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Purpose

The purpose of this paper is to describe how high‐performing organizations require effective performance‐management systems to promote and develop the necessary values, principles and competencies.

Design/methodology/approach

The paper explains, in the context of performance management, the importance of clear job descriptions, employee‐improvement plans and 360‐degree feedback.

Findings

The paper reveals how to make performance management a source of competitive advantage.

Practical implications

The paper urges that a performance management system be used not only as an evaluation and documentation tool, but also as a strategic tool.

Social implications

The paper explains how performance management can benefit both individuals and employers and, through them, society as a whole.

Originality/value

The paper highlights the importance of holistic analysis of performance at organizational, process and individual levels for individual satisfaction, commitment and goal attainment.

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