Comprehensive Report on Performance Management System in Organizations

This report provides a comprehensive analysis of performance management systems, addressing the challenges associated with their design and implementation. It explores various aspects, including the importance of a well-designed system aligned with organizational needs, leadership commitment, integration with organizational goals and culture, and employee competence. The report also examines how to measure the effectiveness of a performance management system, detailing steps such as benchmarking, setting clear goals, defining success measures, and evaluating results. Furthermore, it delves into the implementation of a performance management system, emphasizing the importance of gauging current methods, defining goals, setting expectations, providing feedback, and monitoring performance. The report also explores different measurement approaches, including comparative, attribute, behavioral, result, and quality approaches. Additionally, it highlights the correlation between performance management systems and employee development, the legal issues involved, and the metrics used to assess individual, team, and overall organizational performance, offering a holistic view of performance management within organizations.

Running head: PERFORMANCE MANAGEMENT SYSTEM
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PERFORMANCE MANAGEMENT SYSTEM
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Institutional Affiliation

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1. PERFORMANCE MANAGEMENT SYSTEMS
Challenges associated with its design and implementation.
A lot can go wrong when the expected effectiveness of staff performance is not met. The
main objective of the performance management system is usually to improve the overall
performance of team members. Both management and employees work together to plot, monitor,
evaluate, review, gauge the tasks undertaken by each team member all to contribute towards
achieving an organization`s objectives.
With all these activities being carried out, challenges face the organizations and these
include;
i. Wrong design.
The performance management system and the tools to be used for appraisal must go hand
in hand with the company`s needs. The system must be unique from any other organization`s
organization. Consultation between the stakeholders and the users of the said system must occur.
There should also be user trust for the system to be successful. The systems should be very fair
to all, and all related documents should be in place. The said design should also have
mechanisms that include reward programs for best performers and punishing or training the poor
performers.
ii. Inadequate leadership commitment.
Support, as well as commitment from the management, is crucial for the implementation
of any appraisal system. The management drives the process of implementing performance
appraisal and making the entire process apart from the organization. The leaders measure
performance through monitoring and gauging by use of already laid down strategic goals and
objectives.

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iii. Lack of integration.
For the system to work effectively, it has to be integrated with the workforce,
organizational goals and the culture of the organization in question.
iv. Assuming change management in the design and implementation of the system.
Strategic management relating to change is a crucial part of ensuring implementation of
the system. The leaders of an organization create it to manage resistance. Communication is
crucial in change management. The proper records must be in the right place, and all the
implementation schedules must be followed.
v. Incompetence.
All the employees must be competent enough to use the management system. They
should also ensure proper implementation of the appraisal system.
The employees should be able to relate the KPI`s, give and receive feedback and be
active listeners. There should be a performance coaching.
2. PERFORMANCE MANAGEMENT SYSTEMS
Performance management systems are systems designed by managers to ensure that
employees achieve their tasks to the later efficiently and meet the organization's objectives. The
management of any organization or business tracks departmental or individual employee
performance in line with meeting organizational goals.
MEASURING PERFORMANCE MANAGEMENT SYSTEM.

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If an organization needs to measure the effectiveness of performance management system, it
needs to follow the five steps below;
i. Undertake research as well as a benchmark on the most appropriate practice.
Organizations should focus on the best performance management tradition. This could be
through reading through the latest researches done. Moreover, going through case studies that
involve other companies that have achieved excellent performance management practice would
also help.
ii. Have a clear set of goals relating to performance management.
The management should state its goals to be achieved through the use of performance
management system so that the employees know what is required of them. The goals could be
having an improved employee performance or organizational performance.
iii. Form success measures.
These indicate whether the goals for the performance measurement system have been
achieved. For example, improved corporate performance would be indicated by more profits
realized by the corporate.
iv. Evaluation.
This involves collecting both qualitative and quantitative data from the organization. It
could be through surveys, conducting interviews or distributing questionnaires.
v. Act on the results.
The management should know clearly about the effectiveness of the performance
management processes to know where to improve if the outcome is not as good as the
expectations.

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HOW TO GATHER
i. Know what you want to measure and how you will do it.
ii. Collect data for the measure.
iii. Let people and the systems analyze it.
iv. Briefly write and analyze the data to make it performance information.
v. Communicate about the information to those whom it is made for, for them to
make decisions.
vi. Interpret the information so that any implications to the business can be
understood.
vii. Use the then resulting information to makes decisions on ways to improve
performance.
IMPLEMENTING A PERFORMANCE MANAGEMENT SYSTEM
This system helps employees perform their tasks effectively and efficiently. With this, the
management can identify employee’s strengths as well as their weaknesses so that they become
productive to the corporate.
The system is implemented in the following ways;
i. Gauge the performance appraisal method currently in use.
As management, you should evaluate yourself by looking at how often you avail
feedback to your employees as well as the kind of feedback. Define if there is a need for a

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change or not. The management can also decide to develop a new performance system or
improve the one already in existence.
ii. Find corporate goals.
Corporate goals give the staff motivation to work towards achieving organizational goals
altogether. Set annual goals for sales and even profits to be made and share them with every staff
member.
iii. Fix performance expectations.
Share with you employees what you expect of them. Encourage them to do better. Point
out any weaknesses that you may have noticed among them so that they change them for overall
better performance. Give deadlines for any tasks.
iv. Monitor performance and give feedback.
Watch how the employees work and give credit when due. Where there are problems in
completing tasks coach and train them.
v. Gauge performance.
Rate the performance of each employee on whether they meet, not meet the expectations
or exceed expectation. The provide feedback where you talk about rewarding or not rewarding
the employee.
vi. Set new goals.
(b)Measurement approaches to performance management.
There are five major measurement approaches. These include;
i Comparative approach.
This is used to rank employees against each other. Best performers are promoted or
awarded while poor performers can be either dismissed or given a chance to improve.

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ii Attribute approach.
The staff is rated on already set parameters like innovation, skills on how to solve
problems, teamwork and creativity.
iii Behavioral approach.
This relates to job dimensions. It involves Behaviorally Anchored Rating Scale (BARS)
that consists of vertical scales and Behavioral Observation Scale (BOS).
iv Result approach.
Staff performance results are used in this approach. The balanced scorecard model is
used, and it uses financial, customer, innovation and growth and internal and operations
perspectives as its matrix. The Productivity Measurement and Evaluation System is also used. It
motivates employees for better productivity as well as to quantify feedback. This approach
converts corporate strategies into corporate operations.
v Quality approach.
This approach focuses on ensuring best customer service and reduction of errors. The
approach considers both staff or customer as well as the system.
(c)CORRELATION BETWEEN THE PERFORMANCE MANAGEMENT SYSTEM
AND ENTIRE EMPLOYEE DEVELOPMENT
Performance management systems are created to help employees grow and improve their
talents and skills.
Employee development entails activities introduced by a company to help an employee
develop. The activities include training the employees to acquire competences, provide

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employees with opportunities to realize their talents and guide poor performers to improve their
performance.
Benefits of employee development include;
i. Goals of a corporate organization can be met by availing facilities for employees to
perform their tasks effectively.
ii. Grooming of leaders in the organization helps reduced costs of hiring new staff.
iii. Improved employee engagement when employees are happy and become an area of
focus.
iv. Training of employees helps them become competent and undertake their responsibilities
effectively.
v. Performance Management System can be converted to employee development system by;
vi. Enabling the management to have feedback cycles often.
vii. The management should avail feedback to the employees, examine the status of
objectives, listen carefully to the employee feedback and develop specific actions.
viii. The management should ensure that the feedback is available to all employees and the
necessary actions are taken.
ix. Maintain the scorecard for each score to be used at the end of period performance
appraisal.
Performance management system is used to perform appraisal annually, and much work
is involved which stops when employee salary revisions are made. The systems also have
limitations because it does not help the management notice training needs or staff development
needs.

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Once the feedback is obtained, it is used to address ways that can be used to improve
employee performance hence it starts to convert to development management system. When the
cycle has close intervals, the performance management system starts to become a development
system, and that is how they are interrelated.
(d) Legal issues involved in performance management systems.
i. The systems should not be biased in terms relating to sexual preference, marital status,
age, gender or even disability.
ii. The records of any appraisal should be well kept by the company. For example, those of a
poor performer will help handle his or her legal issues. Those employees who feel that
their cases were not dealt with effectively may legitimately take legal actions against the
employer.
iii. The appraisal system tool is used to improve employee performance not promote,
increase an employees’ salary or demote anyone.
iv. The results of the system should be precise, supported by evidence and fair to all.
v. The appraisals should not have emotive language.
vi. The results of the appraisal should be treated with confidentiality.
vii. Any employee should be allowed to give a remark about their evaluation result so that
they can express their defense or agree to it.
(e) A performance management system.
(i) Individual performance.
To know if an employee is working towards improving company performance; both
quantitative and qualitative metrics are used. These include;
Quantitative metrics Qualitative metrics

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Number of defects Teamwork
Number of calls per hour Dependability
Number of customer calls per hour Initiative
Returns per hour Enthusiasm.
Sales per employee Communication
Profit contribution Creativity
Sales Empathy
The organization should connect the measures in the balanced scorecard with the most
important organizational goals. The objectives should be measurable. The appraisals focus major
on skills to complete tasks effectively and efficiently. They could be tools for monetary
compensation.
(ii) Individual performance that contributes to team performance.
The metrics for measuring a team member contribution to a team include the following
Attendance
The other team members should check if a team member comes to work or not. Teams
should automate time and those attending data. Those that don’t come to work are obviously not
contributing to a team`s growth.
Helpfulness
This helps foster a certain culture among the team members like putting all your hands
together to tackle a complicated task.
Initiative
Team members should take the initiative to ask about where they can help or take a step
to do a certain task without having to be asked.

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Efficiency
Everyone on the team should be able to complete their task on time. They should be able
to use the limited resources effectively and efficiently. Team members should not need overtime
to complete tasks allocated to them. They should meet deadlines.
Quality
Check how many connections a team member has as a sales person and are they
important leads. If a team member is doing a quality job, then there will be increased sales.
(iii) Team performance
Organizations depend on teams of employees to complete some company tasks. The
appraisals made assess how a team is working. In this case, no individual ratings are made. A
team is composed of people with different attitudes and skills but with a common goal.
The following metrics are used to measure the performance of a team;
i. Level of communication. Team members must cooperate with each other and put equal
effort for a favorable result of their task.
ii. Overall outcome. Team tends to have different inputs into a process. In the outcome the
different efforts for a successful must be realized.
iii. Feedback. If the members of a team do not share feedback the, there is a likelihood of
failure.
iv. Innovation level. People with different skills are put together to share ideas that will
contribute in the total achievement of organizational goals.

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Madrid: ISEG School of Economics and Management.
Martocchio, J., 2011.Strategic Compensation: A Human Resource Management Approach,
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