Models and theories of performance management system

Increasing complexities in functions of business have lead to the emergence of new and comprehensive concepts in business management.

Understanding performance management

Performance management is a concept in the field of human resource management. “Performance management is a continuous process of identifying, measuring and developing the performance of individuals and aligning performance with the strategic goals of the organization” (Aguinis, 2009). Performance management is many times mistaken as performance appraisal but the latter is just a part of the former.

There is no single universally accepted model of performance management. Various experts have explained the concept in their own ways. Mabey has prescribed the model of performance management system in the form of ‘performance management cycle’. This cycle has 5 elements which suggest how performance management system should be implemented in an organization. The elements of performance management system cycle includes:

  1. Setting of objectives.
  2. Measuring the performance.
  3. Feedback of performance results.
  4. Reward system based on performance outcomes
  5. And amendments to objectives and activities (Mabey et al, 1999).
Performance management cycle

Performance management system

What others say

Salaman says there are two theories underlying the concept of performance management:

  1. The goal-setting theory.
  2. Expectancy theory.

Goal-setting theory had been proposed by Edwin Locke in the year 1968. This theory suggests that the individual goals established by an employee play an important role in motivating him for superior performance. This is because the employees keep following their goals. If these goals are not achieved, they either improve their performance or modify the goals and make them more realistic. In case the performance improves it will result in achievement of the performance management system aims (Salaman et al, 2005).

Expectancy theory had been proposed by Victor Vroom in 1964. This theory is based on the hypothesis that individuals adjust their behavior in the organization on the basis of anticipated satisfaction of valued goals set by them. The individuals modify their behavior in such a way which is most likely to lead them to attain these goals. This theory underlies the concept of performance management as it is believed that performance is influenced by the expectations concerning future events (Salaman et al, 2005).


  • Aguinis, Herman. 2009. 2nd Edition. Performance Management. Dorling Kindersley India Pvt. Ltd.
  • Salaman, Graeme; Storey, John; Billsberry, Jon. 2nd Edition. 2005. Strategic Human Resource Management: Theory and Practice. Sage Publications Ltd.
  • Mabey, Christopher; Salaman, Graeme; Storey, John. 2nd Edition. 1999. Human Resource Management: A Strategic Introduction. Blackwell Publishers Ltd.
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  1. thank you for the info. I will find this useful.

  2. Doing research on performance management for PHD.

    • Hi there,

      noticed you said you’re doing your PHD on performance management. I also an doing my dissertation on performance management and was wondering if you knew of any solid theories or techniques you found in your research?



  3. information provides useful background to performance management.

  4. doing my thesis proposal on performance managment,

    ….i coudn’t find the full article……….failed to open the pdf…………can i get a copy at anymeans???

    thank you,

  5. Friends i find this network of friends important and helpfull to as well, could you provide me information about Performance Management for my research work as well. Will be glad to share mine as well.

  6. pls can i get more articles on pm in public sector…

  7. Hi, I really find this useful. please can I get articles on PM and PA(performance appraisals) in the banking sector in Africa and UK. thank you.

  8. Am doing my PhD in Performance Management systems in the care sector, would you help me find journals and articles that deal with the performance management systems please?

  9. thank you so much, i found this article very educative.


Ankita Agarwal

Ankita is working with the editorial board of Project Guru as a Research Analyst and Writer. With Masters in Commerce and Business Studies, Ankita learned much of what she knows about management through experience. She has previously worked in various financial institutions like Birla Global, HDFC Ltd. and Citi Financial. She is self-motivated and writes for the Knowledge Tank section of Project Guru. She has authored more than 80 articles so far in Human Resources Management, Strategic Management, Finance and Marketing. She likes to pen her thoughts about the latest issues gripping these areas across the world.

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