This document provides an overview of performance management systems. It discusses the purposes of a performance management system, which include linking individual goals to organizational goals, making administrative decisions, communication, development, organizational maintenance, and documentation. It also outlines the six stages of a typical performance management process: prerequisites, performance planning, performance execution, performance assessment, performance review, and performance renewal. Key aspects of each stage are described. The document provides context on performance management and its differences from performance appraisal.

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Kwantlen Polytechnic University
School of Business
HRMT 5110
HR Management (P60)
Individual Research Report
Performance Management System
Kiranjit Kaur
100423832
10 October 2022

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Table of Contents
Abstract.........................................................................................................................................................3
Introduction ..................................................................................................................................................3
Performance Management System ..............................................................................................................4
Purposes of Performance Management System ..........................................................................................5
Performance Management Process..............................................................................................................7
Stage 1: Prerequisites ...............................................................................................................................7
Stage 2: Performance Planning.................................................................................................................8
Stage 3: Performance Execution...............................................................................................................9
Stage 4: Performance Assessment............................................................................................................9
Stage 5: Performance Review.................................................................................................................10
Stage 6: Performance Renewal and Reconstructing...............................................................................10
Problems or challenges while implementing a Performance Management System..................................11
Performance management best practices..................................................................................................13
Conclusion...................................................................................................................................................14
References ..................................................................................................................................................15

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Abstract
Due to high competition, an organization must attract and retain skilled labour to succeed. In
every industry, whether it is big or small, Human Resources Management evaluates and
manages employee’s performance with a systematic approach known as Performance
Management System or PMS. This system is a strong strategic tool to improve the performance
of employees and helps an organization achieve its goals. The process of a performance
management system commences when an employee joins a company, and the process ends
when an employee quits or leaves a job. This report will provide an overview of the
performance management system, the purposes of PMS, how to implement it or the
performance management cycle, and some common problems faced while implementing the
performance system. Also, it describes the characteristics of successful PMS.
Key Words: Human Resource Management, employee performance, performance
management, performance appraisal
Introduction
As we are living in the epoch of Liberalization, Privatization, and Globalization, it is important
for every organization to have a competitive advantage. To remain on track, the Human
Resources Management revise and review old policies and strategies and develop some new
strategies to improve the performance of employees because effective performance is key to
success for any organisation (Gautam & Jain). It is seen that HR is the only resource, if used
efficiently, can help an organization in gaining a competitive advantage over rivals (Shrivastava,
Mathur, & Barodiya, 2019). Most companies these days rely on PMS as it is a useful tool for

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employers as well as employees. This system helps employees know their roles and
responsibilities and what is expected from them to achieve the organisation's mission, vision,
and strategy. On the other hand, it helps employers to ensure that employee’s behaviour
matches the aim or objective of an organization. Traditionally, the focus of the Performance
system was to just shape the behaviour of employees, and some factors like wages and salaries
were considered to meet the goals, however, this focus is now shifted towards learning and
development in a work environment (Gautam & Jain).
Performance Management System
Performance Management is a strategic tool for measuring and managing employee
performance to increase organizational effectiveness (Hartog, Boselie, & Paauwe, 2004).
According to Simon, performance management is defined as “the formal, information-based
routines and procedures managers use to maintain or alter patterns in organizational activities”
(De Waal A. A., 2010). Performance Management includes providing coaching and feedback,
meeting organizational goals, and evaluating the performance of the employee (Ghosh, Long, &
Murphy, 2004). Performance Management is a continuous process of aligning employee
performance with the strategic goals of an organization. Here, the main focus component is “a
continuous process.” In other words, if an employee’s performance is evaluated once a year
then it is not performance management (Aguinis, An expanded view of performance
management, 2009). There is a difference between performance management and
performance appraisal. Performance appraisal is a part of the strategy of performance
management (Aguinis & Pierce, Enhancing the relevance of organziational behavior by
embracing performance management research, 2007). Performance appraisal means providing

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feedback to employees about their performance that ultimately helps an organization make
decisions related to promotions and pay increases (DeNisi & Pritchard, Performance Appraisal,
Performance Management and improving individual performance: A motivational Framework,
2006). Performance management includes several policies, procedures, and activities to
improve the performance of employees. This system starts with the performance appraisal and
then includes training, feedback, and a reward system (DeNisi & Murphy, Performance
Appraisal and Performance Management: 100 Years of Progress?, 2017).
Purposes of Performance Management System
Performance management system serves six important purposes in an organization:
1. Strategic: It links organizational goals with an employee or individual goals. In other
words, it links individual goals with the team goals that are eventually linked to the
organizational goals (Agunis, 2020).

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2. Administrative: PMS is used in making administrative decisions (promotions, merit
increases, salary adjustments, employee termination or retention, identifying poor
employees) about employees. If there is no effective PMS in an organization then
administrative decisions would be biased or based on personal preferences (Aguinis, An
expanded view of performance management, 2009).
3. Communication: It is an effective communication channel in which employees are
informed about their performance and in which areas there is a need for improvement
(Aguinis, An expanded view of performance management, 2009).
4. Developmental: Managers give feedback to employees and improve their performance.
This feedback includes causes of performance deficiencies, strengths, and weaknesses
of employees (Aguinis, An expanded view of performance management, 2009). For the
improvement of employees, managers use different methods like training and
mentoring (Shrivastava, Mathur, & Barodiya, 2019).
5. Organizational maintenance: A performance Management System provides information
about accurate talent inventories (abilities, skills, assignment history of current
employees) as well as future training needs, and evaluates HRM inventories, like Is there
any improvement in the performance of employees after training or not? (Aguinis, An
expanded view of performance management, 2009).
6. Documentation: PMS creates an accurate database for an organization that contains
information about employees, such as their skills, knowledge, performance level, and
rewards (HR Help Board, 2022).

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Performance Management Process
For the equal and fair treatment of employees, many organizations use performance
management for their pay and HR decisions. Performance management is a continuous process
that includes six steps:
Stage 1: Prerequisites
Before implementing PMS, two prerequisites are needed i.e., the organization’s strategic goals,
missions and knowledge of the jobs in question. If an organization’s mission and strategies are
unclear, then employees will not be clear about what to do. After establishing goals for the
organizational level, the goals cascade downwards from the departmental level to the
employee level (Aguinis, An expanded view of performance management, 2009).

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Based on these stages, management designs a Performance Management System that
describes job specifications, and job descriptions to obtain organizational objectives
(Shrivastava, Mathur, & Barodiya, 2019).
Stage 2: Performance Planning
When the performance management cycle starts, firstly, managers and employees discuss what
needs to be done or achieve and how to achieve it. The performance planning includes three
attributes:
Results: The results are known as performance standards which are used to measure employee
achievement. In simple words, results mean the outcome that is produced by an employee. It
tells the achievements and gaps (Shrivastava, Mathur, & Barodiya, 2019). The results that
employees need to achieve, must be tied to organizational goals and strategy (Pulakos, 2004).

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Behavior: It is a difficult task to measure behavior. Employees do not have control over the
results of their behavior (Aguinis, An expanded view of performance management, 2009). Their
behavior can be measured through close observation and monitoring by the HR department
(Shrivastava, Mathur, & Barodiya, 2019). Behavioral standards include competencies
(knowledge, skills, and attitudes) that help to determine how to achieve a result (Aguinis, An
expanded view of performance management, 2009).
Development plan: It includes results and behaviors. The development plan identifies the
strength and areas of improvement and further sets goals that are needed to improve the
weakness.
PMS will be implemented after meeting prerequisites and completing the planning phase
(Aguinis, An expanded view of performance management, 2009).
Stage 3: Performance Execution
This stage cannot be ignored because the whole procedure of implementation of PMS and
building standards is dependent upon it (Shrivastava, Mathur, & Barodiya, 2019). Feedback is
provided based on effective and ineffective performance. It must be a two-way communication
process in which employees and managers have joint responsibilities. Employee’s responsibility
is to understand how they are performing through feedback or self-assessment; however, the
manager’s responsibility is to observe, and provide constructive feedback (Pulakos, 2004).
Stage 4: Performance Assessment
Both employees and managers participate in the performance assessment process. The
manager fills an appraisal form as well as employees also fill out their form in which they self-

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rate their performance standards. Then, these self-ratings are compared with the manager’s
rating (Pulakos, 2004). This process can lead to disagreement between employees and
managers when the manager’s feedback is more negative than the employee’s self-evaluation.
On the other hand, self-appraisal can increase employee satisfaction during an appraisal
meeting. Employees would have feelings of accuracy and fairness (Aguinis, An expanded view
of performance management, 2009).
Stage 5: Performance Review
This stage is known as an appraisal meeting in which employees and managers exchanged their
feedback and review performances. The appraisal discussion focuses on the past (what was
done), present (compensation received), and future (goals to be achieved before the next
review session). In other words, this stage is the base of the next years appraisal cycle (Aguinis,
An expanded view of performance management, 2009).
Stage 6: Performance Renewal and Reconstructing
This is stage is like the performance planning stage. However, this stage uses the information
from other stages. This process starts with the stage of prerequisites and ends with the stage of
performance renewal and reconstruction. As it is a continuous process, the process starts again
after stage 6 which should align with the mission and strategic goals (next year) of an
organization. Due to the external environment, such as a change in customer preferences and
needs, market, product, competitors, and suppliers, there is a need for change to prerequisites
so that performance planning is consistent with the strategic objectives of organizations
(Aguinis, An expanded view of performance management, 2009).

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Problems or challenges while implementing a Performance Management System
Organizations usually spend a huge amount of money and time on their performance
management systems but still the results are not satisfactory. Some common complaints were:
 Employers say that a Performance Management System is time-consuming and a
burden.
 Employees say that this system does not reward high performance, which demotivates
them (Ghosh, Long, & Murphy, 2004).
An organization can face some common problems while implementing the PMS and if these
problems are not rectified then the organization have to deal with the problems repeatedly.
Every organization should have “a successful PMS, " meaning PMS should be used daily to
manage and control the organization. In a study, thirty-one issues were observed while
implementing PMS (De Waal & Counet, 2009).
One of the problems is that management is busy solving short-term problems and
implementation of PMS requires more time and effort due to which they give less priority to
the development and implementation of the PMS. Also, for the implementation, some
organizations do not have a sufficient budget (resources) and people (capital), which delays the
implementation (De Waal & Counet, 2009). In other words, an organization must have
sufficient resources and capacity for implementing PMS.
It is observed that the lack of a clear goal is another problem of failure of PMS, which means
organizational members are not having a clear understanding of the mission, objective, and
strategies of the organization. The unstable phase is another obstacle in implementing PMS. For

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example, if an organization is facing financial issues or any other instability situation, it will
delay the implementation of PMS (De Waal & Counet, 2009).
Institutional Fragmentation is also one of the key issues in the development and
implementation of PMS. In other words, decision-making is segmented between different
bodies instead of just one authority. This creates problems in the division and allocation of
authority, coordination, accountability, and responsibility, resulting in discouragement among
the policymakers (Ohemeng, 2009).
Another problem is that the Performance management system is not used on a daily basis. For
example, performance management knows the advantages of using this system continuously
but still, they see it as ‘just another task’. There would be more differences between the
employees and managers if employees will not get regular feedback (Devarajan, Maheshwari, &
Vohra, 2016).
Some common reasons why performance management system is poorly managed are:
a) Unfair rating system: Sometimes managers make a judgement and give an opinion
based on preferences. There can be biased or less interest from the managers side due
to which employees did not get proper feedback on their performance.
b) Ineffective communication: In many organizations, there is a lack of proper channel of
communication between managers and employees which lead to the poor performance
management system.
c) Damaged relationship: less interaction between employees and supervisors can results
in deficiency in the performance management system. If there is regular interaction,

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then employees will be provided with feedback that can eventually increase their
performance and vice versa.
Performance management best practices
The following characteristics will discuss the successful implementation of a performance
management system:
 Thoroughness: A thorough system is needed for effective PMS.
 Specificity: It must provide clear and detailed information to employees about what
are the expectations from them and how to achieve them (Aguinis, An expanded
view of performance management, 2009).
 Reliability: effective performance management means measuring performance that
is error-free. If two or three supervisors are giving a rating to the same employees,
then there should not be a mismatch of ratings (Aguinis, An expanded view of
performance management, 2009).

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 Fairness: a good system should be fair for all employees. Performance evaluation
should be based on work performance not up on other factors like country, or
culture (Aguinis, An expanded view of performance management, 2009).
 Openness: there should be no secrets. A good system includes providing continuous
performance, feedback, a two-way communication process, and open and clear
communication (Aguinis, An expanded view of performance management, 2009).
Conclusion
The organization that has talented and motivated employees are more successful and provide
outstanding services to their customers. The customers are more satisfied even though the rival
companies are offering the similar products. Performance management system is the only way
to change employee’s motivation and talent into business advantage. For the successful
performance management system, performance management should look broader
organizational context instead of just viewing performance appraisal (Aguinis, An expanded
view of performance management, 2009). It must work with HRM functions like training,
compensation, succession plan, and staffing. There should be clear definition of performance
management system, which means employees should have proper information what they need
to achieve and how to achieve it (Gautam & Jain).

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References
Aguinis, H. (2009). An expanded view of performance management. (J. W. Smither, & M.
London, Eds.) Performance management Putting research into action. Retrieved from
http://www.hermanaguinis.com/PM2009.pdf
Aguinis, H., & Pierce, C. A. (2007, September 22). Enhancing the relevance of organziational
behavior by embracing performance management research. Journal of Organizational
Behavior, 140. doi:10.1002/job.493
Agunis, H. (2020, December 07). Using Performance Management to achieve multiple purposes
- Part 1. Retrieved from Binus University: https://qmc.binus.ac.id/2020/12/07/using-
performance-management-to-achieve-multiple-purposes-part-i/
De Waal, A. A. (2010). Performance-driven behavior as the key to improves organizational
performance. Measuring Business Excellence, 14(1). doi:10.1108/13683041011027472
De Waal, A. A., & Counet, H. (2009). Lessons learned from performance management systems
implementations. International Journal of Productivity and Performance Management,
58(4), 368. doi:10.1108/17410400910951026
DeNisi, A. S., & Murphy, K. R. (2017). Performance Appraisal and Performance Management:
100 Years of Progress? Journal of Applied Psychology, 102, No. 3, 421– 433.
doi:http://dx.doi.org/10.1037/apl0000085

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DeNisi, A. S., & Pritchard, R. D. (2006). Performance Appraisal, Performance Management and
improving individual performance: A motivational Framework. Management and
Organization Review, 253. doi:https://doi.org/10.1111/j.1740-8784.2006.00042.x
Devarajan, R., Maheshwari, S., & Vohra, V. (2016). Implementing New Age Performance
Management System in IT MNC: Leveraging Communication and Training. SAGE
Publication Pvt. Ltd. doi:https://dx.doi.org/10.1177/2277977916665983
Gautam, D. A., & Jain, M. S. (n.d.). Implementing Performance Management Systems: A
Strategic Tool for Human Resource Management. Academia, 2.
Ghosh, A. D., Long, J. L., & Murphy, K. (2004). Performance Management that makes a
Difference: An evidence-based approach. Society For Human Resource Management, 7.
Retrieved from https://www.shrm.org/hr-today/trends-and-forecasting/special-reports-
and-expert-views/documents/performance%20management.pdf
Hartog, D. N., Boselie, P., & Paauwe, J. (2004, September 03). Performance Management
System: A model and Research Agenda. Applied Psychology, 53(4), 556-557. Retrieved
from https://iaap-journals-onlinelibrary-wiley-
com.ezproxy.kpu.ca:2443/doi/epdf/10.1111/j.1464-0597.2004.00188.x
HR Help Board. (2022). What is Performance Management? Retrieved from
https://www.hrhelpboard.com/performance-management.htm
Ohemeng, F. L. (2009). Constraints in the implementation of Performance Management
Systems in developing countries The Ghanaian Case. Internation Journal of Cross

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Cultural Management, 9, 123. Retrieved from https://journals-sagepub-
com.ezproxy.kpu.ca:2443/doi/epdf/10.1177/1470595808101158
Pulakos, E. D. (2004). Performance Management A roadmap for developing, implementing and
evaluating performance management systems. Society For Human Resources
Management. Retrieved from https://www.shrm.org/hr-today/trends-and-
forecasting/special-reports-and-expert-views/documents/performance-
management.pdf
Shrivastava, R., Mathur, D. G., & Barodiya, D. P. (2019). Scoping Review study on Performance
Management System: A strategic Tool for Human Resource Management. International
Journal of Scientific Development and Research (IJSDR), 4(5), 5. Retrieved from
https://www.ijsdr.org/papers/IJSDR1905002.pdf
Lots of good content but, covered very lightly as you would jump from one topic to another. For
example; we understand management can be biased in their evaluation process – any
suggestion how to improve it? You have relied heavily on few authors.
Assessment Area Weight Score 0 to 5 Weighted Score
Coverage of Knowledge Base -
level and scope of research:
Academic and professional
3.5 3.5 12.25
Introducing the idea: 1.5 5 7.5
Building on the Statement
Analytical and Synthesis of ideas,
application and implications
4 2.85 11.4
Clarity of writing and Writing
Technique; report flow and
professional appearance
1 5 5
Subtotal: A 36.15
FINAL GRADE; (A x 2) 72% B

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HRMT 5110 Research Report - Rubric
Your report will also be assessed on citation following APA 7th edition criteria.
Points will be deducted for misspelled words, incorrect grammar, and improper
punctuation. Please be guided by the parameters offered via our course syllabus.