A performance management system is designed to support and develop employees in order to maximize their contributions to the organization and its goals. The system supports all employees at all levels of the organization, from front line staff to executive management. It focuses on supporting people in their work roles and businesses will sometimes use more than one system for this purpose.

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Different Types Of Performance Management
System And Their Purpose
If your organization is growing rapidly, hiring a good team is essential. There are multiple types of
performance management systems that can help you manage your employees and have the best
team in place to drive your business forward.
What is a Performance Management System?
A performance management system is designed to support and develop employees in order to
maximize their contributions to the organization and its goals. The system supports all employees
at all levels of the organization, from front line staff to executive management.
It focuses on supporting people in their work roles and businesses will sometimes use more than
one system for this purpose.
A Performance Management System has 8 main purposes:
Managing employee’s performance is the key objective of establishing systematic Performance
Management system in an organization.These process servers’ eight main purposes in the
company:
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2. 1. Strategic
It is a tool which should be aligned with overall organization goals followed through department
goals and individual goals.
2. Administrative
It is also the deciding factor of an employee’s promotion, demotion, salary increment, transfer and
terminations. It enables the identification of performers, non-performers or under performer
employees in an organization.
3. Communication
It is an effective communication channel to inform employees about their goals, job
responsibilities, key deliverables and performance standards. Further, it is also a structure method
to indicate the key areas of improvement required by the employee in order to improvise his
performance.
4. Developmental
It is the structured method of communicating the positive feedback, improvement areas, and
development plans. The idea behind a development focus is that employees don’t need to be
forced to perform, they want to perform well and develop both personally and professionally.
5. Organizational Maintenance
The yardstick of measuring employee, department and organization achievements and evaluating
the performance gaps through various tools and techniques. Hence, it maintains the health of the

3. organization and its performance standards.
6. Documentation
The performance management reviews, feedback and forms should be documented and
maintained periodically by every organization. It would enable them to look forward, set new
targets, design developmental needs, design training and learning programmes, and career
progression of employees across departments
7. Recognition
Recognize employee performance and behaviors consistent with organizational goals. Employees
should feel valued and appreciated for the work they do and the effort they put in.
8. Reevaluation
Reevaluate employee performance in light of changes in the business environment or
organizational structure. Giving regular feedback will help the employees to perform better and be
consistent.
The Top 5 Types of Performance Appraisal Systems
There are five main types of performance management systems that are used by businesses
today:
1. Forced Distribution
The ratings of employees in a particular group are dispersed along a bell curve, with the supervisor
allocating a certain percentage of the ratings within the group to each performance level on the
scale.

4. 2. 360-Degree Feedback
This process collects information from the employee’s supervisor, colleagues and subordinates
about an individual’s work-related behavior and its impact.
3. Competency-Based
This type of system focuses on performance as measured against specified competencies (as
opposed to specific tasks or behaviors) that are identified for each position.
4. Management By Objectives
Management by objectives (MBO) is a process through which goals are set collaboratively for the
organization, various departments and each individual member.
5. Graphic Rating Scales
Graphic rating scale (GRS) appraisals list several factors, including general behaviors and
characteristics on which a supervisor rates an employee. The rating is usually based on a scale of
three to five gradations. This type of system allows the rater to determine the performance of an
employee along a continuum.
The majority of performance management system make these six mistakes:
Organizations that want to improve the performance of their employees follow a performance
management system. There are many different types of performance management systems, and
each has its own unique way to implement it. The type you choose depends on your organization
and its goals.
Troublesome factors in most performance management systems are their structure, planning
process and implementation. These factors often cause the system to be ineffective and thus lead
to poor results. Here are the three common mistakes that many performance management
systems make:
1. Focus On Goals Rather Than Outcomes
Focusing on insignificant activities instead of on the end result could end up hurting the
organization. There is a thin line which makes a huge difference. When one shifts the attention
from goals to outcomes, it will help them grow.
2. Little Or No Consideration For Personal Growth
Taking care of the employees entails more than just hosting pleasant happy hours or providing

5. weekly lunches. Everyone wants to feel really cared for, regardless of their position or where they
choose to work. A commitment to employee development is a powerful method to do this.
Employee development is a long-term strategy with immediate advantages such as enhanced
loyalty, improved performance, and higher engagement.
3. No Clear Communication Of Expectations
As a leader, one drives their team’s motivation and progress. It is critical for them to be able to
communicate to all team members not only what their collective goals are, but also what they
expect of each of them in their roles to help meet those goals.
4. Halo/Horns Effect
The “halo” and “horns” effects occur when an employee is highly competent or incompetent in
one area, respectively, and the supervisor rates the employee correspondingly high or low in all
areas.
5. Personal Bias/Favoritism
Some managers may allow their impressions of employees or their personal feelings about them
to dominate the performance rating process.
5. Inaccurate Information/Preparation
Managers sometimes fail to take the time to solicit relevant information about the employee’s
actual performance from those who work most directly with the employee, resulting in an
inaccurate assessment.
The successful uses of a performance management system
Performance management systems have evolved from a basic set of performance measurement
tools to a comprehensive system with critical input from the employee, immediate supervisor and
manager.
Performance management is a systematic approach to providing feedback and coaching to
employees in order to improve their job performance. It provides a framework for planning,
monitoring and adjusting behavior through the use of the following:
Employee Self-Assessment:
Performed by the employee, it documents the employee’s view of his or her strengths and
weaknesses, achievements and development needs.

6. Manager Assessment:
Performed by the immediate supervisor, it documents how well the employee is meeting
established expectations in areas such as achievement of goals, teamwork and attitude toward
work.
Manager Observation:
The manager observes the employee’s actual performance to validate or give clarity to what was
reported by the employee and/or supervisor.
Individual Development Plan (IDP):
An action plan that links development needs to goals, objectives, competencies and career
aspirations.
Conclusion
There seems to be an abundance of different types of performance management systems. It
depends on your organization or team size and the purpose you are aspiring to accomplish. So the
choice is completely up to utilization on whether the performance management system will be
applicable for your company or organization to achieve certain goals and improve employee
performance.
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