In an environment of increasing competition, businesses are expected to offer applicable, flexible and customer-focused solutions for their products and services in order to gain the upper hand. Although the solutions businesses produce to meet customer expectations bring with them investments in technology, raw materials and physical resources, it is impossible for these solutions to emerge independently of human resources. In this context, it must be acknowledged that human resources — one of businesses' most important forms of capital — have strategic importance in achieving sustainable competitive advantage. The effective management of human resources matters for carrying out and continuously improving business activities. Employees represent businesses and give clues about their success.

A successful business should see its employees as a value and adopt a systematic management approach toward its human resources.

Human resources management covers analyzing, planning, developing and maintaining continuous communication with the business's human resources throughout the entire process — starting with the selection and placement procedures that bring employees into the organization, all the way to their departure. The productivity of human resources is directly related to carrying out these activities in the most effective way.

Human resources management includes many interrelated functions — above all selection and placement, personnel affairs, orientation, compensation management, performance management, career management, and training and development. One of the most important areas of interest of human resources management is performance management. Performance management aims to support employees' continuous development by monitoring their performance, defining measurable position-based performance criteria in order to translate the business's mission and vision into employee performance and to take the right managerial decisions.

Handled as a strategic approach to creating and sustaining improved performance in employees, performance management plays an important role in the effectiveness of businesses. It increases the employee's motivation within the business and contributes to their being more eager to reach the goals set for them.

Maintaining performance management systematically also strengthens managers' hands. The absence of a designed system causes various difficulties for managers in leading their employees effectively — in defining roles, understanding individual strengths and weaknesses, providing feedback, triggering interventions and rewarding positive behavior.

Strengthening the communication between manager and employee, contributing to the employee's continuous development through feedback, and integrating the business's goals with the employee's goals are among the benefits performance management brings to the business.

Successful businesses treat employee performance not in a single dimension but as a whole, together with the other human resources management functions. Performance management benefits from the outputs of — and/or forms the basis for the inputs of — all the functions it relates to, above all training and development, career management, workforce planning and recruitment.

For performance management to be planned, implemented and sustained systematically, it is important to handle it within the framework of a management system. When performance management — covering the activities of monitoring employee performance, giving feedback, and evaluating and improving performance — is treated as a system, the system's inputs, processes and outputs must be clearly defined.

For the performance management system to be planned, designed and sustained successfully, the business's needs in this area must first be analyzed correctly. What is expected of the employee with regard to the business's core needs is determined at the analysis stage. In this context, it is important first to analyze the business's mission, vision and core purposes, its core activities, and its job descriptions and responsibilities. According to the analysis results, matters such as where the business positions its employees, which goals it expects them to achieve and which competencies they should have are clarified.

For the expectations that emerge at the analysis stage to be put into practice within a system, the system must first be designed. The most important step in system design is creating the evaluation mechanism. Although evaluation methods differ between businesses, performance management generally uses practices covering goal- and competency-based evaluation. Goals broken down to position level, and the competencies required to carry out the activities expected of the position, are defined as the evaluation criteria.

During system design, the positions included in the scope of performance evaluation, the forms and tools used, the actors responsible for running the system and their roles, the evaluation periods and the nature of the outputs are clearly defined. Designing the system with all its practical details reduces the likelihood of unexpected situations arising during implementation.

After the performance management system has been designed conceptually, its practical planning is carried out. Planning is generally done by the human resources unit, taking managers' and employees' schedules into account. It is important that the plans, created in keeping with the periods defined at the design stage, are workable.

Although the evaluation activity in the performance management system is scheduled for a specific time in accordance with the plan, evaluation is a continuous process. Employees subject to evaluation are monitored continuously by their managers within the framework of the competencies and goals expected of them. The role of managers in this process is critical. Thanks to managers' positive communication with employees and development-oriented feedback, the employee's commitment to the business and the motivation needed to improve their performance are expected to increase.

Unexpected situations that arise while the system is being put into practice are evaluated in a way that provides input into the planning and design steps. In this way, lessons learned are used for the continuous improvement of the system. Ensuring the continuity of the system depends on every actor properly fulfilling their responsibilities.

A well-defined performance management process based on consistent, constructive feedback helps businesses retain and develop world-class employee talent. Frequent feedback, together with goal setting, lets employees know they are valued — which increases their commitment and performance.

Today, when human resources are treated as a value, it is recommended that businesses review their current performance management systems as a whole within the framework of the steps described, in order to retain employees and contribute to their continuous development — and that businesses without a performance management system put the steps above into practice.

Author: Sait Sağlam