What is a Performance Management System and how can you set it up for your organisation. Read more to know --

1. Annual
Report
Performance
Management
Systems

2. Keeping your employees motivated and making sure they’re able to perform at
their best is crucial for an employer. This is where Performance Management
can be a powerful tool to help your
employees step up their game and contribute more effectively.
However, the catch is, designing a Performance Management System that
aligns with your organisation’s values and culture while consistently providing
your employees with constructive feedback that helps them improve.
If you’re considering implementing a Performance Management System, here’s
what you need to know
A startup ecosystem involves countless decisions, including whether to
implement a Performance Management System (PMS). While a PMS can be
beneficial in many ways, there are also potential drawbacks to consider.
Advantages of
not having formal PMS
Not having a formal
Performance Management
System allows for greater
flexibility in adjusting job
responsibilities and
performance expectations as
the startup evolves.
No Performance Management
System may encourage a
results-oriented culture, where
the focus is on achieving key
business objectives rather than
adhering to a set of
predetermined performance
metrics.
Implementing a Performance
Management System can be
time-consuming and
expensive, particularly for
early-stage startups with
limited resources. By forgoing
this process, startups can save
money and direct their
resources toward other areas
of growth.
Disadvantages of
not having formal PMS
A lack of formal structure can
make it challenging to provide
employees with meaningful
feedback and opportunities for
growth and development.
When there is no formal
system in place for evaluating
performance, it can be difficult
to provide constructive
feedback that can help
employees improve.
Additionally, without clear
goals and expectations,
it can be challenging to identify
areas where employees can
grow and develop their skills.
Without clear expectations and
goals, employees may not be
able to understand what is
expected of them and how to
measure their own success.
This leads to confusion and
frustration, which can also
negatively impact job
satisfaction and performance.
Without specific performance
standards,
employees may feel a lack of
accountability, which can lead
to decreased performance.
When employees are oblivious
to clear and consistent
standards, it can be difficult to
ensure that everyone is
working towards the same
goals
Pros and Cons of not having a
formal Performance Management System
Therefore, it is recommended to establish and integrate a Performance
Management System once your team has grown to ~50 members. At 50,
when your team is smaller, it will be easier to implement and adapt to the
PMS software, than it would be once you’ve scaled to a team of 100 members.

3. Startups in India face unique challenges when it comes to managing employee
performance. One of the primary challenges is the lack of a formal structure for
designing employee performance. Additionally, startups in India often have a
young and diverse workforce with varying skill sets, making it difficult to
implement a one-size-fits-all approach to performance management.
Hence, there are specific objectives to keep in mind while designing the
Performance Management System.
The system should capture not only the current performance but also the
long-term and mid-term goals.
Future-oriented
One of the most crucial things to remember is the sample space you’ll be
dealing with.Late-stage startups can incorporate a more extensive PMS
whereas a scaling startup that is yet to hire an HR Rep and deploy an HRMS
(Human Resource Management System) can implement a close-knitted PMS.
Team size
Employees should be included in the goal-setting process to ensure that they
are aware of the goals and feel a sense of ownership.This will not only boost
employee motivation but also enhance engagement.
Employee participation
Employee advice and improvement opportunities are identified through regular
coaching and feedback. Also, this promotes trust and strengthens
manager-employee communication.
Regular feedback and coaching
The goals should be Specific, Measurable, Achievable, Relevant, and
Time-bound (SMART). Ensure that the Performance Management System
aligns with the startup's overall goals and objectives. This will ensure that all
employees are working towards the same goals and that their performance is
evaluated in a way that is meaningful and relevant to the organisation.
Alignment with goals and objectives
It is crucial to establish a system that is clear and transparent. This means that
employees should have a comprehensive understanding of the expectations
set for them, as well as how their performance will be evaluated. A clear and
transparent system can increase employees' motivation, and job satisfaction,
and prevent any misunderstandings or conflicts.
Transparent
All employees should be evaluated using the same criteria, and evaluations
should be conducted in a manner that is unbiased and free from discrimination.
This will help to build trust and confidence in the Performance Management
System and ensure that employees are evaluated based on their performance,
not on any personal biases.
Consistent and Fair
What to keep in mind while designing the
Performance Management System

4. One of the most important factors to consider before incorporating a
Performance Management System is laying a base for the Objectives and
Key Results (OKRs). This involves setting specific, measurable objectives for
employees and working towards achieving them over a set period. It is a
results-based system that focuses on outcomes rather than outputs. It is
becoming increasingly popular, especially in the technology industry, due to its
flexibility and ability to align individual goals with the company's overall
objectives.
After speaking with several tech startups in the Blume ecosystem, we learned
that developing effective and specific OKRs can be challenging for teams
initially. To address this, some startups have taken the proactive step of
collaborating with OKR coaches and/or utilising available software to help their
teams better comprehend the OKR framework and improve the quality of their
OKRs.
OKRs can be incorporated into the following Performance Management
Systems to ensure that employees are working towards achieving their goals in
a measurable way.
Define your mission and vision
Before setting OKRs, it's important to have a clear understanding of your
startup's mission and vision.These should guide your objectives and
key results.
Break down your goals into objectives
Once you have identified your strategic goals, break them down into specific
objectives. Objectives should be Specific, Measurable, Achievable, Relevant,
and Time-bound (SMART).
Identify your strategic goals
Identify the strategic goals that will help you achieve your mission and vision.
These should be specific and measurable and should align with your
company's overall strategy.
Identify key results
For each objective, identify the key results that will help you measure
progress towards achieving that objective. Key results should be quantifiable
and should help you track progress toward achieving your objectives.
Assign ownership and accountability
Assign ownership and accountability for each objective and the key result.
This helps to ensure that everyone is clear on their responsibilities and is
working towards achieving the same goals.
Regularly review and adjust your OKRs
Regularly review your OKRs to ensure that they are still relevantand aligned
with your company's mission, vision, and strategy. Adjust your OKRs as
needed to reflect changes in the business environment or company priorities.
What to do when you’re facing
difficulty developing OKRs?

5. Here's an elaboration on the most incorporated Performance Management
Systems in the Indian startup ecosystem:
Continuous Performance Management
Continuous Performance Management (CPM) involves providing employees
with regular feedback and coaching throughout the year, rather than just
during annual or semi-annual performance reviews. This approach can help
managers stay more closely connected to their team members, and provide
feedback that is more timely and relevant to employees.
Traditional Performance Appraisal
This system has been in use for decades and is still widely practised. With
evolving times, we are witnessing the Indian startup ecosystem adopting the
same which involves a yearly or bi-yearly review process where a manager
conducts a formal performance appraisal of their employee's performance.
The performance appraisal typically assesses the employee's
accomplishments, strengths, and areas for improvement, and sets goals for
the coming year.
Set goals
Set specific and measurable goals for each employee that align with the
company's overall goals.
Monitor performance
Regularly monitor employee performance to ensure that they are making
progress toward their goals.
How to implement a CPM
How to implement a traditional
performance appraisal
Perform regular check-ins:
Step 1
Schedule regular check-ins between
managers and employees to discuss
progress, goals, and challenges.These
check-ins can be weekly or monthly,
depending on the needs of the
employee.
Step 2
Provide feedback:
Use these check-ins to provide
feedback to employees. Focus on both
positive feedback and areas for
improvement. Be specific and provide
examples.
Step 3
Encourage employees to reflect on
their own performance and identify
areas for improvement. Provide
guidance and support as needed.
Encourage self-reflection:
Provide feedback
Regularly monitor employee performance to ensure that they are making
progress toward their goals.
Set development plans
Identify areas for development and set plans to help employees improve their
skills and achieve their goals.
360-Degree Feedback
This system collects feedback from a range of sources, including managers,
peers, subordinates, and customers, to provide a comprehensive view of an
employee's performance. This type of feedback can help identify areas of
strength and areas for improvement and can help employees understand
how their work impacts others.
Commonly used Performance
Management Systems

6. Here's an elaboration on the most incorporated Performance Management
Systems in the Indian startup ecosystem:
How to implement a 360-degree feedback
Define Performance Metrics
The first step is to establish clear performance metrics and objectives for
each employee based on their job responsibilities and the organisation's goals.
Identify Reviewers
In this step, managers and employees identify the individuals who will provide
feedback, including supervisors, subordinates, peers, and customers.
Conduct Assessments
Assessments may take various forms, including surveys,
interviews, and focus groups. The goal is to gather feedback on
an employee's performance from multiple perspectives.
Analyse Results
Once the assessments are complete, the data is analysed to identify trends
and patterns, including strengths and weaknesses.
Provide Feedback
The feedback obtained from the assessments is shared with the employee,
and they are given an opportunity to discuss the results.
Develop an Action Plan
Based on the feedback, an action plan is created to help the employee
address areas of improvement and build on their strengths.
Implement Changes
The employee works to implement the action plan, with the support and
guidance of their manager.
Monitor Progress
Regular check-ins and progress reviews are conducted to ensure that the
employee is making progress toward their goals, and adjustments are made
as needed.

7. In our conversations with industry leaders in the startup ecosystem who lack
a formal Performance Management System (PMS) or are in the process of
implementing one, we noticed that as the company grows and reaches a
certain headcount, it becomes increasingly challenging for them to maintain
individual employee records and track their performances. The task of
tracking employee performance becomes tedious and time-consuming,
especially when done manually. Based on our conversations with the
leaders, here’s how they have incorporated performance management tools
–
A GUIDE TO SETTING UP OF PERFORMANCE MANAGEMENT
SYSTEM TOOL
A guide to setting up a Performance
Management System tool
- How to train the employees:
The training workshops should
be a regular practice wherein
the team members will learn
navigating themselves through
the performance management
process. This will further help
them get accustomed to the
interface.
Get the
employees
onboard and train
them
-What should be the typical
requirements from the
PMS tool: Easy user interface,
ease in integrations, HRMS and
ATS solutions in one tool
- Why should you deploy a
PMS tool: Ensures transparency
and consistency in
communicating
feedback as well as maintaining
databases for all the emplovees
at one place
- What are the most common
PMS tools being used in the
startup ecosystem:
We have collated a list for you
ecosystem which encapsulates
the pricing and offerings of the
most commonly used PMS tools
in the Indian startup.
Evaluate the PMS
tools available in the
market basis your
requirement and
budget
Determine the
requirements to be
fulfilled by the PMS
tool
Deploy the most
viable PMS tool and
integrate the same
with the official
communication
channels
- What is the ideal budget:
Most of the startups we have a
conversation with capped their
budget for deploying PMS tool
in the range of 8-10% of the total
HR budget
Determine the
budget

8. The software available in the market may or may not include both
employee management and performance management. Here is a checklist
of the best tools available in the market and what they have for you on the
table
Offers employee management, attendance
management & payroll modules
Cost
Essential
($1 per employee per
month), Professional ($2
per employee per
month), and Premium
($3 per employee per
month)
*only professional and
premium plans offer
performance
management
Customised based on
the kind of products the
org. need
Customised based on
the kind of consulting
and products the org.
need
Lite (₹999 per month for
up to 20 employees),
Pro (₹49 per employee
per month), and
Premium
(custom pricing).
The Pro and Premium
plans include
performance
management features.
Offers Performance Management
Zoho Darwinbox Mesh KekaHR
India Based
Where can you integrate your Performance
Management System?

9. We understand designing and implementing a Performance Management System
can be a daunting task but don’t worry, we’ve got you covered. Our in-house Talent
Branding Team can help you build your Performance Management System as per
your requirements.
How can we help?
trishla@metamorph.work and akash@metamorph.work.
You can reach out to