Performance Management Systems Development


Key performance management system features

An explanation of performance management systems development, including the concepts and key features required. Covers design considerations including the actual performance appraisal form design and the broader business improvement issues.

Every business and organisation should have a performance management system. The system's complexity and scope may vary, but the underlying requirement remains.

Every organisation is different. The system should be designed to meet the unique issues faced, although many systems will have common elements.

Employee development

A good performance management system has an employee development focus. The personal development requirements of employees and staff members are reviewed and plans are made for formal and informal learning and training participation.

Salary and compensation review

In many organisations, employee compensation (wages, salary, benefits, etc.) is linked to performance. If this is the case, the system has to integrate compensation review as part of the overall process.

Personal performance

Most systems set personal performance objectives and targets at the start of the review period. These can relate to job tasks, multiskilling, responsibility levels, etc. - there are many variables. Achievement of these objectives can be linked to compensation review.

Business performance objectives for individuals and teams

Some systems include performance measurement related to the business objectives and strategy. Relevant corporate goals and measures are taken directly from corporate strategy documents and adapted for individuals or teams. These often relate to financial objectives, market share, sales, etc. Achievement of these objectives can be linked to compensation review for staff and bonus payments for teams or groups.

Performance management system design

Success with performance management systems relies on good design and implementation.

Many factors need to be considered. They include morale and organisation culture, other HR (human resources) practices and policies, business competitiveness and market conditions and employee "readiness" for either a new or a revised performance system.

New design or redesign?

A good performance management system is designed from the "bottom up" - that is, the organisational context provides the basis for the framework development.

New systems are easier, i.e. if a performance management system has not previously operated. There is no negative "baggage".

More often, a redesign is undertaken to overcome problems that occurred in the previous implementation.

Design or redesign responsibility

In many organisations, particularly subsidiaries of larger companies, the system is implemented as a corporate initiative. Local management and local human resource managers may be charged with the responsibility for local implementation. Modification to suit local conditions may or may not be an option.

The better situation is design responsibility established at the local level based on a corporate framework.

System technology

Many systems are paper based. Others have created a computerised paperwork system. Others have a technology based system, particularly those using 360 degree feedback mechanisms.

Human resource policies/legal framework

Every performance management system needs to incorporate organisational values and statutory requirements, e.g. discrimination and equity guidelines, etc.

Other performance management resources


External assistance

Management and employee involvement in the design/review of a performance management system is important. Equally important is "getting it right". The management literature is full of articles about the failures and problems of performance management implementations. An external consultant can facilitate the process to overcome the pitfalls but maintain management and employee participation, a key factor in achieving "ownership".

If you require consulting assistance, or telephone or write to Derek Stockley at Contact Details.

For more information about performance management approaches, including training and implementation, select: Performance Management.