Performance management is one of the most challenging aspects of managing people. Employers that manage and reward employee performance successfully know that this accounts significantly towards their commercial success. The following section suggests some important principles.

1. Employers should have in place open and fair processes to assess and reward employees’ performance. Employees and their managers should have at least one discussion each year in which a dialogue takes place concerning the performance of the employee.
   
2. Employees should clearly understand the values of their employer and the goals and objectives their employer has set. Where possible employees should be involved in the setting of their long and short-term targets.
   
3. Employees who perform well need recognition (financial or otherwise) and to know that their performance improves their career prospects and employability.
   
4. Employers should provide employees whose performance is unacceptable with timely feedback, training or other remedial action to help them improve their performance. Employees with poor performance should have sufficient opportunity to improve or risk disciplinary action up to and including dismissal.
   
5. For performance management to be truly successful and fully appreciated by all employees, top management need to provide leadership by assessing their own performance rigorously from time to time.