Components of an Effective Performance Management System

This paper elaborates on discussing the different components of an effective performance management system. It includes performance planning, ongoing performance communication, data gathering, observation and documentation, performance appraisal meetings, performance coaching and diagnosis.

Running head: PERFORMANCE MANAGEMENT
Performance Management
Name of the Student:
Name of the University:
Author note:

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Companies today are facing some significant challenge in terms of finding out ways
for making their performance management successful. Working in Human Resource
department is more about regulating the performance management (Glass and Cook 2016).
Establishing and developing an area where the manager and his staffs could produce work
and perform best of their abilities is not an easy task. The performance management system is
highly valuable to the firms and the managers. However, along with right strategies, one can
make it work. Having an effective performance management system is therefore necessary.
This paper shall elaborate on discussing the different components of an effective performance
management system.
According to Bryson (2018), performance management refers to an ongoing process
of improving and enhancing the performance of an organisation by means of setting team and
individual goals that are well-aligned with the strategic goals and objectives of the very
organisation. It is about planning the performance of the staffs for achieving the set goals;
assessing and reviewing the progress and; developing the abilities and skills of the
employees. Whittington et al. (2017) in this context have claimed that effective performance
management is far more than simply creating a working environment that works. It is also
about leadership, team work, constructive feedbacks and interpersonal relationships. It is to
note that the main purpose of performance management system is assessing and ensuring that
the employees are carrying out their duties for which they are employed to do in a
satisfactory and effective way so that they aid to the overall objectives of the business. There
are different stages of cycle of performance management. It includes, planning, Acting,
tracking and reviewing (Kerzner 2017). Planning included setting the SMART objective,
agreeing the personal development plan and updating the role profile. The action phase
includes the steps and measures to take for achieving the objectives, carrying out the role and
implementing the personal development plan. Furthermore, the tracking phase include the

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tracking of the progress, giving regular feedbacks, mitigating the barriers and obstacles and
coaching. Lastly, the process of reviewing includes reviewing the achievements, identifying
the learnings and discussing about the career goals and agreeing the actions.
It is to mention that there are still several people who are confused in between
performance appraisal and performance management. The performance management system
is highly valuable to the companies and the managers compared to performance appraisal
(Noe et al. 2017). The main components of performance management system are
performance planning; ongoing performance communication; data gathering, observation and
documentation; performance appraisal meetings; performance coaching and diagnosis. It is to
note that performance planning is the most important element of an effective performance
management system and it forms the base of the performance appraisals of the employees
(Pulakos et al. 2015). It is collectively done by the reviewers during the starting of the
performance session. At this period, the employees decide over their targets as well as the
significant performance areas that could be improved over a year within the budget of the
performance. This budget is finalised after a mutual agreement in between the employee and
the reporting officer. Secondly, the ongoing performance communication refers to a two-
way communication process in between the employee and the manager and this is designed
for monitoring the progress and identifying the performance barriers and for sharing the
required information (Baddadi and Bodduru 2017). In this process, the two parties work
together for ensuring that the necessary tasks stay on the track and the problems are identified
and solved prior to they get out of the hands. Most of the ongoing communication must
include the interactions through mentoring and coaching the employees if required.
Thirdly, data gathering, observation and documentation is the process that involves
the regular information and collection of the manager about the performance of the employee
by means of regularly observing and reviewing the work of the employee. Some of this data

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collection is informal and some is formal (Morrison et al. 2019). The formal ones are
formalised in the form of logs and diaries by means of using scales of performance rating.
Fourthly, the performance appraisal meetings is where the managers of performance
management and the employees work together for assessing the progress and improvement
towards the agreed set of goals. They are required to communicate on a regular basis for
identifying and removing the obstacles to performance. With the same, some formalised
sessions for communicating the performance evaluation, which is often conducted on an
annual basis. It also require providing additional performance feedback and counselling. All
these make some valuable components of performance management. Lastly, the
performance coaching and diagnosis is last and the important component of performance
management system (Schleicher et al. 2018). It shows that the performance management is
not linear and that the coaching and diagnosis could permeate any barrier in the way of
effective performance of employees. It is to note that performance coaching helps in building
and maintaining an effective employee and supervisory relationships. It could help in
identifying the growth and development of the employee and help in planning and developing
new skills within him.
One of the significant organisation model of performance management is that what is
used in Accenture. In the year 2016, Accenture joined the list of organisations that are known
to abandon the annual performance review within their companies. About 6% of the Fortune
500 firms got rid of the rankings as per the report of Chatterji et al. (2016). The new
performance management model of Accenture is designed for representing the ongoing
performance discussions in between its employees and its managers in more effective and
better way. According to Hayes (2018), the company earlier had a long standing performance
management model and this is something that has driven an innovation led business along
with an inspired culture. Its purpose if to assess and ensure that the employees are carrying

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out their duties in a satisfactory and effective way so that they aid to the overall objectives of
the company. This model was built when Accenture was a consulting company in a less
digital environment and less global environment. For a continuous building on its innovation
culture in the process of reflecting the differentiation of the business, the future of the
working environment and the demographics of its workforce, the company planned to
redesign its performance management system. It opted for a mixed model solution. It is to
note that the technology that is powering the performance achievement in Accenture is this
mixed model solution that is developed with the custom .Net code (Webb et al. 2018). Its
components include- leading the application architecture, analytical data model, interview-
centric technologies, reusing the components from the company’s current performance
management solution and that parts of the company’s re-usable architecture like the single
sign-on.
However, it is to mention that there are different torts that can be used in Performance
management. As per Delgado (2018), torts refers to the wrongful action or any infringement
of a right, which ultimately results to civil legal liability. The torts in performance
management include defamation, fraud in incentives, and difference in incentive slabs for
different employees, destructive feedbacks and false punishment and taking the credit of
other people works. For effectively measuring the performance of an organisation, the
managers need to eliminate the “silo” approach for measurement and measuring the right
things. Measuring the performance is very important for effectively monitoring the progress
of the organisation. It is composed of measuring the outcomes of the actual performance of
an organisation against its intended goals. It needs a top-down approach for setting the
performance criteria instead of a bottom up approach. Having a strategic plan helps in
providing the performance targets for the organisations. It sets the corporate direction.
According to Bititci, Cocca and Ates (2016), the performance improvement opportunities for

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supporting the delivering the strategy of an organisation get overlooked and the progress of
the company is stymied.
Hence, from the above analysis it is clear that effective performance system is very
important for an organisation to ensure overall success in the present market environment.
The performance management system is highly valuable to the companies and the managers
compared to performance appraisal. It is continuous process of improving the performance of
an organisation by means of setting team and individual goals that are aligned with the
strategic goals of the very organisation. However, having all the elements of the performance
management cycle in the place is very important and this will not necessarily result in
effective performance management. There are several other factors that come into play in this
process. Ensuring that the cycle of performance management is an ongoing process and is not
an annual one is important. With the same, taking into consideration all the components of
performance management system clearly and in well planned manner is also very important.
Most importantly, the willingness and skills of the managers for delivering effective
performance management on a daily basis is important to consider.

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