Performance management systems are tools that managers use to review employee productivity and the e...

1. What is a performance management system?
Performance management systems are tools that managers use to review employee productivity and
the effectiveness of business operations. These types of systems vary, depending on the business and
the performances being measured.
Types
Employee performance management systems set goals and expectations for jobs, offering workers a
reward for achieving these goals. Operational performance management measures production
procedures, looking for ways to improve profits and cut costs.
Facts
While financial bonuses are most often the reward in an employee performance management
system, other options such as vacations, time off or recognition at a company function are also
common rewards.
Features
Operational performance management systems review specific operations or departments and
measure their productivity against a predetermined schedule or budget. Unfavorable variances are
researched and corrected, while favorable variances may result in rewards for the department
employees.
Time Frame
Most performance management systems have a set time frame for measuring employee or
operational performance. This gives managers a sense of how well the company operates during this
time frame; managers may also extend or shorten the time frame as needed.
Significance
Performance management systems create a positive company culture for managers and employees.
It also increases the quality of employees wanting to work for the company, building stronger
business operations.
Source:
DnB: Setting up a Performance Management System
Free Management Library: Performance Management -- Basic Concepts