measure relevant and important aspects in their own context [48].

4. Available resources: In selecting and using assessment instruments, it is necessary to consider the availability of resources, such as the necessary expertise, time, and technology. Selecting appropriate assessment instruments with available resources can ensure efficient and effective implementation [49].

5. Ensuring objectivity and fairness: The use of valid and reliable appraisal instruments helps ensure that performance evaluations are conducted objectively and fairly. Valid and reliable instruments reduce subjectivity bias and increase fairness in employee appraisals [13]. By using objective instruments, development decisions and performance-related decision-making can be made based on facts and accurate data.

9. Coaching and performance development

Performance coaching and development is an important component in performance management that aims to improve the ability and competence of employees in achieving organizational goals. By conducting effective coaching and performance development, organizations can maximize employee potential and increase productivity.

The first step in coaching and performance development is to identify employee development needs. This can be done through performance evaluations, competency analysis, and talks between superiors and subordinates. By identifying specific development needs, organizations can design appropriate and relevant coaching programs [50]. It is important for organizations to provide adequate support and resources in coaching and performance development. This includes the provision of training, mentoring, access to learning resources, and career development opportunities. Adequate support and resources will give employees the opportunity to develop their skills and knowledge [51].

In coaching and performance development, it is important to use effective learning methods. Effective learning methods can include classical training, practical work training, mentoring, giving special projects, or the use of learning technology such as e-learning. Choosing the right learning method will help employees develop skills better [52].

Evaluation and feedback on coaching and performance development are essential to measure program effectiveness. The organization needs to evaluate the results of the coaching that has been done and provide feedback to employees. This helps employees understand their strengths and areas of development and provides opportunities for improvement [34].

9.1 Identify employee coaching and development needs based on performance appraisal results

Identifying employee coaching and development needs based on performance appraisal results is an important step in effective performance management. By understanding the areas that need improvement and the necessary development, organizations can design appropriate coaching programs to improve the quality of employee performance.

The results of performance appraisals provide insight into the strengths and weaknesses of employees in carrying out their duties and responsibilities. By analyzing the appraisal results, organizations can identify areas where employees need to improve their performance [13]. This allows for coaching planning aimed at improving areas that need improvement. Every employee has different development needs based on the results of their performance appraisals. Some employees may require development in technical skills, while others may require development in leadership skills or teamwork [53]. By identifying individual needs, organizations can put together customized coaching programs to help employees reach their potential.

Identifying coaching and development needs based on performance appraisals also provides growth opportunities for employees. By offering relevant coaching programs, organizations provide opportunities for employees to enhance their skills and knowledge, which in turn can improve career prospects and job satisfaction [52]. In addition, identifying coaching and development needs based on performance appraisals helps organizations allocate resources more efficiently. By focusing coaching efforts on areas that need the most attention, organizations can avoid wasting resources on development that is irrelevant or less prioritized [54]. This helps in planning a more effective coaching budget.

9.2 Implement an effective performance development program

Implementing an effective performance development program is an important step in ensuring the growth and improvement of the quality of employee performance.

Before designing a performance development program, it is important to identify employee development needs based on the results of performance appraisals and organizational goals [55]. By understanding development needs, programs can focus on the most relevant aspects and have a significant impact on employees and the organization. It involves determining the areas of skill, knowledge, or competence that need to be improved to achieve the desired results.

After identifying the development needs, the next step is to plan a structured and targeted development program. The program should include clear objectives, effective learning methods and strategies, and an assessment of employee progress during program implementation [56]. According Snell et al. [57] the program should include training, coaching, work experience, and career development that aligns with the development goals that have been set, not least a program that is challenging and provides opportunities to improve skills and knowledge that will motivate employees and encourage their growth.

The involvement of leaders and managers in performance development programs is essential. They must provide support, provide feedback, and provide clear direction to employees in following the development program [58]. Leaders and managers also play a role in providing the resources necessary to make the program a success including formal training, mentoring, performance monitoring, special projects, and participation in cross-departmental projects [53]. By utilizing a variety of methods, employees can develop a wide range of skills and gain a comprehensive understanding of their work. According to [52]. Effective performance development programs use a variety of learning methods, such as coaching, mentoring, coaching, or project assignments. The diverse approach helps employees learn in a way that suits their learning style, thus maximizing the development of their potential. Effective performance development programs encourage continuous learning in the workplace. It involves providing support for self-development, access to learning resources, and facilitating knowledge exchange between employees [55]. By encouraging continuous learning, organizations can create a culture of learning that allows employees to continue to grow and adapt to changing work environments.

To ensure the effectiveness of performance development programs, it is important to conduct regular evaluations and measure their impact on employee performance and the organization as a whole [57]. Through the assessment, it can be seen to what extent the program achieves development goals and its impact on employee performance [56]. This evaluation can be done through performance measurement, feedback from employees, and assessment of program effectiveness. By tracking and evaluating results, development programs can be adjusted and improved as needed to improve future programs.

10. Recognition and reward in performance management

Recognition is an effective way to appreciate significant employee achievements and contributions [59]. According Luthans et al. [60] consistent and fair recognition and reward can increase employee retention and reduce turnover rates, employees who feel valued and rewarded are more likely to be more motivated to stay in the organization and make long-term contributions.

By providing recognition, employees feel valued and motivated to continue to perform well. Recognition can take the form of praise, public appreciation, or formal awards such as certificates or monthly/yearly employee awards. With the right rewad and recognition can increase employee satisfaction and attachment to the organization [60]. Employees who feel recognized and rewarded fairly tend to be more loyal, dedicated, and contribute positively to organizational goals. Therefore, recognition and reward have a positive impact on employee motivation and engagement. When employees feel recognized and valued, they tend to be more motivated to continuously improve their performance and contribute more actively to achieving organizational goals [60]. It also helps strengthen the bond between employees and the organization, thereby increasing employee retention and loyalty rates.

Rewards given in the form of performance-based incentives or bonuses can be a motivation for employees to achieve targets and improve their performance [61]. The rewards associated with achieving set goals can provide an additional boost to achievement and deliver better results. Through appropriate recognition and reward, performance management can encourage desired behaviors and align with organizational values [59]. Rewards associated with achieving performance targets or developing certain competencies can shape a positive work culture and lead to organizational success. Consistent and fair recognition and reward can increase employee retention and reduce turnover rates [60]. Employees who feel valued and rewarded tend to be more motivated to stay in the organization and make long-term contributions.

In practice, consistent recognition and reward can help build a culture of rewards within the organization. When recognition becomes part of the work culture, employees feel more motivated to give their best performance and develop high quality work [62]. A culture of appreciation also creates a positive work environment and strengthens collaboration between employees. It can be used as a means to encourage employee learning and development. For example, rewarding training or career development opportunities can motivate employees to continuously improve their skills and knowledge [8]. Thus, organizations can build competitive advantage through continuous employee development.

It is important to allocate adequate resources for recognition and reward in performance management. Organizations need to have clear policies and best practices regarding recognition and rewards, including transparent criteria, fair procedures, and consistency in awarding [60]. Thus, recognition and rewards can be implemented effectively and have a positive impact on employees and the organization.

10.1 The importance of recognition and reward in increasing employee motivation and performance

Recognition and reward are important factors in performance management that can contribute significantly to employee motivation and performance. According to Deci and Ryan [63]. Proper recognition and reward can be a source of motivation for employees. According to motivation theory, employees tend to perform better when they feel valued and get recognition for their efforts and contributions.

Recognition and reward associated with achieving performance or desired behavior can encourage employees to exhibit positive, high-performing behavior [34]. Rewards given in return for good performance signal employees about expected expectations and provide motivation to achieve.

Recognition and rewards given appropriately can increase employee productivity and quality of work. Employees who feel valued tend to work with more enthusiasm and strive for higher standards [64]. This has a positive impact on the achievement of organizational goals.

Recognition and rewards given appropriately can increase employee job satisfaction. Employees who feel recognized and rewarded fairly are satisfied with their work and work environment [32]. This can create a positive work climate and strengthen employee commitment to the organization.

Human needs theory suggests that recognition and reward can satisfy some of the basic psychological needs of employees [65]. Recognition can satisfy the need for reward and a sense of worth, while reward can satisfy the need for economic recognition and financial security. By meeting these needs, employees become more motivated and perform better.

Consistent and fair recognition and rewards can create a positive work environment [66]. When employees feel valued and cared for, they tend to be happier and satisfied in their jobs. A positive work environment affects the working atmosphere, teamwork, and ability of employees to focus and perform well.

Recognition and rewards given fairly can increase employee commitment to the organization [67]. Employees who feel valued and given recognition tend to be more loyal to the organization, highly motivated to achieve organizational goals, and actively contribute to the company’s success.

Proper recognition and reward can increase employee productivity and quality of work [68]. Employees who feel valued tend to work more efficiently and are dedicated to achieving better results. Increased productivity and quality of work also have a positive impact on the achievement of organizational goals.

10.2 Effective recognition and reward strategies and practices

Effective recognition and reward are an important part of performance management that can improve employee motivation and performance. According to Armstrong and Murlis [69] it is important for organizations to clarify the goals to be achieved through recognition and reward. Goals should be specific and related to desired performance. In addition, it is also important to clearly communicate these goals to employees so that they understand what is expected of them. According to O’Neil et al. [70] recognition and rewards should be given clearly and measurably so that employees understand what is valued and what is expected of them with specific goals and clear assessment criteria that will help in determining whether employees are eligible to receive recognition and rewards.

Every employee has different preferences and motivations. Therefore, it is important to consider the diversity of rewards given. Rewards can be verbal recognition, promotions, financial bonuses, career development opportunities, or other non-financial incentives. Tailoring rewards to individual preferences and needs can increase their effectiveness [71]. According to Reeve [72] every employee has different needs and preferences, therefore, it is important to provide diverse recognition and reward options with personalized recognition and rewards according to the individual preferences of employees will be more effective in improving their motivation and performance.

Recognition and rewards must be done consistently and fairly. Consistency means that recognition and reward are not selective but are based on consistent achievement from employees. Fairness means that the reward determination and assessment process must be transparent, objective, and impartial [73]. Cropanzano et al. [74] said the principle of fairness is very important in giving recognition and rewards, so the process of determining recognition and rewards must be transparent, objective, and based on fair criteria. Employees need to feel that they are being treated fairly and that recognition and rewards are based on tangible contributions.

Providing real-time feedback is an effective practice in giving recognition and rewards. When employees perform an outstanding achievement or achieve a set target, providing immediate recognition and reward can reinforce the link between performance and recognition. It also increases employee awareness of their contribution [73]. This is where the provision of recognition and rewards given in real-time, as soon as employees achieve achievements or contribute, is more effective in increasing motivation and maintaining good performance, not only given at certain moments, but also continuously in the longer term [75].

Personalized Recognition: Every individual has different recognition preferences. It is important to personalize recognition and rewards according to employee needs and preferences. For example, some employees may value public recognition more, while others prefer personal recognition or written reciprocity. Understanding individual preferences helps improve recognition effectiveness [71]. Open communication about recognition and reward is critical to ensuring employees understand and value the recognition they receive [68]. Public appreciation, such as announcements or awards in front of a team or organization, can increase an employee’s sense of pride and self-esteem.

11. Evaluation and improvement of performance management process

11.1 Evaluate the effectiveness of the performance management process

Evaluating the effectiveness of performance management processes is an important step in ensuring that the system is functioning properly and supports the achievement of organizational goals. Evaluation of the performance management process can be helpful in measuring the extent to which employees are achieving set goals and whether they are meeting expected performance standards [76]. This evaluation can be done through individual performance measurements, such as the use of key performance indicators (KPIs), as well as through feedback from superiors, co-workers, and employees themselves. Such indicators may include the level of goal achievement, increased productivity, employee satisfaction, and competency attainment [77] this makes it possible to assess the extent to which the process supports the achievement of organizational goals and whether adjustments or improvements need to be made. Therefore, evaluation of the performance management process helps organizations to ensure that the system is in accordance with organizational goals and strategies [78].

Assessing the Relevance and Conformity of Objectives requires a performance management process also involves assessing the relevance and suitability of the objectives that have been set [79]. Goals that are clear and relevant to the organization’s strategy will provide the right direction for employees in achieving the expected performance. That’s where valid and reliable data collection is needed. Data can be obtained through various methods such as surveys, interviews, observations, and document analysis [6]. It is important to use appropriate data collection instruments and techniques in order to obtain accurate information about performance, whether employees and teams have achieved predetermined targets and established performance standards [6]. This helps measure the extent to which employees and teams have succeeded in meeting the expectations and expectations that have been set.

Performance management also involves assessing the quality of feedback provided to employees [25]. Effective and constructive feedback can help employees to improve their performance. This evaluation involves assessing the clarity, relevance, and consistency of feedback provided by superiors and colleagues. Analysis can involve comparisons between actual results and predefined targets, identification of performance trends, and comparisons between individuals or teams within the organization [80]. With in-depth analysis, strengths, weaknesses, and areas of improvement can be identified in the performance management process and help in identifying weaknesses or obstacles that may exist in the system [13]. By knowing these weaknesses, organizations can take the necessary corrective steps to improve the effectiveness and efficiency of the performance management process.

Performance management should also include an assessment of its impact on employee motivation and development [81]. An effective performance management process will encourage employee motivation and development, as well as increase their involvement in work. This evaluation can be done through employee satisfaction surveys, interviews, or group discussions. The results of the evaluation need to be conveyed to relevant stakeholders, including management and employees. Constructive feedback can provide insight into the successes and failures of performance management programs [77]. Based on the results of the evaluation, improvements and improvements can be made in the performance management process to increase its effectiveness. At least performance management provides important information in decision making related to employee development, promotion, reward, or elimination of employees [82]. By having accurate data and information, organizations can make informed and objective decisions to improve individual and overall organizational performance.

Performance management evaluation also aims to identify areas that need improvement or adjustment [75]. The results of the evaluation can be used as a basis for making improvements in the performance management system, including in terms of formulating objectives, delivering feedback, or using assessment instruments. This process is not a one-way activity but needs to be done on an ongoing basis. Periodic evaluation allows monitoring of performance changes, identification of long-term trends, and adjustment of performance management programs in accordance with organizational changes and the business environment [18]. As well as helping in measuring the effectiveness of the system as a whole [1].

11.2 Identify continuous improvement and development in performance management

Identifying continuous improvement and development is a crucial aspect of performance management that helps organizations to continuously improve performance and achieve desired goals. By identifying continuous improvements in performance management, organizations can overcome weaknesses and obstacles that may exist in current systems [6]. This involves collecting and analyzing data on factors that affect employee performance, such as lack of skills, inadequate training, or ineffective policies. In addition, by identifying improvements in the performance management process, organizations can improve overall efficiency and productivity [18]. By removing barriers and improving existing processes, employees can work more efficiently, produce better performance, and achieve organizational goals more effectively.

The ever-changing business environment requires constant adaptation and innovation, hence the identification of continuous improvement also allows organizations to improve the processes and performance evaluation tools used [78]. In this process, the organization can evaluate whether the evaluation tools used are still relevant, objective, and meet the needs of the organization. If needed, changes and enhancements can be made to improve the validity and reliability of the performance evaluation process. This includes adjusting employee skill needs, developing new strategies, and changes in work duties and responsibilities.

Identifying continuous development opportunities helps organizations to encourage continuous employee learning and development [78]. Continuous improvement identification also allows organizations to identify skills and competencies that need to be further developed within teams or individuals [13]. Through the use of performance data and feedback, organizations can identify specific areas of development and design appropriate training and development programs. By providing new training, education, and experience to employees, they can improve their skills and knowledge, which in turn will improve their performance in the future.

Innovation and Process Improvement: Identifying continuous improvement also provides an opportunity for organizations to innovate and improve performance management processes [1]. As well as increasing employee engagement and satisfaction [82]. When employees feel that their organization cares about improving and developing their performance, they will be more motivated, engaged, and satisfied with their work, while organizations can consider using technology, new methods, or more effective approaches to manage employee performance and achieve better results.

Identifying continuous improvement also means adopting an attitude that is open to changes in performance management [7]. Organizatiomakingeed to be willing to adapt to changing business environments and employee needs, as well as make continuous improvements to maintain competitive and relevant performance. By continually identifying improvements and developments in performance management, organizations can strengthen their competitive advantage [1]. Improving employee performance and work processes on an ongoing basis helps organizations to remain relevant and competitive in an ever-evolving market.

12. Conclusions

Performance management is the process of planning, supervising, and improving the performance of individuals, teams, and the organization as a whole. The main objectives are to increase productivity, set clear performance goals, measure performance, provide feedback, develop performance, and support effective decision making.

Performance management plays an important role in achieving organizational goals. With effective performance management, organizations can identify barriers to achieving optimal performance, measure goal achievement, and provide constructive feedback to individuals and teams. Employee training and development is also driven by performance management, as well as supporting decision-making related to promotions, rewards, and career development.

The above discussion reviews various aspects of performance management, including comparisons between traditional approaches and new approaches. The traditional approach focuses on periodic evaluation and control, while the new approach places more emphasis on continuous and responsive development, employee engagement, use of technology, and performance management. A variety of approaches are also discussed, including competency-based, purpose-based, and continuous feedback.

Employee involvement is very important in performance management because it brings various benefits. When employees are actively engaged, they feel a sense of responsibility towards achieving organizational goals and are motivated to improve performance. Some of the benefits of employee engagement include increased satisfaction, motivation, individual and team performance, skills development, communication, collaboration, and creating a motivating culture.

Recognition and reward also play an important role in performance management because it can increase employee motivation and performance. Consistent and fair recognition contributes to better employee retention and reduced turnover rates. By feeling valued and rewarded, employees tend to be more motivated to stay in the organization and make long-term contributions.

Acknowledgments

Thank you to the library of the University of Muhammadiyah Jember for providing space to work on this project and do not forget to also say to Mr. Juhanda who has been willing to be a consulting partner during the work on this project.

Conflict of interest

The authors declare no conflict of interest.