Performance management (PM) is the practice of making sure an organization's activities and outputs meet its goals effectively and efficiently.
Performance management can operate at several levels: the whole organization, a department, an individual employee, or the processes that govern particular tasks. Standards are usually set by senior leadership and by the owners of each task. In practice it combines defining the tasks and outcomes of a role, giving timely feedback and coaching, comparing actual performance and behavior with what was expected, and tying rewards to results. Systems of this kind can backfire when people see them as unfair, when they breed excessive internal competition, or when they come to feel like compliance enforcement rather than support for improvement.
The term is broader than performance appraisal, the periodic review of an individual, which is one component of it. It also has a finance-systems sense: business or corporate performance management describes the software and processes that link plans, budgets, and results, a category the analyst firm Gartner folded into 📝Financial Planning and Analysis in 2017.