A complete outline of performance management system

Published On: August 19, 2022|Categories: Performance Management|

A complete outline of performance management system

Published On: August 19, 2022|
Performance management software-Datalligence

Introduction to performance management

Performance management is an integral part of an organization’s management strategy. As organisations are getting modernised, streamlined to larger goals, the buzz in the corporate corridors is Performance Management Tools/Software!

Performance management software is designed to improve business performance by stimulating the productivity of employees. Quite simply put, performance management tool works as a cohesive model to ensure individual employees/teams are engaged and aligned to the larger organizational goals.

Strategic performance management system aligns the organization with its teams and employees by understanding and managing their performance within a set of planned goals, benchmarks and competency mapping.

A corporate management tool, it helps managers monitor and evaluate employees’ work, the goal being to create an environment where people can perform to the best of their abilities and produce the highest-quality work most efficiently and effectively.

Objectives and Key Results, generally known as OKR, are the basic tenets of strategic performance management. It helps build a clear and foreseeable performance path – for both the organisation and its employees.

It gives a 30,000-feet-high view of your organisation’s goals and tracks the progress, month on month, or quarter on quarter. Every individual’s achievements are aligned with the organisation’s success. Importantly, it maps your strategy till execution.

What is a performance goal definition?

Performance goal means a target level of performance expressed as a tangible, measurable objective, against which actual achievement can be compared, including a goal expressed as a quantitative standard, value, or rate.

How does performance management work?

Organisations face the single biggest challenge of measuring and tracking performance. We are stuck with excels that don’t provide any insight that would be useful for the business. We make presentations that provide no goal visibility.

The link between strategy and execution is vastly missing! There is a lack of alignment, no accountability and priority is completely or mostly missing.

The OKR system of performance management does the following:

  • Creates Goal Alignment

Get a clear focus on the OKRs that matters to the business. Prioritize and align the team to the organization’s mission to boost productivity

  • Increase Collaboration

Enables teams to communicate and collaborate, even remotely as the new-age hybrid model, with the objectives of the organization. Communicates on the wins and misses that empower teams in decision-making

  • Increase Employee Performance

Creating focus and transparency to increase participation and trust, as a result, increase engagement and performance

An objective of a performance management system consists of the processes used to identify, encourage, measure, evaluate, improve, and reward employee performance at work and align it all with the organisation’s goal.

Why is performance management important?

Effective performance management is essential to businesses. Through both formal and informal processes, it helps them align their employees, resources, and systems to meet their strategic objectives.

1.A Peek into the Future

By examining and dealing with workplace performance steadily, leaders can see potential future problems. Early detection is the key to resolving the issue!

2.Helps Create Development and Training Strategies

With performance management software – the OKR tool – the organization could create specific training programmes to change an issue into an opportunity for improvement.

3.Provides Clarity in the Organization

Directly addresses the question of many employees who are unsure of their role, expectations and to who they report to. A lack of understanding leads to a lack of productivity. With clarity, comes increased productivity from employees.

4.Provides the Opportunity for Exchanging Feedback

Quite often, management speaks to employees about their performance, but employees do not get a chance to voice concerns or frustrations. Effective performance management provides an avenue through which both the employer and the employee exchange feedback. Employees often feel much more valued when they can voice their thoughts.

5.Increases Employee Retention

Performance management also encourages organizations to reward and recognize their employees. Lack of recognition is a big reason some employees leave a job and look for another. They want to be appreciated for their hard work. In addition to the clarity, the ability to share feedback, and the additional training when needed, rewards and recognition can play an important role in employee retention.

6.Boosts Employee Engagement

When there is a disconnect between management and employees, employees just go through the motions of the day, their position merely becomes a job. Performance management has the capability of engaging employees fully and making them feel invested in the company. This leads to job satisfaction and employee loyalty, all of which increase productivity.

You might consider asking employees for feedback on what they feel should be addressed. Though it may take some time to put together, investing your resources into developing an effective performance management strategy will be well worth the effort.

7.It encourages employee recognition and reward. Consider this:

  • Companies that implement meaningful reward systems enjoy as much as a 50% increase in their employee engagement
  • 68% of employees will put in more effort if they’re aware that their input is appreciated and valued
  • 84% of workers working in organizations with great recognition and reward systems say they are satisfied with their position

Most businesses neglect the value of recognizing and rewarding employees. And that can be greatly disastrous to your organization. According to a survey carried out by American Express, a third of top businesses believe that recognition and reward lead to higher employee retention, with half also attributing better motivation to giving incentives.

Managers can use a continuous performance system to identify employees that go above and beyond for the company. Good reward systems are vital for employee satisfaction and happiness.

8.Boosts employee productivity and engagement

One noteworthy benefit of an engaged workforce is that they stay on, contribute actively to the company, and, importantly, deliver better results. Increasing employee engagement is important to maximize ROI and boost productivity. Excellent performance management means an engaged workforce!

Performance management invests in an ongoing interaction and an atmosphere of encouragement, support, and trust. It also helps in developing a relationship between the company and its employees. If employees know that their employer and the organization care about their efforts and are committed to them advancing their career, it automatically creates a better employee connection with the business.

9.Goal setting and achievement

Goal setting is the single biggest objective of OKR technique. This means the employees understand how their contributions affect the overall growth of the business.

Thus, performance management will help in business and executive goal setting. Aligning your teams with higher organizational goals sets visible priorities and provides direction, ensuring that individuals have a sense of ownership in the business via their personal objectives.

10.Offers mentoring for increasing performance

The ultimate aim of performance management is to improve performance. It will help the executive manager and/or HR manager to provide additional mentoring and training which will be useful in developing criteria for promotions.

Performance management to employees:

Performance Management helps you track your employees’ performance and tells you whether or not they need extra support, can handle a higher-level training, or deserve a raise. It is important to have a structured Performance Management and tracking process to maintain a high standard for your organization.

Continuous performance management allows managers to see when employees go above-and-beyond. It helps them track progress against goals and personal development and make informed decisions about additional compensation, such as pay-rises or bonuses.

Employee Performance Management is about aligning the organisational objectives with the employees’ agreed measures, skills, competency requirements, development plans and the delivery of results.

Gives Clarity to Employees:

Employee Performance Evaluation provides clarity to employees about the wants and expectations of the leaders. They get to know that their performances are getting evaluated and valued. This is why it’s important to keep performing well for both their sake and the company.

A good performance management system helps employees to understand the goals of the company and what they are expected to do to achieve these goals.

Purpose and goals of performance management

The main objective of performance management is to enhance individual employee goal achievement along with organizational objectives. Also, it boosts the skills and personal development of employees through the managers’ help. Additionally, it encourages work that helps in fulfilling business goals.

There are five main objectives of performance management:

  • Develop clear role definitions, expectations and goals.
  • Increase employee engagement.
  • Develop managerial leadership and coaching skills.
  • Boost productivity through improved performance.
  • Develop a performance reward program that incentivizes accomplishment.

Performance goals enable employees to plan and organize their work in accordance with achieving predetermined results or outcomes. Goals can be separated into four types of organizational categories.

  • Time-based goals
  • Performance-based goals: Performance-based goals are short-term objectives set for specific duties or tasks
  • Quantitative vs. qualitative goals
  • Outcome- vs. process-oriented goals

Importance of performance goals:

Performance goals become effective when employees know how they contribute to the company’s growth. Start with an overall company goal and divide it into smaller goals for each employee. For example, if the management wants to grow sales by 4%, find out how each individual can contribute toward that achievement.

How to choose the right performance management software?

The five key business performance objectives for any organization include quality, speed, dependability, flexibility, and cost. When it comes to business performance objectives, you’re likely aware that efficiency and productivity are crucial.

It is crucial that you and the other leaders acknowledge the importance of performance management in your organization. By avoiding it, you are setting yourself up for a possible failure. Meet with your HR department and other business leaders to put a performance management plan in place. You may want employees to give their feedback on what they feel should be addressed. Though it may take some time to put together, investing your resources into developing an effective performance management strategy will be well worth the effort.

Effective performance management is essential to businesses. Through formal and informal ways, it helps them align their employees, resources, and systems to meet their strategic objectives. It works as a dashboard too, providing an early warning of potential problems and allowing managers to know when they must make adjustments to keep a business on track.

Strong performance management rests on the simple principle that “what gets measured gets done.” In an ideal system, a business creates a cascade of metrics and targets, from its top-level strategic objectives down to the daily activities of its frontline employees. Managers continually monitor those metrics and regularly engage with their teams to discuss progress in meeting the targets. Good performance is rewarded whereas underperformance triggers action to address the problem.

Organizations that get performance management right become formidable competitive machines. Much of GE’s successful transformation under former CEO Jack Welch, for instance, was attributed to his ability to get the company’s 250,000 or so employees “pulling in the same direction”— and pulling to the best of their individual abilities. As Henry Ford said, “Coming together is a beginning; keeping together is progress; working together is success.”


Datalligence AI specialises in designing performance framework that suits the organisation culture. Talk to our performance coaches today to get started.

Simple and intuitive tool that increases the adoption through its integration with employee engagement. We thrive in providing “Decision Intelligence” that enables quicker decision-making. The platform is user-friendly that is aligned with all the generational workforce today. Talk to our performance coaches today to understand more about Datalligence OKR-based performance software.