For the public sector, performance management is a valuable process. Organizations increasingly rely on performance data to make decisions relating to various organizational processes, including strategic planning, internal management, resource allocation, reporting, as well as monitoring and evaluation. This is what performance management is all about -- continuous measurement of performance, definition of performance objectives and outcomes, communication of the outcomes, and taking action based on those outcomes. As demonstrated by literature, implementing PBM can be viewed as implementing organizational change: it requires assessment of the status quo, defining the organization's desired future state, and undertaking action to achieve that state. For this to be achieved, however, a number of factors are important: strong leadership commitment, organizational culture changes, as well as attention to individual, operational, and strategic dimensions. If effectively implemented, PBM can positively influence employee and organizational outcomes.

Performance Management: Brief Literature Review

With the operational environment becoming ever more competitive, and against the backdrop of austerity in resource management, the importance of performance-based management (PBM) cannot be overemphasized. Indeed, PBM has increasingly become a common practice in organizations of different sizes -- small and large -- and in diverse sectors -- manufacturing and service, as well as public and private sectors (Ploom & Haldma, 2013; Lutwama, Roos & Dolamo, 2013; Rivenbank, Fasiello & Adamo, 2016; Wierzbinski, 2016). This paper presents a brief review of literature relating to performance management. The review is based on various types of sources, including conceptual articles, systematic reviews, as well as primary studies (case studies, surveys, and mixed methods studies). Following a comprehensive definition of PBM, attention is paid to the impact of PBM and employee and organizational outcomes, as well as PBM implementation, antecedents, and key success factors.

What is PBM

Defining PBM can be quite problematic, with the term being often confused with performance measurement (Rivenbank, Fasiello & Adamo, 2016). In addition, performance management is often thought to involve only personnel management processes such as employee performance appraisal (Turk, 2016). Furthermore, contention exists over whether it should...
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Also, referred to as results or outcome-based management, performance management is an umbrella term which includes a number of ongoing organizational processes: setting and clarifying objectives, establishing performance indicators, gathering and analyzing data, reporting outcomes, and learning from the outcomes (Woerrlein & Scheck, 2016). This means that performance measurement is an element of PBM. Brudan (2010) describes performance measurement as a sub-process of PBM, which focuses on identifying, monitoring, and communicating performance outcomes, and taking action based on those outcomes. PBM processes are ultimately aimed at driving performance. Based on management control theory, PBM is about evaluating outcomes with the aim of creating value for the end consumer and other important stakeholders (Pihl-Thingvad, 2017).
PBM processes relate to not only individuals or employees, but also organizational processes (Brudan, 2010). Indeed, performance-based management means that all organizational processes, internally and externally, are pegged on performance or results -- from personnel management to supply chain management. Selviaridis & Wynstram (2015), for instance, demonstrate the relevance of PBM in supplier management. PBM determines aspects such as supplier payment, incentive design, performance specification, and risk allocation. For example, Rolls Royce, a manufacturer of aircraft components, is paid for providing maintenance services on the basis of engine availability in flight hours as opposed to labor and spare part cost. In the service context, logistics providers are increasingly being paid based on the performance of the client's supply chain. In essence, PBM is about outcomes. The organization first determines the outcomes it desires to achieve and then determines the means for achieving those outcomes. This is unlike the conventional approach, wherein means lead to outcomes.

PBM and Employee and Organizational Outcomes

A major focus of PBM research relates to the impact of PBM on employee and organizational outcomes. Focusing on higher education institutions, Turk (2016) demonstrates that performance management is important for improving staff performance, especially during organizational change. It achieves this by aligning performance management processes with the organization's strategic goals…