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CMA Final · Strategic Performance Management and Business Valuation · Introduction to Performance Management

In a performance management system, which activity is carried out first in the cycle?

The first step is defining strategic objectives and converting them into measurable targets. Measures, monitoring, variance review, corrective action and rewards all depend on knowing what the organisation wants to achieve, so they follow rather than precede objective setting in the performance management cycle.

  1. ARewarding employees based on ratings
  2. BDefining the organisation's strategic objectives and translating them into measurable targetsCorrect
  3. CConducting a variance review of actual results
  4. DPreparing a corrective action plan for under-performers

Explanation

Performance management begins with strategy and objective setting, because targets, measures, monitoring and rewards all depend on what the organisation intends to achieve. Rewarding, reviewing variances and corrective action come later in the cycle, so they cannot be the first step.

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