Performance management is an ongoing process that aligns employee performance with business goals. It has four key steps: defining goals, planning performance, coaching performance, and reviewing performance. Effective performance management provides employees with direction, benchmarks progress, and builds confidence. Regular feedback is important to motivate employees and address any issues. Formal annual reviews measure what employees have achieved against their goals and assess their behavior and development needs. The goal is to both develop and motivate high performers, as well as address issues with poor performers.