TermiKnowledge - Supply Chain, Procurement and Inventory Terminologies
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Performance simply means actual results and behaviours. Actual results are a matter of chance; outcomes are based on knowledge and skill sets which are continually evolving. Performance is an ever-changing process in any organization, with processes continually being developed and modified as organizations grow. Performance is not only the products of human effort exerted on tasks, but is also a result in its own right, the product of conscious and unconscious mental and physical effort put into tasks and is judged against results.

In order to ensure a continual improvement in business performance, organizations use a wide variety of different performance management systems. Managers often choose to implement a mixture of performance management systems such as performance incentives, performance compensations, quality rewards, and professional development incentives. These rewards and incentives are designed to improve business performance by increasing productivity, improving service quality, and reducing errors and wasteful behaviours. By providing employees with an incentive to perform to the best of their ability, incentives encourage them to use their skills to the fullest, and increase productivity. In addition to quality rewards, managers often use professional development incentives to improve employee skills and performance.

Performance management systems also use many different tools to evaluate business performance. An example of one tool is the Performance Curve, which depicts the range of possible performance ratings a business can attain over a period of time. Another tool is the Performance Scorecard, which measures strengths and weaknesses across an organization using metrics and ratings to indicate performance on key areas such as staff development, customer satisfaction, and profitability. The third key tool in performance management systems is the Performance Curve Analysis tool, which is used to determine what level of performance each key area needs to achieve over a period of time. The fourth tool is the Customer Value Proposition (CVP), which measures the benefits and losses of various business activities. In order for performance management to be successful, managers must combine evaluation tools with the strategies that they have to achieve high levels of business performance.

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