THE IMPORTANCEOF PERFORMANCEMANAGEMENT

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In the modern world Productivity is a topic of interest

due to its importance for competitiveness and regional

prosperity. On the one hand, Productivity can contrib-

ute to a society’s well-being, and on the other hand it

can be a valuable factor for providing companies with a

competitive advantage. Global competition has be-

come fierce and as a result companies focus more and

more on productivity improvements.

According to Bernolak (1997) Productivity means how

much and how well we produce from resources used.

As reported by the European Association of National

Productivity Centers (EANPC, 2005) Productivity can be

defined as how efficiently and effectively products and

services are being produced. Efficiency can be seen

as utilizing resources to accomplish desired results and

Effectiveness as approaching the customers’ require-

ments (Grunberg, 2004).

Generally, we could say that Productivity depends on

the produced output (product or service) and the input

factors (human and physical resources). A company’s

Productivity is reduced if its resources are not properly

used or if there is a lack of resources, while high Produc-

tivity is achieved when activities and resources used in

the process, add value to the produced goods (Tangen,

2005).

Profitability is often confused with Productivity and

is an important indicator for a company because it is

based on pecuniary results and shows whether the

company is making money.

More specifically, Profitability is the ability of a business

to earn profit,where profit is defined as the financial

benefit gained from a business activity after expenses,

costs and taxes. In order to assess the financial health

of your business and produce a financial analysis of

your company, Business Performance Management

(PM) is necessary. Using PM, all employees will reconcile

personal goals with organizational goals and increase

Productivity and Profitability of the organization.

FACTORS AFFECTING PRODUCTIVITY:

• Capital Investments in Production, Technology, Equipment, Facilities.• Economies of Scale.• Workforce Knowledge and Skills resulting from Training and Experience.• Changes in Technology.• Work Methods.• Quality of Products and Processes.• Education.• Geographical Factors.• Social Environment.

What is Productivity and Profitability ?

PM can contribute not only to the improvement

of internal communication among employees, but also

to external communication with customers.

PM can help with the identification of organiza-

tional goals and required results.

PM can help measure outcomes.

PM has a variety of useful applications than can

help in benchmarking and setting standards for the

company. These applications can indicate results during

improvement efforts, like employee training, manage-

ment development etc.

PM can identify developmental opportunities

and can be an important way forward to ensure suc-

cess of the planning process.

PM can help managers evaluate and compare

employees according to organizational goals and ob-

jectives.

PM can help employees understand the impor-

tance of their contribution to organizational goals and

objectives.

PM can contribute to the creation of strong

relationships between an employee and a manager or

the company.

Generally, PM can improve organizational Performance and employee loyalty, improve produc-tivity, overcome barriers of communication, ensure efficiency and consistency, define career paths for employees and promote job satisfaction.

Performance Management“Performance Management (PM) is a process by which managers and employees work together to plan,

monitor and review an employee’s work objectives and overall contribution to the organization”.

Some important advantages are listed below:

Anna Papasiopi is a PreSales Consultant at B-Open S.A.

Performance Measurements give us information about

our progress, our goals, our customers’ satisfaction and

improvements or changes that are needed.

There are six basic categories of Performance Measure-

ment, but organizations can create their own categories

according to their mission:

• Effectiveness: Does your product/ service comply

with the requirements?

• Efficiency: Is your product/ service produced at the

minimum cost?

• Quality: Does your product/ service meet custom-

ers’ requirements?

• Timeliness: Is your work done correctly and on

time?

• Productivity: Are all your resources used in an ef-

ficient and effective way?

• Safety: Is your organization “healthy”?

But why do we need to measure Performance? The

benefits of Measurement are critical and crucial.

Through Measurement you can understand your pro-

cesses and if there are any problems, you can ensure

that your decisions are based on facts. You can estab-

lish whether you need changes and improvements,

and have a thorough picture of them, and finally,you

can control and manage any activity.

A successful Performance Management system focuses

on important elements, such as customer needs and

allows your employees to participate in the design and

the implementation of the system.

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Performance Measurements“Performance Measurement “is the process of collecting, analyzing and reporting information regarding

the performance of an individual group, organization, system or component”.