Debunking Common Myths about Performance Management System.

Vivek Anand

A Mentor, Performance Consultant & a Trainer

Vivek is an HR Specialist. He loves working with HR Professionals & Students to help them create an Impact. He is a Mentor, a Performance Consultant & a Trainer You can connect with him on Professionals can connect for Mentoring & Training on HR SMBs can connect for Strategic Consulting Assistance

A performance management system is a mechanism for tracking the performance of employees consistently and measurably. It allows the company to ensure that employees and departments across the organization are working effectively towards achieving the business’s strategic goals. Successful businesses gain an advantage from having employees better aligned with corporate goals.

http://dummyOrganizations are constantly looking to get better at evaluating and measuring employee performance. This brings us to another persistent ask

Why do we measure Performance?

Is it to Reward, recognize or punish the individuals or is it something else?

Performance management is aimed at improving an organization’s bottom line by stimulating employee performance. It also aligns workforce and individual goals with the wider organizational goals and mission.

Yes, the core philosophy behind measuring performance is to influence better performance. When we measure/evaluate, we also get to know the shortfalls, the gaps. Highlighting the gaps and the ways to overcome them to improve is the agenda.

Then why is there so negativity around it?

Negative is our outlook towards it. We see it as a result, as the outcome when it only gives us the inputs for a better future. Let’s seek these inputs to better out tomorrow, negativity will turn into positivity

Why do we need a PMS?

Performance management system speeds up the performance management process and help organizations deliver fair, periodic reviews. Performance management tools can offer the following seven benefits for your organization:

Let us understand the different components of a PMS.

Goal: It sets the direction for your people. Goals, when set properly not only influence the performance, but they also bring in a better commitment. If the Goals have not excited the employees, performance and results will always be an illusion. They do not just set the benchmarks; they encourage people to go for it.

Make sure the individual Goals must be aligned to broader Organization Goals.

Read more on Goal Setting here

KRAs: These represent the broader areas/activities that will lead to the Goals & Objectives. Important to note that these cannot be set in isolation and needs to be directly linked to the Goals.

The common mistake that most organizations make is failing to set the correlation between the Goals & KRA.

KPIs: KPIs are the measure of performance in Key Results Areas (or Key Performance Areas). They link back to the achievement of department/organization objectives, and the achievement of the organization’s goals.

KPIs are more than numbers you report out weekly – they enable you to understand the performance and health of your business so that you can make critical adjustments in your execution to achieve your strategic goals. Knowing and measuring the right KPIs will help you achieve results faster. 

Here are some of the common mistakes that most organizations make while setting up KPIs

Performance Appraisal/Influencer

Performance Appraisal is the evaluation of the performance of employees and understanding the abilities of a person for further growth and development.

What is the Purpose of Appraisal?

Is it to Reward the superior performers? OR

Is it to Punish the poor performers?

None. The main purpose to evaluate performance is to identify the strengths and the weaknesses so that with proper inputs the weaker areas can be improved, and high performance can be achieved.

The Rewards or no Reward is a method to influence and is assumed to bring better results. However, a feeling of achieving higher results remains a feeling or an emotion without a proper feedback mechanism. This is what most Performance Management Systems fail to establish

Here are some of the Advantages of Performance Appraisal

It is said that performance appraisal is an investment for the company which can be justified by the following advantages:

  1. Promotion: Performance Appraisal helps the supervisors to chalk out the promotion programmes for efficient employees. In this regard, inefficient workers can be dismissed or demoted in case.
  2. Compensation: Performance Appraisal helps in chalking out compensation packages for employees. Merit rating is possible through performance appraisal. Performance Appraisal tries to give worth to a performance. Compensation packages which include bonuses, high salary rates, extra benefits, allowances and pre-requisites are dependent on performance appraisal. The criteria should be merit rather than seniority.
  3. Employees Development: The systematic procedure of performance appraisal helps the supervisors to frame training policies and programmes. It helps to analyse the strengths and weaknesses of employees so that new jobs can be designed for efficient employees. It also helps in framing future development programmes.
  4. Selection Validation: Performance Appraisal helps the supervisors to understand the validity and importance of the selection procedure. The supervisors come to know the validity and thereby the strengths and weaknesses of the selection procedure. Future changes in selection methods can be made in this regard.
  5. Communication: For an organization, effective communication between employees and employers is very important. Through performance appraisal, communication can be sought for in the following ways:
    1. Through performance appraisal, the employers can understand and accept the skills of subordinates.
    1. The subordinates can also understand and create trust and confidence in superiors.
    1. It also helps in maintaining cordial and congenial labour management relationships.
    1. It develops the spirit of work and boosts the morale of employees.

All the above factors ensure effective communication.

  • Motivation: Performance appraisal serves as a motivation tool. Through evaluating the performance of employees, a person’s efficiency can be determined if the targets are achieved. This very well motivates a person for a better job and helps him to improve his performance in the future. (Source:

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