Employee Performance Management Process in HRM

Employee Performance Management is one of the most important Human Resources Function for an organization. Employees perform assigned job responsibilities in different positions for an organization. Continual growth & success of an organization mostly depends on the effective & efficient job performance of the employees of the organization.

HR department of an organization is responsible for developing & sustaining an effective performance management system to evaluate actual delivered performance standard of the employees of the company and formulate rational competitive increment, promotion, reward, punishment, training & development programs from the performance outcomes.

By going through the below write up we will get detail information on the following topics:

  • What is Employee Performance Management?
  • Key elements for developing an effective Performance Management System
  • What is the purpose/Objective of performance management?
  • What are the methods of performance management?
  • KPI Based Performance Management System

What is Employee Performance Management?

Employee Performance Management is the set of activities and processes that aim to identify, maintain and continuously improve employee performance in line with an organization’s set goals/objectives. Performance Management is strategic as well as operational, as its aim is to ensure that employees contribute positively to achieve the set business goals or objectives.

Following are some quotes about performance management:

“Performance Management starts from the top by tailoring strategies which can be translated into meaningful targets and trickles down to managers for setting goals & making this process effective by helping them understand the big picture and owning up careers of their team members.”
Colin Mendes
General Manager – HR & Admin. at Voltas Beko
“A performance management system is the foundation of performance excellence in organization and therefore it should be simple, straightforward, intuitive, aligned with organizational goals and have flavors of organization values.”
Kaustubh Sonalkar
CEO, Essar Corporate Services LLP

Objectives of Employee Performance Management is to align the organizational goals with the employees’ agreed measures, skills, competency requirements, development plans and the delivery of results. The emphasis is provided on improvement, learning and development in order to achieve the overall business strategy and to create a high performance workforce.

Employee performance management is controlled by establishing and practicing effective performance appraisal system. Performance Appraisal is a systematic approach to evaluate performance of the employees for understanding their capability of performing assigned job responsibilities, finding out strength & weakness and determining the training and development needs.

Performance Appraisals helps in improving employer-employee relations in the workplace. It initiates a continuous flow of communication between employee and employer in connection with achieving company goals.

What Are the Basic/Key Elements Necessary for Effective Performance Management?

Performance Management System should be developed and implemented in a very effective & systematic way to get desired output for both the organization & the employees. Performance Management is used to ensure employees’ activities and outcomes are fitting with the organization’s objectives and entails specifying those activities and outcomes that will result in the company successfully implementing the strategy.

Basic or Key elements for developing & sustaining an effective performance management system in step by step are as follows:

  • Setting Goal aligned with organization objectives
  • Effective communication & cooperation for achieving set goals
  • Obtaining regular performance feedback, find out performance gap & take necessary development actions
  • Initiate employee Training & Development program
  • Ensure employee recognition & reward

Setting Goal aligned with organization objectives

Organization appoint employees to perform some specific jobs. Linking individual employee’s objectives with the organization’s goals is the most vital part for designing an effective performance appraisal system and getting best output from the employees. The employee should get a clear idea/concept on the job activities they need to perform to contribute for the achievement of overall business objective of the organization.

Goals should be set by discussing with the individual employee. Goals need to be mean­ing­ful and achievable. Employ­ees should have clear idea as to why these indi­vid­ual goals mat­ter and how they are linked with organizational objec­tives. Employ­ees will care much more about their roles and will be more engaged when they know and tru­ly understand how their job matters for the organization.

Goal set­ting should be a collaborative process. It should involve meet­ing with employ­ees and being trans­par­ent about com­pa­ny goals, direc­tion and obstacles. Furthermore, when employ­ees are put in the dri­vers’ seat and allowed to devel­op their own goals (prior approval by their line man­ag­er), employ­ees take own­er­ship over their work. Inevitably, this results in improved employ­ee performance.

Effective communication & cooperation for achieving set goals

Employee of a specific position are required to perform some major jobs those are aligned with company objectives. It is the responsibility of respective supervisor/line manager to make the concern employee thoroughly clarify about their roles to perform the assigned jobs. Managers should explain the employees how to execute the assigned jobs successfully.

Employ­ees expect their man­agers and lead­ers to be open and caring at all times. Often they may face difficulties to perform their job activities smoothly. In that instances, they should get necessary assistant from their supervisors to overcome the problematic situations. A professional cordial and harmonious relationship should be maintained within the team to get desired effective output.

Obtaining regular performance feedback, find out performance gap & take necessary development actions

Employees are performing their assigned jobs on regular basis. Respective supervisors are continuously monitoring employees’ job performances and providing guidelines to them as & when required. The more frequent and pre­cise the feed­back, the bet­ter indi­vid­ual perfor­mance is achieved. Proper & timely guided employ­ees provide better job performance.

Conducting regular monitoring & discussions throughout the performance cycle (which include coaching, mentoring, feedback and assessment) certainly improve employee performance. Through getting regular employee performance feedback, performance gap/lacking of the employees are identified. Accordingly necessary training & development programs are designed to minimize performance gap of the employees.

Initiate Employee Training & Development Program

Employee performance gaps are identified through performance appraisal process. Some gaps can be overcome through finding out and implementing effective training programs for the concern employees. After completion of the training programs, feedback need to be taken from the employees on their learning. Learning & training program should be continued till getting the desired improvement of employee performance.

Employee development needs also identified from the performance evaluation process. Careerist & ambi­tious top per­formers do not want to remain at a com­pa­ny for long term with­out having the scope of attaining develop­ing skills. Advance­ment and devel­op­ment are important to employ­ees. Com­pa­nies should identify potential brilliant employees, engage them in prospective development programs, and thus retain them in the company for a long term to get optimum output from them.

Ensure Employee Recognition and Reward

An organization find out good and bad performers through the performance appraisal process. An effec­tive per­for­mance man­age­ment sys­tem should prioritize employ­ee recog­ni­tion and reward. Employ­ees should feel val­ued and appre­ci­at­ed for the work they do and the effort they put in. If employ­ee recog­ni­tion is not given pri­or­i­ty, this will provide neg­a­tive impact to the better performers and provoked them on voluntary turnover from the organization.

Purposes/Objectives of effective performance management system

Performance management system aims to develop individuals with the required commitment, skills and competencies for working towards shared meaningful objectives within an organizational framework.

Performance management is about what the employee can do for the organization. It is equally about what the company can do for the employee, to keep them engaged, content and productive. The main purposes of an effective performance management system are as follows:

  • Setting individual goal aligned with organization objectives
  • Setting rational expectations for Appraiser and Subordinates
  • To ensure effective communication, teamwork & employee engagement
  • To provide actual regular Performance Feedback & take immediate corrective actions
  • To Identify Training & Development Areas
  • To Provide Employees Visible Career Path & reduce employee turnover
  • To provide employee Recognition and Reward
  • To improve overall Business growth

Setting individual goal aligned with organization objectives

Effective Performance Management System set & link individual employee’s goals with the organization’s objectives. When employees get clear idea on the importance of their performed job activities for the overall business growth of the organization, they become motivated & perform their jobs more enthusiastically.

Setting rational expectations for Appraiser and Subordinates

An efficient performance management system always tries to set clear and rational expectations for both managers and subordinates. As Managers/Supervisors are continuously monitoring job activities of their subordinates/juniors, they can easily set manageable expectations for their subordinate employees.

Once employees know their own achievable roles, responsibilities, and accountability they are more likely to be more consistent and productive. This facilitates better business performance and personal development of the employee.

To ensure effective communication, teamwork & employee engagement

Performance Management promotes a two way system of communication between the supervisors and the employees for clarifying expectations about the roles and accountability for achieving organizational goals.

Through the process of providing regular, actual and transparent feedback between the supervisor & subordinates an effective & amicable work environment sustains in the organization which certainly improves employee & organization performance.

In this process employees are willingly engaged with the assigned job responsibilities. When the employees are contended with their well-defined job roles and getting regular performance feedback they are likely to be more enthusiastic to perform in a better way and thus obtain the company objective.

To provide actual regular Performance Feedback & take immediate corrective actions

Through getting Real time performance feedback employee job performance is evaluated on regular basis. Concern Manager/ Supervisor can easily identify whether the employee is performing as per the set standard or not. Accordingly, s/he can guide the concern employee to overcome the performance gap and successfully.

Performance Feedback is more effective when delivered promptly. Effective Performance management system give emphasize to provide feedback regularly, regardless of whether it is positive or negative in nature.

Performance management system allows managers and HR to address performance gap issues at an early stage Poor performing employees can have a serious impact on the entire organization’s productivity and if performance issues are left unaddressed it can cause disaster for the organization. So, by getting regular performance feedback and taking required corrective actions employee performance is improved & organization’s objective is achieved.

To Identify Training & Development Areas

Through performance appraisal process performance gaps of the employee are identified. Accordingly, Training needs are identified for filling up the performance gap of the concern employees. By arranging effective training programs, employees become capable to perform their jobs as per the set job role.

Excellent Job performers are also identified through performance appraisal process. Career advancement and development are important for this group of employees. Company should engage the best employees in potential development programs and thus retain them for a long term to get maximum output from them.


To Provide Employees Visible Career Path & reduce employee turnover

Most of the potential employees are very focused about their career progression. A good performance management system engages managers to discuss a career plan with their employees by covering what the employee needs to do to get there.

If the career path is well defined & structured, employees are motivated to perform spontaneously to reach at the top ladder. If a company can ensure providing career progression as highlighted, top performers are more likely to remain in the company for a long period.

To provide employee Recognition and Reward

Through performance appraisal process, organization finds out performance standard of its employees. An effective performance management system prioritizes employee recognition and reward. Recognizing & rewarding employees is the simplest way to improve morale and employee engagement. Recognition is also positively linked with high performance.

Employees who are contributing significantly for attaining goal of the company are identified and rewarded by the company in the form of increment, promotion, appreciation letters etc.

To improve overall Business growth

Organization needs to take care of their employees to obtain its business objectives. By developing & implementing an effective performance management system, employees are truly judged for their provided job performance. Further, through this process best performance of the employees are also ensured.

When the employees provide their best output, obviously organization will be much more benefited. So, by implementing effective performance appraisal system, the employees become contented & continuously work for achieving overall business growth of the company.

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