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All you need to know about performance management system | peopleHum
Performance Management

Performance Management System - All you need to know

HR blogs
Anagha Vallikat
January 26, 2022
Human Resource Management Platform

Leaders have a responsibility of constantly communicating the company vision and expectations to their team members. Clearly defining the role helps employees focus on personal as well as company goals and check from time to time if both align with each other. That’s why leaders focus on aligning individual effort with teamwork with the help of a performance management system. However, there’s a secret to choosing the right performance management system. It begins with a clear strategy that defines the action plan, key measurements, and performance review process, topped with a dust of appreciation.

Not a secret anymore...

Efficient performance management is not easy to attain but it’s not impossible either, is it? We have been through decades of experiments, discussions, debates, etc., in order to explore the right way to measure employee performance. This has lead to big shifts in the performance review process after some visionaries decided to get rid of the traditional ways that are not efficient. Other what was happening before is quite contrary to the expected outcome. Some companies largely supported performance management while others couldn’t care less. Therefore, a much-needed revolution was coming and is here now.

Technology has been able to identify inefficiencies in the traditional approach and with the right tools, employees will no longer have to blame the rating system. With evolving conversations and experiments, we know that performance management has a lot more to contribute than simply upgrading the rating system of an organization. There are some key components of measuring performance, managing people and rewarding top performers to bring out the true potential of human talent and work towards building it for the future. This way we can ensure that it’s efficient.

Let us see what has to be done to make sure that the performance management system is effective and efficient.

Define an action plan

A well-constructed strategy or course of action is necessary to ensure that the performance management system turns out to be productive.

As much as it is important to discuss with your team about the scope of work, improvement, and strategies to improve results, it’s also essential to do it all through appreciation. It will show your team that you trust them and value their inputs.

Also, if you are working on a project with your team you have to ensure that you are present with them throughout the work and effort and not just show up towards the end.

Planning and execution is the time when you get to interact and bond with your team. As a result, when it’s time for you to score them you’d closely know who has put in all the effort and deserves the appreciation.

Measure the impact

When you measure the impact of the work that you do you get to monitor a bunch of meaningful insights. Otherwise, it’ll be like shooting in the dark. A good performance management system must regularly measure:

  • The steps or channels that bring maximum returns
  • Areas with high potential but low returns
  • Blockages or challenges faced during the project
  • How to overcome these blockages if it results in better ROI

And with each step, look for people who are willing to take an initiative. Invest more time with such people because these are the ones who’d become future leaders. Therefore, it becomes even more important to encourage them to take ownership, make decisions, and appreciate them when they make an effort to do something different.

Otherwise, you’ll only be surrounded by people who will say yes to everything that you favor and no to everything you dislike. You don’t want to build a team of parrots. You want to build a team of future leaders.

Don’t worry, it’s scary for all successful leaders in the beginning

The greatest and most successful world leaders have all undergone resistance and apprehension. There were people and challenges that didn’t want them to succeed but they still did – Jobs, Jack Ma, Bill Gates, Bezos, Tata – higher the success, bigger the challenges. Which is why world leaders invest in their people through a comprehensive performance management program. It encourages a data-driven approach and creates accountability for each team member.

Build an engaging performance management system

Performance management and feedback sessions must be more of a discussion than a monologue. Nobody wants to hear about what they did wrong over and over. That’s not the reason why people spend 10-12 hours each day at work. They invest more time to experiment, make mistakes and learn from them. With this they expect their leaders to help them grow. Therefore, while building an all performance management process make sure that you are putting each individual team member at the center of performance management.

Here’s how successful world leaders do it-

  1. Keep the performance review open, honest, transparent, and constructive. Tell your team members what they did right, where they could have done better, and how to improve on future projects.

  2. Involve each and every member in the performance review discussion so that every team member is able to see the 360-degree review on his/her performance. To know more about 360-degree review and other performance evaluation methods, read our previous blog Performance Evaluation and Performance Management- A Complete Guide

  3. Create a clear demarcation between high performance and low performance because your team needs to know from you whether their work is creating an impact or not.

  4. While giving feedback, be a team coach and not just a boss. Whether your team improves or not or contributes in ways that are unique in the system depends on you. So, work on your speech and create an interactive session because it matters to your team.

Expect better performance and development with proper feedback

Performance Management System: Proper Feedback

As much as employees crave feedback, they tend to feel dejected when they receive it when it’s unsolicited. You don’t want to threaten a team member to listen to your ideas or rebuke them for not following the orders. That’s simply how it doesn’t work. The reason why employees seek and crave feedback is because they look for encouragement to continue their work and suggestions on where they might be going wrong. It’s more efficient this way.

So, given the significance of feedback in the journey of an employee’s development leaders much reiterate the value of feedback and maintain an environment that promotes encouragement. In such cases, the agility of the leadership is put to test and this is where they have to gear up and put in some extra effort. You should read more about collecting employee feedback and surveys.

Further, what can’t be measured can’t be improved either. So, measure the results of these feedback sessions because it’s important to keep improving the process.

Learn from the failure of other performance management programs

There are organizations that integrate the most perfect performance management programs with their work culture but due to inconsistency, they fall flat. It could be because of the lack of tools or improper focus. The most common reason, however, is managing it all in a clerical manner and as a result, many companies aren’t there where they want to be. Their focus must definitely be on individual performance but in the end, the impact must reflect on team performance as well. This is what the successful leaders and companies do to ensure the process is efficient

  • Focus on team-specific metrics and see how they work out for the entire organization
  • Fix individual-specific tasks so as to avoid organizational chaos
  • Build efficiency metrics around production so that it reflects on customer satisfaction
  • Embrace inter-department collaboration for the organization to benefit as a whole
  • Incorporate weekly updates and forecasts of key metrics to keep a track

Managing performance is comparatively easier for small companies – they are able to focus on team performance company-wide. However, as the company becomes bigger it gets more complex to manage teams. Therefore, leaders must define department wise goals, which link directly to the overall business financial performance. Since we have spoken about culture, you might want to read this blog on Company Culture.

The future of performance management- redesign creativity and collaboration

Irrespective of which era we live in the main focus of performance management is to meet the expectations of each person in the workforce. Many organizations keep trying new methods and practices to get rid of inconsistencies and inefficiencies. Understanding individual and collective level tasks shouldn’t be as difficult, so it doesn’t have to be a struggle at all. Therefore, focus on the core purpose – building teams, establishing communities, and growing business.

So, if you apply performance management well enough then it’s quite liberating and empowering. There are no confinements when it comes to discussions, ideation, and overall work. It will show in business ROI as well as engagement and employee satisfaction in the company for everyone.


Performance management can be stressful but it doesn’t mean that you have to stress over it every time you conduct a performance review meeting. Just think about the benefits it will provide your team and the organization. As a leader, you can build a culture where teams outperform and are fearless and it happens when you conduct fair performance reviews. Therefore, don’t worry about building a perfect all performance management system because it’s about showing improvements in the next quarter.

Lastly, don’t invest too much time or effort on building it from scratch. It’s going to be clerical and inefficient. Therefore, trust automation and select the right people tool that will help you build a stronger team. It will keep track of individual performance, ratings, 1-on-1’s, etc and thus, automating the routine tasks and giving you more time to interact with your team.

The essence of an efficient all performance management is the one in which leaders hold on to their people and take good care of them. When leaders show care businesses run smoothly and people share ideas more openly.

Therefore, invest in your capabilities, practicing the continuous approach to both performance acceleration and performance measurement and gauging the impact of employee engagement and turnover very closely.

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October 25, 2021

A very inspiring list. Thanks for putting this together


October 25, 2021

This is such a great list of women leaders! More power to you all