Characteristics of an Ideal Performance Management System

Performance management is a continuous comprehensive process of communication and evaluation between a manager and an employee. A performance management system aims to fulfill the strategic objectives of the organization. Performance management focuses on employee engagement, development and performance evaluation.  

Every performance management system helps to improve the effectiveness of talent management in an organization by monitoring and improving the performance of the employees, by engaging them with continuous feedback, appreciation and rewards program. The performance management includes ensuring organizational buy-in of the employees, creating an open feedback culture and providing development opportunities to the employees. 

In this article, we shall discuss the various characteristics of an ideal performance management system: 

Goal-setting and management  

Goals management is an integral part of an effective performance management system. Goals are important because they challenge the employees and motivate them to perform better. Setting goals would mean providing direction, priority and time frame for an employee to achieve the objectives. 

Based on the business models, goals are set by the employees and approved by the managers or set by the managers. However, the key factor is goals must be aligned with the organization’s objectives. In general, organization set goals that are challenging yet attainable. Clearly defined goals make employees understand what is expected of them and proceed with clarity. 

Performance Appraisals 

Performance appraisals are the heart of the employee performance management system. Feedback questionnaires are created for employees based on their goals and competencies. Self-feedback, manager feedback and ratings are sought during the appraisal cycle. Performance manager software automates the appraisal cycle. The automated reminders and notifications in the software help reduce the manual follow-up efforts of HR to make the employees and managers to complete the feedback process. It also helps to drastically reduce the appraisal duration.

One - on- one appraisal meeting summary is captured in the system and final ratings and recommendations are published for the employees. These ratings are then used to decide compensation revisions. From creating appraisal feedback forms and workflows to appraisal letter distribution the software helps to automate the entire performance appraisal process. 

360 Degree Reviews 

An ideal performance management system does not only stimulate feedback from the manager but considers an overarching perspective of everyone who is involved in the business. This could be the employee, or his colleagues and external stakeholders. So how do we bring in a system where everyone is involved in the feedback process?  

One way of doing this is by creating a survey or a rating mechanism where the employee can do a self-evaluation, the colleagues can rate him, then the managers, customers, vendors, and HR can give their feedback. This gives an overall perspective on the employee’s performance. You can even make this creative by adding emoticons in the rating section.  

With a 360-degree review mechanism, there is an upward feature through which employees can give anonymous feedback to their managers. The managers will then be able to know how capable they are in terms of their leadership skills and team management. Through this, employees can identify the perception gaps between the managers and the employees.  

Employee engagement 

Employee engagement is the hallmark of a successful performance management system. Employee engagement is the process of creating the best work conditions for an employee to keep him motivated. When employees are engaged, they give their best performance every day. 

In a performance management system, engaging an employee would mean, having a system where employees are reviewed on an overall basis, they are recognized for good performance, rewarded for their achievements and are appreciated for their talent. Something as simple as, “You did well today” can go a long way. 

One way of doing this is to have a software, that creates employee engagement surveys. The survey can have various questions that measure employee engagement either qualitatively or quantitatively. An example of a qualitative survey question could be, “How well are you being able to contribute to the goals of the organization?” a quantitative question, on the other hand, would either use a rating scale or yes or no questions. 

Continuous Feedback Mechanism 

From the beginning, we have been emphasizing one thing that is very significant for a successful performance management system. It is a feedback mechanism that is continuous. When you have a continuous feedback mechanism in your performance management system, all the other processes will become easier. In one way, you could say that the continuous feedback mechanism is a backbone to any performance management system. 

When you have a continuous feedback mechanism in your performance management system, you could have something like a wall or a portal, that could serve as a platform for employees and managers to post their comments and feedback for employee performance. In a way, this digital wall could become an employee performance evaluation tool. 

In a performance management system, continuous feedback promotes healthy collaboration between all the employees and the managers. The feedback that is provided is accurate and timely. This process is a lot more convenient than those excel sheets that you send every year. You can even have a facility in which you can send confidential comments to the employees by having a mobile app. 

Performance Analytics 

In order to do effective performance management, it is important that your performance management system has a thorough record of all the performance reports of the employees. It is important that your PMS has proper records of all the employees' profile reports and career history so that the managers can come up with strategies for employee’s talent management. 

For a PMS, details such as employees' skills, training programs, and attrition rate are important because it helps managers understand the various trends in employee performance. 

Conclusion 

Performance management system is a methodological framework that fosters collaboration among the employees and aims to improve the performance productivity of the employees and the organization. With the help of a performance management system, we can manage goals, conduct performance reviews, give continuous feedback and align everything with the core values and mission of the organization. This helps in better employee engagement, which is again the hallmark of an ideal performance system.