Understanding Performance Management in Context of Strategic Planning

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The report has been prepared on "Understanding Performance Management in context of Strategic Planning". The objective of this report is to guide you through the performance management system in an organization which should be linked to the strategic planning in order to bridge the gaps between the achieved and expected outcome to benefit the organization.


What is Performance?

It is the accomplishment of the given task measures against preset standards of accuracy, completeness, cost & speed.

Performance is all about obtaining results or outputs.

The three levels of performance are:




The Organization level defines & demands the desired performance based on its Culture, Policies, Mission, and Goals & Operating Strategies.

At process level, the actual work gets accomplished by examining factors such as work flow, job design, and performance management procedures to support the first level.

At Individual level, individual performance goals, knowledge & skills, work environment and support tools must be effective for the process to run smoothly.

All three must work in harmony to achieve the desired level of output.

Performance Management:

It is the set of activities to ensure right efforts being made in order to achieve the desired goals efficiently & effectively on consistent basis.

Performance Management focuses on products, services, employees, processes, policies & procedures, departments & certainly, the organization.

Four pillars of Performance Management Process:

1. Alignment:

The degree of awareness an employee is having about his role and its efficient execution keeping in view the business strategy of the organization leading to success.


It focuses on ability of the employees to do their jobs with their skill sets in line with their efforts.


These are tools that the employee needs to do their jobs.


The extent to which an employee want to perform well i.e. engage himself productively to his assignments.

Strategic Planning :

A systematic plan of action implemented by the organization through decision making and resource allocation; including capital and people to achieve a long term goals.

Understanding the link between Performance Management and Strategic planning

Let's consider a practical scenario with the help of a virtual organization to understand the implications of performance management on the strategic planning of an organization;

Green Soft Technology, a prominent leader in IT services and products in US attempted to acquire a new market for its new range of Laptops in one of the Asian Countries. The company establishes several regional offices across the country & hired young MBA professionals on handsome packages. The product review was excellent & started gaining a good market share at initial stage.

The company moved ahead with the Mission of "acquiring maximum number of customers i.e. Customer acquisition & new market development."

Performance management system of Green Soft Technology:

Performance Standards: Individual Targets have been set to achieve an overall yearly sales fig. of 15 lakh laptops & communicated throughout the team.

Reporting of progress : A standard format of several reports have been designed to collect Customer details, Sales data and Competitor's information etc. on daily basis & the database is regularly being updated.

Performance Assessment: Monthly meetings are being conducted on month closing to evaluate the individual performances and tracking out the non-performers.

Process Improvement: The Company is having a customer care department to handle the queries & feedbacks of customers.

Strategic planning of Green Soft Technology:

The company strategically planned to penetrate into the market by establishing a strong distribution network offering the best competitive margins to them.

A sufficient manpower of 5000 young sales professionals including 50 experienced sales managers at 500 different locations all over the country have been placed to handle the sales.

The company offered the best affordable prices to the end users for a top quality product to get a competitive edge in the market.

Extensive branding and promotions have been done through indoor & outdoor media support for maximum customer acquisition.

In spite of initial success, the company failed to achieve its sales figures over the last quarter.

The top management tried to figure out the reasons of this continuous fall in the sales figures. They found that they are still on the winning edge of the competition with maximum market share; product reviews are still very good.

However, they observed a great deal of dissatisfaction among the customers and the employees. They find it hard to retain their customers along with the employees. What went wrong?

After conducting surveys and personal interaction with the customers as well as the employees, the top management realized two major issues behind it.

Lack of after Sales Support & Services to the customers.

Lack of product knowledge among the employees leading to job dissatisfaction.

They marked that although the customers are happy with the product performance but few technical issues related to compatibility and installations which remained unresolved after several complaints at distributor's point or customer care leads to the degradation of brand image in their mind and hence, a negative word of mouth spread in the market which finally hampered the sales figures.

Even, the sales professionals find it difficult to sell out the product in the market as they find themselves incapable of handling technical queries related to the product and facing back to back target pressure from the organization and & feeling embarrassed in the meetings being on the side of non-performers hurting their self-esteem and ultimately leading to job dissatisfaction.

The Management decided to improve the performance management process and this is what they did:

At organization level:

The mission of the organization was changed to the following "Growing and retaining the customers by providing superior values & services for better customer satisfaction and exploring new markets for business growth.

At process level:

A new team to provide technical assistance to the customers has been devised under Customer care department.

The after sales support services were provided to the customers at their door step if the problem remains unresolved over a time span of 15 days in customer care.

At individual level:

The employees were given product based training for getting a sharp technical edge.

Small rewards given to appreciate those who achieved their targets as well as received thanks note from customers for taking care of their issues.

By implementing the above steps the top management succeeded to strengthen the process of performance management.

The synchronization between the strategy and the individual actions got more aligned.

The employees got more capable of handling technical issues and gaining customers faith and retaining it.

The training and performance appraisal motivated employees to work smartly & boost their morale.

This is how few improvements in performance management system leads to the effective implementation of the strategy and hence making the complete business process smooth and productive.

The benefits that Green Soft Technology achieved :

The organization gained back the trust of customers in its services.

The technical training process adds value to the personality of its employees who ultimately represents the company.

The Employees started enjoying their work and their productivity increases.

The organization succeeded to reestablish their positive brand image in the market through positive word of mouth.

Sales graph again increased as a result of positive market response.


The performance management system in any organization should be decided keeping in view the policies & procedures, mission and vision of the organization. The processes involved in the performance management should be efficient and effective in order to provide the productive result at any stage. The performance management system should be kept flexible in order to implement any changes desired at a later stage of implementation of strategic plans.

Strategic planning in any organization is done to achieve long term objectives. In order to achieve these objectives, the underlying strategy must be clearly shared at all levels of management. Before we execute any strategic plan, we must overview the performance management system of the organization in order to implement the strategic plans effectively.

A performance management framework establishes a continuous feedback mechanism that links strategic planning & operational execution. It also works to cascade & communicate any changes in the strategy throughout the organization.


Text referencing:

Human resource management/K Aswathapa/5th edition

Marketing management/Philip Kotler Kevin Lane Keller/12th edition

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