Performance management involves designing organizational structures and processes to ensure consistent and effective performance in achieving desired outcomes with moderate risk. It aims to promote employees, provide increments, analyze training needs, enhance performance through positive competition and align divisional goals with company objectives. Key aspects include annual performance reports, management by objectives, graphical rating scales, and final result sheets to evaluate top, middle, and lower management based on function-specific forms, 360-degree feedback, balanced scorecards, targets, and training budgets.