Components of an Effective Performance Management System

This article discusses the components of an effective performance management system, including goal setting, rewarding good performance, manager reviews and feedback, planning, engagement survey, and social recognition. It explains how these components contribute to improving employee performance and aligning organizational goals.

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Introduction
Performance management system refers to the systematic method that is used to assess
the performance of employees. The performance management system identifies skills,
competency, and knowledge gaps that exist which helps the organizations to devise ways to
make improvements by providing trainings, coaching, and guidance to employees. This reduces
conflicts within groups and employees in general. This is because employees are clear about the
expectations from their roles hence putting in efforts to meet performance standards. Moreover,
implementing the performance management system is important to an organization. It motivates
employees to take new challenges and innovate through structure process. It is an approach
through which companies align their objectives, goals, and mission with available resources such
as material and manpower. The performance management system has components that are useful
in providing guidelines to an organization.
The first element of the PMS is goal setting. Setting goals in an organization is important
since it gives the company direction. However, organizations should not only set goals but
specific and challenging goals. The goals should be specific, measurable, achievable, relevant,
and time-based (Yadav and Dabhade, 2013, pp.47). Therefore, goal setting is an important
component of performance management software. Goal setting assists an organization to achieve
more. On the other hand, an organization should encourage team goals compared to individual
goals since team goals motivate team members to work hard. The performance management
system of an organization should enable the setting of goals in an easy, simplistic, and
straightforward manner that inspires the teams to set goals and achieve a crucial milestone at
work.

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Rewarding good performance is another important component of the performance
system. Performance appraisal should be followed by reward and recognition. An organization
should reward and recognize the employees. The management of any organization should take it
as a portion of performance review and management process in order to stimulate the team and
employees that have achieved their performance targets. The employees may be motivated
through paid holidays, medical insurance, job promotions, and career development. This will
motivate the employees to work hard knowing that their efforts will be recognized (Baird,
Schoch and Chen, 2012, pp.171). In addition, offering rewards and recognition for performance
well done is a method of shaping behavior so that employees can work hard to qualify for an
appraisal through their continuous contribution to the company’s goals. According to the
incentives theory of motivation, people are inspired towards behaviors that lead to rewards and
they are demotivated from behaviors result to negative consequences (Bednall, Sanders and
Runhaar, 2014, pp.47). The theory relates to operant conditioning where behaviors are performed
in order to gain reinforcement or avoid punishment. According to this theory, the actions of
individuals are aimed at gaining rewards. Therefore, this relates to this component of
performance reinforcement in a way that when employees are motivated, they work because they
are certain that their handwork will be appreciated.
Another component is the manager reviews and feedback. A manager review refers to a
process where employees can evaluate the strengths and possible training needs of their leaders.
This approach gives leaders a chance to get useful feedback from their workers about core skills
needed to lead a group appropriately (Behery, Jabeen and Parakandi, 2014, pp.29). Example,
employees may find out that the leadership of the manager is affecting the group instead of
helping the team grow. Through the employee’s complaints and suggestions, the managers may

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get training on how to effect the change and lead the group well. Managers’ evaluations can be
useful in identifying sectors that collide with the company’s goals and objectives. This may lead
to easy achievement of the company’s goals. On the other hand, the employees also get
apprehension from the valuator on the specific parts that need improvement and data on whether
they are adding any benefit to the performance level that is expected or not (Di Gravio, et al.,
2016, pp.356). Furthermore, the employee is given open feedback with the recommended type of
training and development needed. The appraiser embraces all the required stages to ascertain that
the workers meets the results for the firm through personal guidance and counseling,
representing the workers in coaching program, and mentoring program which enhance the
capability and improve the firm’s general performance.
Planning is also an important component of PMS. Planning involves the process where
the company’s managers and supervisors meet with their workers to identify, discuss, and set
plans for performance for the next appraisal period. However, for planning process to be
effective, it should state what the employees need to do and specific standards that they should
attain. The planning process should locate a major responsibility that contributes directly the
achievement of company’s goals which the workers ought to perform and will be held
responsible for during performance reviews (Bititci, Cocca and Ates, 2016, pp.1786). Planning
involves innovation, better growth, and execution. This gives the organization direction hence
making employees and managers be committed to achieving their target. On the other hand, this
component is important since it helps the company to plan for the future and forecast any deficits
that may occur such demand of employee, increase in customers, or shortage in customers and
device strategies to cope up with such challenges.

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Moreover, engagement survey another component of an effective performance
management system. It is important for the manager to conduct a survey in the organization since
it assists in gaining an insight into what matters most to the employees (Blume, Rubin and
Baldwin, 2013, pp.277). The main reason for conducting a survey in an organization is to find
out if the employees are involved in the organization’s activities or not. Besides, the survey is
used to measure strategic alignment, performance, satisfaction, and competencies that the
employees contribute to the organization. The engagements but validated statistically against
other organizations if they are supposed to provide useful results (Haines III and St-Onge, 2012,
pp.1158). Employee engagement may be assessed using short surveys with a few questions. This
type of employee survey can be done at any time since it will enable managers to have a better
understanding of how their employees are engaged.
Social recognition is another element which involves providing employees with the tools
to develop meaningful associations with each other. This involves tools such as feedback apps
that encourage and empower employees to rejoice the behaviors and success that they experience
daily with their workmates (Decramer, Smolders, and Vanderstraeten, 2013, pp.361).
Organizations should encourage any tool that makes dialogue simple and encourages the sharing
of feedback among employees. The social recognition tools of a performance management
system include feedback software tool impraise and praise tip. Social recognition facilitates the
sharing of information and ideas that may be helpful to the organization (Ren, Skibniewski and
Jiang, 2012, pp.644). Nonetheless, this component is essential in reducing cultural diversity and
conflicts in an organization.
Conclusion

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The performance management system identifies skills, competency, and knowledge gaps
that exist which helps the organizations to devise ways to make improvements by providing
trainings, coaching, and guidance to employees. The system has several components which
include goal setting. Setting goals in an organization are important since it gives the company
direction. Rewarding good performance is another significant component of the PMS. Moreover,
the manager’s reviews and feedback as an element of PMS refers to a process where employees
can evaluate the strengths and potential training needs of their leaders. On the other hand,
planning as performance management system involves the process where the company’s
managers and supervisors meet with their workers to identify, discuss, and set plans for
performance for the next appraisal period. Other components for an effective performance
management system include engagement survey and social recognition. These components are
important in ensuring that the performance system of an organization is effective.

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References
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