Performance Management System | Meaning

What is performance management system? 

A performance management system refers to a system that facilitates leaders and managers to consistently monitor and coach the performance of employees. Such setups ascertain that employees are working efficiently and productively while seeing that their goals are aligned with the goals of the organization. Thus, it helps in developing employee talent towards optimal work performance.

Challenges faced by modern organizations are complex and different from those that were experienced a few years ago. Although production and output are critical business metrics that indicate success, communication, and innovation, adaptability stands at the top. Thus, it is not deemed effective any longer to develop an irregular, annual approach for performance management. The top enterprises focus on crafting a consistent performance management approach to get their hands on real-time data and the extent of its progress.


Need for a performance management system

Top reasons to consider a performance management system are:

  •   Measure performance precisely.
  •   To fill skills gaps in employees with effective training and coaching
  •   To hash out employee’s personal and professional goals
  •   To enhance employee morale and lower turnover
  •   To display sufficient appreciation and recognition for an employee’s work
  •   To build a trust foundation between manager, supervisors, and the employees
  •   To pave a path to success for the employees
  •   To enhance enterprise-wide alignment
  •   To leverage the outcomes that matter most to the organization


A performance management system furnishes employees with newer opportunities for their development and growth in their careers. Furthermore, it supports the company by providing data to identify skill and knowledge gaps of employees, which can then be utilized to improvise through coaching, mentoring, and training.

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