[Excerpt] At the core of performance management and human resources more generally is the idea that people make the difference in organizations. Research has shown time and time again that effective deployment of human capital is a key differentiator in business. People, and more specifically their distinct knowledge and skills, function as the most reliable source of competitive advantage for companies in today’s economy. Realizing the need for continual development of the workforce, American companies spent an estimated total of $164.2 billion, or $1,196 per employee, on workforce training and development in 2012. Effective performance management has the ability to significantly enhance such development efforts; employees could increase their productivity by as much as 26% under effective performance management systems. As companies strive to do more with less, properly designed and executed performance management functions as an essential mechanism for increasing employee productivity and continually improving business results.