Making a Performance Management System Work for You

A performance management system is basically a business management model that enables a company to create and control specific performance guidelines that have been outlined in such a way that they will benefit the company. This also means that you have a system in place that allows you to measure the actions of all of your staff and compare it to minimum performance requirements.

A well-run company will always have its own goals clearly defined and it will always have a means to achieve those goals as well. If it did not, then there would not be a very great chance of success for the business as a whole. For that reason, a performance management system plays an important role for the company because it allows the business to control and manage all of the actions of the staff within the company.

Aligning Staff Actions with Company Goals

The process for creating a performance management system is generally quite straightforward and as long as you stick to the general guidelines, you should be able to create an effective performance management system. The first step is to check your current company performance at all levels, so that you have a benchmark to work from when the time comes for a review. At this point you have to make sure that you take measurements of all the critical aspects of your day-to-day operations, so that you know what you have to compare.

Once you have your current performance levels measured, you can start to look at your organisational goals. Your organisational goals determine where the company is supposed to be and where it is currently heading. The company goals are then contrasted against the existing company performance so that any shortfalls can be highlighted and addressed.

Defining Your Performance Areas

Defining key performance areas is a little more difficult to do because you have to define exactly what an employee is supposed to do for their job and for the company they work for. If a particular staff member has a role related to accounting, then his or her performance areas will have to be related to accounting in some way. To give you an example, a debtor’s clerk may be responsible for all the accounts received as part of their job, and a key performance area for them to work on would be to accurately collect and record the accounting data.

If that same employee has been recording data incorrectly, then they would obviously be marked down in that area. The benefits of a performance system here would be to measure their existing recording abilities and then see how they have done for the next review. The review process is your control measure to see how much change the employee has actually made over the last period.

The Benefits of a Performance Management System

The main benefit from installing a performance management system, is that you have a direct link to improving profitability of a business. When your staff are working towards a unified goal and they understand their purpose, it automatically increases turnover for the company. When you tie in performance to monetary remuneration, you get a motivated workforce that gets rewarded for good performance.
The higher confidence levels from the reward system, means that staff are dedicated to their work rather than slacking off. It also means that management has better control over how the staff work, and they have less responsibility in terms of motivation, as the staff are already incentivised to continue working. Not only is it a flexible and useful system, but it also allows management to convey, implement and control the strategic goals of the company.

Long Cycles, Short Cycles and Organisational Development

A performance management system is designed to keep a close eye on your long and short term goals of the company. It provides a feedback mechanism for upper levels of management and helps to create a clearer picture of where the company stands at the present moment. You can gain insight into current performance, past performance and determine goals for all future performance as well.

As you can see, it is clear that making use of a performance management system has distinct benefits and advantages to how a company is running.