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Performance Management System - What and How?

Updated: Jun 23, 2022

Performance management is a system which creates impact on employee lifecycle to achieve their career aspiration and organizational results.

  • Colleague want the feedback regarding how they are performing and appraisal proves an opportunity to give them that feedback.

  • Employer need to know the performance of he colleague to reward, provide training, make employee aware of gaps so that he can work on it and achieve organizational goals.

  • Employee also want a complete idea on what is expected out of him, how will his career look like, criteria on which he is assessed, etc...

All the above objectives are achieved through a Performance Management system. Then what is the difference between Performance Management and Performance Appraisal? How to set up a performance appraisal system?

Please download my guidebook that shall help answer all the questions.

Performance Management System Guide
Download PDF • 3.94MB

If you have read the document and been with me so far then fantastic. You are on your journey to create a good Performance Review mechanism. However, few more pointers might help while creating a successful evaluation system.

  1. Define the Objective of Evaluation very clearly. Evaluation can be for various objectives or combination of objectives like performance review, career guidance, salary increments, promotions, market corrections, skill development, etc... For e.g. Quarterly Appraisal's objective can be performance review while Mid year Appraisal's objective can be performance review, career development, skill development, etc... where as Annual Appraisal, in addition to these can be for salary increments and promotions.

  2. The evaluation system should address questions on who, what, where, when, why and how? i.e. What is the objective of PMS? What is being evaluated? Who should be rated and who should rate? When is it happening (Frequency)? Where is it happening ( what happens in case of relocations / movement between locations)? How is it happening (process being followed)?

  3. It is a great practice to develop a training program for managers / raters to guide them on process and also some of the common mistakes observed that leads to failure of the system like conflicting roles, too many goals, incident effect (judging on few incidents), similarity effect (manager rates as he perceives himself), central tendency ( tendency to rate all as equal or average), biases, halo effect, ignoring the 1-2-1 meeting (not giving closure on the rating to the employee), Ethics of rating, etc..

  4. Provide as much clarity as possible. It is not good practice to catch manager and employee by surprise. Try and create a concise yet clear process. Often this is a form filling process which gets tedious, try to keep the process simpler and automate the process.

Hope this helps you to create / fine tune your Evaluation system and give you more idea on performance management. If there are any further questions, feel free to comment / write to me.

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