Analysis of Strategic Planning and Performance Management Systems

This assignment analyzes the relationship between strategic planning and performance management systems. It explores how organizational and HR leaders can align performance management with strategic plans to achieve critical elements of the plan. The analysis emphasizes the importance of breaking down broad organizational goals into measurable results for departments and individual employees, ensuring their understanding of key performance areas. It highlights the roles and responsibilities of stakeholders, including senior leadership, HR, and line managers, in designing and implementing the performance management process. The document stresses the need for aligning individual, departmental, and divisional goals with the overall strategic vision of the organization. The use of a performance management system facilitates transparent appraisal processes, motivating employees to contribute effectively towards organizational goals. References from Armstrong & Baron (2004), Buckingham & Goodall (2015), Mishra & Farooqi (2013), and Poister (2010) are used to support the analysis.

Key concept exercise-Performance Management System
Performance management is understood as a strategic work system that defines what is to be
achieved, aligns it with the organizational goals, measures what is done by the employees to
achieve the set goals, rewards the achievement, as well as ensures further growth and
development of the employees (Armstrong & Baron, 2004). Strategic planning is thereby a
crucial component of performance management. Strategic planning can be understood as an
amalgamation of processes, practices, and procedures to design and develop the vision and
mission of any organization. The broad goals of an organization would cascade down to
measurable result areas for the various departments to be subsequently broken down into goals
and targets for each employee. Performance planning, as a part of performance management,
ensures these goals are understood by the employees as their key performance areas for the year.
Poister (2010) points out that HR personnel in conjunction with the senior leadership and line
managers can use performance management to break down strategic planning elements into
tactical and realistic opportunities, measurable and time-bound goals, and review the limitations
in achieving them. It would be prudent to design the goals for individual employees as a
collective decision of the employee and their supervisors so as to smooth out any initial
impediments to fulfilling them. An employee who has set targets that align with the
organizational goals is contributing in effect to achieving the strategic vision of the organization
and can be thus measured for his/her contribution accordingly (Buckingham & Goodall, 2015).
The performance management process can also review the developmental needs of the employee
in case of a gap in attaining the goals.
An example of such a synchronization between the organization wide strategic planning and
performance management would be if the business goal of a retail goods manufacturer is to
attain a 40% rise in profits in the coming year, the divisional goals would be attributed
accordingly so as to contribute to the 40% which would mean quality assurance, improved pace
of production, availability of finance for smooth operations, increase in overall sales, and the
technological support to carry out the operations. At the individual level, a sales manager may
have a target of increasing his/her team’s sales targets by 60% while an operations team would
have their targets set at zero error rates and less than 1% of bottlenecks on the shop floor. The
performance review and feedback would reflect on how each individual performed with respect

to their set goals. This would also ensure a fair and transparent appraisal process wherein the
employees know what are the quantifiable measures of their performance and expect their
rewards commensurate with their efforts (Mishra & Farooqi, 2013).
Strategic planning can become more definitive and inspired when the goals get more realistic and
articulate with performance management. The senior leadership, HR function and the line
managers all need to work in tandem to ensure that employees’ individual goals, departmental
goals, and divisional goals are all in alignment with the strategic vision of the organization.

References
Armstrong, M. and Baron, A., 2004. Managing performance: performance management in
action. CIPD publishing.
Buckingham, M. and Goodall, A., 2015. Reinventing performance management. Harvard
Business Review, 93(4), pp.40-50.
Mishra, G. and Farooqi, R., 2013. Exploring employee satisfaction with performance
management and the challenges faced in context of IT industry. Compensation & Benefits
Review, 45(6), pp.329-339.
Poister, T.H., 2010. The future of strategic planning in the public sector: Linking strategic
management and performance. Public Administration Review, 70, pp.s246-s254.