What Is Performance Management and Why It Matters

Performance management is more than just annual reviews—it’s an ongoing process of setting clear expectations, providing regular feedback, and aligning individual contributions with organizational goals. At its core, it’s about helping people do their best work and grow within their roles.

Effective performance management involves goal setting, continuous coaching, and development planning. When done well, it builds trust, increases engagement, and drives productivity. Leaders are empowered to lead with clarity, and employees understand how their efforts contribute to the bigger picture.

But what happens when it’s neglected?

Poorly managed performance—or a complete lack of structure—can lead to confusion, disengagement, and high turnover. Employees may feel undervalued, managers may avoid difficult conversations, and organizations miss opportunities to grow and innovate. Over time, this erodes culture, damages morale, and affects business outcomes. In short, performance management isn’t a luxury—it’s a foundational practice that supports accountability, growth, and long-term success.