The performance management system should be always aligned with the business strategy. Each organization has different priorities and needs. The performance appraisal process should be aligned with the priorities as the organization can highlight most essential values for the development. The performance management system brings many benefits, but it can build a strong dissatisfaction when it is not used properly. The performance system should be as painless as possible, and outcomes have to be used for the development of employees and the organization.
The performance management has to be based on pretty straightforward principles. The system has to collect basic information about the performance of the individual, setting and evaluating the personal development plan and plans for next positions. Some employees can be identified as top performers, and they should see the consequence in their variable pay. Some employees can be identified as high potential, and their base salary should be significantly increased. Some employees are identified as “development needed” and they should have their own plan for correction. This should be the main principle of the performance management.
The performance management has to be explainable in several words. Each employee has the right to understand the basic principles of the performance management system used in the organization. Many organizations use the normal distribution (or forced distribution) to rank employees and managers. The employees have to understand reasons to use the forced distribution, and they have to understand the consequences of ratings.
The system should be easy to use. The electronic and flexible system of performance management should be designed. The application has to be flexible as much as possible. The performance management is under a constant development, and forms are not the same each year. HR needs to add new sections, and it has to cancel sections, which are not longer needed.
HR has to make clear priorities about information collected. Sometimes, HR asks for many details. Managers want to finish the performance appraisals as soon as possible. Some employees like to receive the formal feedback at least once a year, but some employees do not see any consequences. HR has to set standards for each performance rating category. Some employees cannot expect much from Human Resources; some employees can go through intensive training sessions to speed up their career path in the organization.
HR should study best practices before coming with the new performance management system. Many studies are published about mistakes and errors in the performance management. Setting the efficient performance management for the organization is not an easy task.
PMS Description and Purpose
- Forced Distribution in Performance Management
- Performance Management and Business Strategy
- Performance Management and Employee Engagement
- Performance Management and Employee Segmentation
- Performance Management and Motivation
- Performance Management Benefits
- Performance Management Risks
- Purpose of Performance Management
- What is Performance in Human Resources