Performance Management System – MBA Tutorials
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Performance Management System

Performance Management is a continuous process of measuring, identifying and developing performance in firms by measuring each individual performance and objectives to the firm’s overall target and goals.

Why Performance Management System is Implemented?

Managing employee’s performance is the key objective of establishing systematic Performance Management system in an organization.These process servers’ six main purposes in the company:

  • Strategic 

Performance managed system is a tool which should be align with overall organization goal followed through department goal and individual goals.In other words, the organizational strategic goals should be linked with each activity performed by each employee or department.

  • Administrative

Performance management system is also set the deciding factor of employee’s promotion, demotion, salary increment, transfer and terminations.It enables to identify the performers, non-performers or under performer employees in an organization. It merits the competency and skill level of employees. Hence, it clearly defines the administrative role as well and supports the management decisions.

  • Communication

It is the effective communication channel to inform employees about their goals, job responsibilities, key deliverables and performance standards. Further, it is also a structure method to indicate the key areas of improvement required by the employee in order to improvise his performance. In other words, it provides  the platform to learn and train on skills, and knowledge for better performance and results.

  • Developmental

It is the structure method of communicating the positive feedbacks, improvement areas, and development plans. The manager can use various methods like training, mentoring, coaching etc. and them their team members to perform better.

  • Organizational Maintenance

PMS is the yardstick of measuring employee, organization and department achievements  and evaluating  the performance gaps through various tools and techniques. Hence, it maintains the health of the organization and its performance standards.

  • Documentation

The performance management reviews, feedback and forms should be documented and maintained periodically by every organization. It would enable them to look forward, set new targets, design developmental needs, design training and learning programmes, and career progression of employee and for department. Hence, it helps in driving the organizational needs to desirable objectives.

Benefits of Performance Management​

In today’s global environment where the market is evolving at a very fast pace, it is important for an organization to understand the benefits of performance management. Therefore, managing employee’s performance is the ultimate need of an organization. The employees are considered as an asset by the organization. The performance management  system serves various benefits to the organization, which are as follows:

  1. It supports to provide data to find the skills and knowledge gaps of employees in order to improvise them through trainings, coaching and mentoring systems.
  2. It motivates workers to take new challenges and innovate through structure process.
  3. It provides new opportunities to employees for their growth and development in their professional careers
  4. It defuses the grievances and conflicts among team members through proper performance evaluation system.
  5. It assesses the employee’s performance fairly and accurately against the performance targets and standards.
  6. Employees would enable to provide better results because of clarity on their performance targets.
  7. PMS provides the platform to design discuss, develop and discuss, develop and the individual and department goals thorough discussion among manager and their subordinates.
  8. The under performer can be identified through performance reviews and can raise their skills levels objectively. It quantifies the learning needs through individual development plans or performance improvement plans as well.

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