Performance improvement is measuring the output of a particular business process or procedure, then modifying the process or procedure to increase the output, increase efficiency, or increase the effectiveness of the process or procedure. Performance improvement can be applied to either individual performance such as an athlete or organizational performance such as a racing team or a commercial business.
In organizational development, performance improvement is organizational change in which the managers and governing body of an organization put into place and manage a program which measures the current level of performance of the organization and then generates ideas for modifying organizational behavior and infrastructure which are put into place to achieve higher output. The primary goals of organizational improvement are to increase organizational effectiveness and efficiency to improve the ability of the organization to deliver goods and or services. A third area sometimes targeted for improvement is organizational efficacy, which involves the process of setting organizational goals and objectives.
Performance improvement at the operational or individual employee level usually involves processes such as statistical quality control. At the organizational level, performance improvement usually involves softer forms of measurement such as customer satisfaction surveys which are used to obtain qualitative information about performance from the viewpoint of customers.
The United States Coast Guard has published the Performance Improvement Guide (PIG), which describes various processes and tools for performance management at the individual and organizational levels.
Performance is a measure of the results achieved. Performance efficiency is the ratio between effort expended and results achieved. The difference between current performance and the theoretical performance limit is the performance improvement zone.
Another way to think of performance improvement is to see it as improvement in four potential areas. First are the resource input requirements (e.g., reduced working capital, material, replacement or reorder time, and set-up requirements). Second, is the THROUGHPUT requirements, often viewed as process efficiency; this is measured in terms of time, waste, and resource utilization. Third, OUTPUT requirements, often viewed from a cost/price, quality, functionality perspective. Fourth, OUTCOME requirements, did it end up making a difference.
Performance is an abstract concept and must be represented by concrete, measurable phenomena or events to be measured. Baseball athlete performance is abstract covering many different types of activities. Batting average is a concrete measure of a particular performance attribute for a particular game role, batting, for the game of baseball.
Performance assumes an actor of some kind but the actor could be an individual person or a group of people acting in concert. The performance platform is the infrastructure or devices used in the performance act.
There are two main ways to improve performance: improving the measured attribute by using the performance platform more effectively, or by improving the measured attribute by modifying the performance platform, which in turn allows a given level of use to be more effective in producing the desired output.
For instance, in several sports such as tennis and golf, there have been technological improvements in the apparatuses used in these sports. The improved apparatus in turn allows players to achieve better performance with no improvement in skill by purchasing new equipment. The apparatus, the golf club and golf ball or the tennis racket, provide the player with a higher theoretical performance limit.
In his study of innate human needs, renowned psychologist Abraham Maslow in his concept of a hierarchy of needs identified esteem and social fulfillment, garnered by recognition by family and peers, as a basic human need, and therefore able to be tied to structured programs that increase performance. Abraham Maslow, on “Third Force” psychology, combines aspects of behavioral, cognitive, and emotional psychology, and accounts for the impact of culture and society on behavior.
In business, human performance in sales, operations and employee engagement is able to be improved through psychologically rewarding experiences "which can trigger a host of intrinsic human emotions and behavior as identified by Maslow. Including rewards in a performance improvement solution is a proven strategy to engage employees and align them with the company's goals. Awards can be cash or non-cash. Both stimulate human behavior. The addition of non-cash awards to the total rewards package creates a unique manner of unlocking the performance potential of people because it separates a reward from being used as or perceived as ordinary salary income. Non-cash awards break through the clutter to motivate higher achievement of and drive greater returns on investment. Cash as a reward can also be spent on day-to-day items like food or gas and does not create the increased "psychological reward" of achieving special items, or points to acquire items. By connecting with all levels of the organization, a complete rewards package can amplify performance across the organization and bring personal goals into alignment with organizational goals." Reward programs supporting improvement in sales and operations can be effectively paid for from the increase in revenue or profits which flow from the program, and without spending to reward for your current levels.
There is substantial evidence that monetary rewards are not effective outside the context of very rote work. In some cases, monetary incentive plans may decrease employee morale, as in Microsoft's stack-ranking system, where the total reward amount is fixed and employees are graded on an artificially fitted distribution
Performance improvement can occur at different levels:an individual performer
an organizational unit
the organization itself
Business performance management and improvement can be thought of as a cycle:
- Performance planning where goals and objectives are established
- Performance coaching where a manager intervenes to give feedback and adjust performance
- Performance appraisal where individual performance is formally documented and feedback delivered