Subscribe Us

Define Performance Management System and its Process

Performance management system

Performance management is a part of Human resource management and it plays a very crucial role in an organization. It helps the employees to continuously improve themselves thereby improving the organizational productivity

Some key features about performance management system


Goal setting is an important activity. Not only setting individual goals but team goals as well. Always make sure that your goals are aligned with organizational goals. Performance management system should help you to set meaningful objectives and then align them to key results; that’s where the concept of OKR’S come from. OKR is a process of setting goals. They are becoming so important nowadays. Companies like Google, Oracle, Twitter, and some of the world’s other top-performing companies are using them.


Performance management is a continuous process, monitoring daily, weekly, monthly performance of an individual, helps the individual to improve his performance and be productive. Whenever goals/OKRs are set, for achieving them it’s important that we keep tracking them.


Feedback system plays a major part in any performance management system because it helps you to be productive, improves your performance. There should be a feedback system so that we can talk about facilitating factors in achieving a goal. We can get valuable feedback from our managers, colleagues, peers and senior employees and then Providing feedback during the period of delivery of performance and correcting them and then normalizing the same also performance reviews sessions (One on one reviews) can be done.


Performance management software’s should allow team leaders to view performance of the teams, it should also allow other team members to view the performance of the other team members creating a healthy competition within the team.


Employees whose work is recognized and appreciated are more likely to stay longer in the organization. Rewards and recognition not only retain the employees, but they also motivate them to work even harder and maintain their good work. When efforts are recognized it increases the self-esteem and satisfaction of the employee. Reward and recognition play a very important role in Performance management system and should be taken very seriously.

What should a good performance management system include?

  • Fair Achievable Targets, Standards of Behaviour, Actions, etc set at the start of the "Year"against the Pay Plan
  • An initial check against these criteria which is explained and agreed with the employee
  • A plan for remedial action such as training etc which is SMART (S = Specific so no wooly language)(M = Measurable so this needs metrics that are meaningful to the business or organisation)(A = Achievable so no impossible requirements such as to make 100% Profit of turnover or to grow a small business area by 50% year on year)( R = Realistic so no expecting start up areas to cost nothing to develop or to have your current employee suddenly achieve a Doctorate they dont have) (T = Timebound, so a start and end date on every activity required and time to reach standards whilst being Specific and Real)
  • Agreement and sign-off on the plan between Manager and Employee
  • Regular (Realistically timed) Reviews e.g., Monthly, bi-Monthly. These to be written, agreed and co-signed by both parties. Copies to both.
  • Corrective Action Plan for not being on target at Review incorporated into revised Plan.
  • End of Year Review and Assessment made of Performance.
  • Individual Performance Reviews to be assessed against others in the reviewed group to attain a "League Table of Performance in the Team, Group and Company
  • Rewards commensurate with Contribution etc defined in the Pay Plan should then be applied.

What are the benefits of performance management system in any organization?

In this highly competitive, fast-moving, and result-oriented world, organizations want outstanding performances from their employees. For that, it is also very important that the organizations have a systematic arrangement for evaluating their employees’ performance. In order to do that, it becomes very crucial for an organization to have a robust performance management system that is automated, interactive, highly flexible, and user-friendly. Some of the benefits that an organization experiences because of a robust performance management system are -

  1. Clarity - Having a performance management system helps organizations to set clear goals for their employees. What this does is help the employees to have a clear understanding as to what is expected of them to perform, what are the targets and goals they need to fulfill as well as it gives them clarity on what parameters their performance is going to be measured.
  2. Continuous Engagement - A robust performance management system will facilitate continuous engagement between managers and employees via platforms like Check-ins where managers can track the employees’ progress as well as the employee can tag their achievement or challenges and so on.
  3. 1-on-1 conversation - An efficient performance management system provides a platform where the employees and managers can have conversations and discuss plans, achievements, setbacks, and so on. What it does is helps the managers and employees to be on the same page throughout the performance review for evaluation of their performance.
  4. Identify training and development needs - PMS system enables the employees and managers to identify their training and development needs and in turn helps the organization to address the issue and provide them with the required training.
  5. Continuous feedback - An effective PMS system facilitates a process of continuous feedback which enables an employee to give and get feedback from anyone in the organization. This is not only an incredible form of employee engagement tool but also when tagged to goals or to a particular template helps the employees in improving their performance.
  6. Comprehensive reports and analytics - a PMS provides a comprehensive analytics tool that helps to slice and dice the performance of the employees and generate detailed reports and visual representation of those reports.

What is the scope of performance management?

The Performance management should conform to broad organizational framework. It should provide for managers and manages shared experiences, knowledge and vision. It encompasses all formal and informal measures and procedures adopted by organizations to increase corporate, team and individual effectiveness. Manages/ employees should be enabled continuously to develop knowledge, skill and capabilities. Performance management has got to be understood in totality of the organization but not in various parts. Performance management is designed and operated to ensure the interrelationship of each of these processes in the organization.

· Performance management assumes that the managers and team members share accountability for performance by jointly agreeing on common set of goals i.e., what they need to do and how they need to do it. They jointly implement the agreed plans and monitor outcomes.

· Performance management is concerned with everything that people do at work. It deals with what people do (their work), how they do it (their behavior) and what they do it (their result).

· Performance management data generated by the appraising process is used primarily for deciding rewards including performance related pay. However it is not the integral part of performance management process.

According to the current best practices, a performance management system should aim at -

  1. Engaging Employees on a Real-time basis through Feedback, 1:1s and checkins
  2. Defining all types of Performance Measures
  3. Monitoring Progress, so as to immediately identify challenges and solve them on the go
  4. Mapping out the areas of work strength and development etc., so as to help employees upgrade their skills
  5. Dashboard to keep track of performance road map
  6. Reports and Analytics, made available through a wide variety of filters
  7. Automatic Reminders for all activities
  8. Linking Compensation to Performance Ratings

What is the process of performance management?

Stage 1: Pre- Requisites

Stage 2: Performance Planning

Stage 3: Performance Execution

Stage 4: Performance Assessment

Stage 5: Performance Review

Stage 6: Performance Renewal and Reconstructing

Post a Comment