Why a good performance management system matters

October 14, 2020

A performance management system does more than just help you improve performance. It is an essential indicator of how efficiently your business is running, as well as how your employees feel about their place within the business. It’s pretty self explanatory: if your workforce is happy and motivated, then performance will be better across the board. 

But how do you measure performance and use this data decisively? 

You can start by having a system in place that lets employees and managers communicate about their performance. If there is no communication throughout the business about performance, then there will be nothing to indicate a problem until something hits boiling point. A centralised system that can pull information up quickly will make this process much more efficient, and will give HR the ability to target and act upon performance results.

HR should have a strong presence while implementing and maintaining a performance management system. You should establish indicators that will measure a shift in performance – a fair measurement system is crucial to support employee engagement. 

A good HR system that can bring up all the facts and figures is a good place to start, Jim Hill The CEO of Proofpoint Systems writes:

 ‘Organizations have started appreciating the need for unbiased, accurate and timely performance information, as the time and quality of information provided determine the speed and quality of HR decision-making (Hill, 2013).’ 

Accurate information that can be pulled up in a few clicks is key to making quick and decisive decisions that can improve your company’s overall performance. Data doesn’t lie, it is easier to implement change if you have all the facts to back it up. 

Especially when showing your findings to upper management, this will help you make decisive and evidence-based decisions. As I mentioned earlier, this will help create indicators to assist an HR professional in making decisions on the next step to take, because it is easier to compare and access information. 

Employee engagement is crucial 

Having a system and establishing measures is useless on their own. Unless employees are engaged, you won’t get the results you expect. 

To achieve this, you have to understand individual circumstances, but perhaps more importantly, you need to have a fair process in place that employees can understand – a system that motivates, and reveals opportunity for personal growth. 

This is why employees need trust in the system. Bricoe and Claus discuss in their book that 

 ‘Only if employees accept and trust the system to be legitimate, they have positive reactions to their performance feedback (both positive and negative) and will try to improve their performance (Briscoe and Claus, 2008). 

The more you can engage with your employees the better. It’ll only improve your own system and give you good data to refer back to. But don’t forget, your performance management system should be as fair and unbiased as possible.

Simon, H.A. an economist, political scientist and cognitive psychologist, explains tha

‘the quality of managerial decisions improves substantially, that is it becomes “objectively rational” if done with computer-assisted reasoning, as these decisions are not accompanied with any social and/or cognitive biases.’ (Simon, 1996).

Functional and reasonable goals will help improve employees’ engagement. If you justify why you have made your decisions, it’ll bring less resistance or conflict when discussing change. Someone’s performance can be a delicate issue, and talking with an unbiased view will help your employees to engage better with their performance appraisals.

If you want to understand your employees, communication needs to be clear and concise. This will give you better indicators on their performance and help you spot anything you need to be aware of. The more time you have to discuss with your employees the better indicators you will have. 

Jawahar, I.M. Professor of Management writes: ‘Satisfaction with PA feedback has also been linked to satisfaction with the rater, job satisfaction and organizational commitment’ (Jawahar, 2006). 

Clear performance appraisals are key indicators

A comprehensive performance appraisal system can get important results that will help create indicators that can be tracked for your employees. Especially since overall satisfaction with their job is linked to their performance – it is a cost effective way to keep your employees motivated to do better, but it will also help find problems before they become too expensive. 

Performance appraisals need to be clear, concise and achievable if they want to be taken seriously. Your employees need to see progression when engaging with your feedback, so having indicators in place is great if you can fix the problems. Your workforce should see that they can progress, improve and have their feedback taken on board, and in turn it will create a productive and healthy workforce.

If the system put in place promotes growth and engages employees, then performance can be monitored and improved company wide. It will give indicators that can be used to identify any changes by communicating with your employees regularly and seeing any irregularities that might crop up.

Accompanying this with a good system will help you store information that you can refer to quickly, and make decisive decisions to improve overall performance. 

Briscoe, D.R. and Claus, L.M. (2008), “Employee performance management: policies and practices in multinational enterprises”, in Varma, A., Budhwar, P.S. and DeNisi, A.S. (Eds), Performance Management Systems: A Global Perspective, Routledge: Taylor and Francis Group, New York, NY, pp. 15-39

Jawahar, I.M. (2006), “Correlates of satisfaction with performance appraisal feedback”, Journal of Labor Research, Vol. 27 No. 2, pp. 213-236

Simon, H.A. (1996), The Sciences of the Artificial, MIT Press, Cambridge, MA. Skarlicki, D.P. and Latham, G.P. (1996), “Increasing citizenship behavior within a labor union: a test of organizational justice theory”, Journal of Applied Psychology, Vol. 81 No. 2, p. 161.

Jim Hill EdD (2013) Using the Cloud to Accelerate Transformation and Influence Change. First published: 20 May 2013

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