How to Develop a Performance Management System?

The performance management process is nothing but a collaborative and communication-based process where the employees and management of an organization work together, plan, monitor, and review the business objectives, long-term goals, and comprehensive contribution to the company. The performance management process is continuous and has regular sessions with the involvement of both management and employee to have the unbiased opportunity to give and receive feedback.

When the HRMS performance management process is planned and executed correctly it solves all the problems that occur in the workplace and the problems that stop the employees from giving their best in the organization. Therefore, a good performance management process helps the organization in achieving its goals and business objectives.

How to Develop a Performance Management System?

HRMS Performance management system involves something more than just simply providing an annual review of the performance of each employee. It is more about working with employees to introduce them to their strengths and weaknesses and help them to be more productive, efficient, and engaged. Thus, it becomes important to have a proper performance management system to make sure that every organization utilizes its knowledge to the fullest, thus proving benefits to the organization’s productivity. Certain steps can be followed to develop a performance management system.

Steps to Follow While Developing a Performance Management System for Your Organization

1. Planning

The first step in performance management is drafting a plan. Here the HR and management of the company need to define the job including the comprehensive description, long and short-time goals of the organization, identifying the key objectives, and also developing clear metrics on how the established and set goals and objectives will be assessed.  The goals should be set in a clear and Specific, Measurable, Attainable, Relevant, and in a Time-based (SMART) format.

2. The feedback stage

After the management has completed the initial stage, employees should be provided with an opportunity to give input on the material that was discussed in the earlier stage. The organization must take feedbacks because they will be doing their job, and they are the ones who will be having key insights into the skills, competency, and goals that will be great to the organizational goals of the company.

3. Revisit objectives as necessary

Once the objectives are defined, a re-evaluation of the same is necessary. Management should revisit and check these objectives again to see if there are any objectives to be achieved. This step involves reviewing the overall performance of the employees and how the process worked on the whole. This is one of the most important parts of the overall process of the performance management system.

4. Reviewing employee performance

At the end of the performance management cycle, there should be an employee review or in other words, performance appraisal. These are held once a year to know and make the employee aware of his performance, there should be everything mentioned about the employee’s process throughout the year so that it helps the employee with several aspects like problem-solving, adjusting goals, and other future tasks.

5. Giving actionable feedback

Management should give constructive, actionable feedback to the employees so that they can know the area where they can improve their performance. This feedback process should include both managers and employees of the organization to improve the efficiency of performance on both ends.

6. Action

The last step in performance management to be kept in mind is action. All the objectives and goals should be executed here.


To conclude, if the HRMS performance management system and the procedure of executing it are kept in mind from the very beginning of the hiring process, you will find that the efficiency of the employee is good and perform the tasks in the best suitable way for which they were hired.

Also Read: Performance Management Cycle: An Overview

Zimyo Favicon
Zimyo Editorial Team

Meet our fantastic editorial team, tirelessly crafting high-quality content. With a passion for HR and a commitment to excellence, they ensure you stay informed and empowered. Our HR content providers specialize in delivering expert insights and industry trends. And don’t forget, we offer top-notch HR & Payroll Software to streamline your operations. Stay connected for valuable HR knowledge!

Lets stay in touch!

Shift to Modern HRMS, built for Next-gen Workforce

More Insights!