Performance Management (PM) system is the systematic approach to measure the performance of employees. It is a process through which the organization aligns their mission, goals and objectives with available resources (e.g. Manpower, material etc), systems and set the priorities. Armstrong and Baron (1998) defined it as a “strategic and integrated approach to increase the effectiveness of companies by improving the performance of the people who work in them and by developing the capabilities of teams and individual contributors.”

The performance management system is a continuous process of defining and communicating the job roles and responsibilities, performance expectations, objectives and set their priorities between supervisor (manager) and subordinates (employees). It integrates organization, department and employee common goal and objectives which are aligned with systems and resources. It is the channel of providing clarity about goals and also to improve the business processes through various methods and mechanism.

The competency, skills and knowledge gaps are also identified through this process which can be improved by providing guidance, trainings, coaching and mentoring to employees or teams at different levels and designations. It optimizes the results through a roper channel and process which reduces the conflicts and grievances among teams or employees. Because each individual is clear about the expectations from his/ her role and put their efforts to meet performance standards.


This process can be applied to single department / function or to whole organization.  It aims to continuously monitor and measure the performance standards against the desired goals and objectives.

Purpose of Implementing Performance Management System

Managing employee’s performance is the key objective of establishing systematic Performance Management system in an organization. These process servers’ six main purposes in the company:

1. Strategic

Performance managed system is a tool which should be align with overall organization goal followed through department goal and individual goals. In other words, the organizational strategic goals should be linked with each activity performed by every department or employee.

2. Administrative

Performance management system is also set the deciding factor of employee’s promotion, demotion, salary increment, transfer and terminations. It enables to identify the performers, non-performers or under performer employees in an organization. It merits the competency and skill level of employees. Hence, it clearly defines the administrative role as well and supports the management decisions.

3. Communication

It is the effective communication channel to inform employees about their goals, job responsibilities, key deliverables and performance standards. Further, it is also a structure method to indicate the key areas of improvement required by the employee in order to improvise his performance. In other words, it provides the platform to learn and train on skills, and knowledge for better performance and results.

4. Developmental

It is the structure method of communicating the positive feedbacks, improvement areas, and development plans. The manager can use various methods like training, mentoring, coaching etc. and them their team members to perform better.

5. Organizational Maintenance

Performance management system is the yardstick of measuring employee, department and organization achievements and evaluating the performance gaps through various tools and techniques. Hence, it maintains the health of the organization and its performance standards.

6. Documentation

The performance management reviews, feedback and forms should be documented and maintained periodically by every organization. It would enable them to look forward, set new targets, design developmental needs, design training and learning programmes, and career progression of employee and for department. Hence, it helps in driving the organizational needs to desirable objectives.

Payback or advantages of Performance Management

In today’s global environment where the market is evolving at a very fast pace, it is important for an organization to understand the benefits of performance management. Therefore, managing employee’s performance is the ultimate need of an organization. The employees are considered as an asset by the organization. The performance management system serves various benefits to the organization, which are as follows:

  1. It supports to provide data to find the skills and knowledge gaps of employees in order to improvise them through trainings, coaching and mentoring systems.
  2. It motivates employees to take new challenges and innovate through structure process.
  3. It provides new opportunities to employees for their growth and development in their professional careers
  4. It defuses the grievances and conflicts among team members through proper performance evaluation system.
  5. It assesses the employee’s performance fairly and accurately against the performance targets and standards.
  6. Employees would enable to provide better results because of clarity on their performance targets.
  7. Performance management system provides the platform to discuss, develop and design the individual and department goals thorough discussion among manager and their subordinates.
  8. The under performer can be identified through performance reviews and can raise their skills levels objectively. It quantifies the learning needs through individual development plans or performance improvement plans as well.
Free WordPress Themes, Free Android Games