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How to check the efficiency of your performance management system

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Performance management (PM) includes activities which ensure that goals are consistently being met in an effective and efficient manner. According to the Wikipedia, “Performance management can focus on the performance of an organization, a department, employee, or even the processes to build a product or service, as well as many other areas.”

A performance management system has 3 key pillars:

  1. Goals – that an organization sets for itself and cascades it down to department and individual levels
  2. Employees – those who perform to meet those goals
  3. Rewards and recognition – tools to motivate employees towards meeting the goals

Performance Management Systems are used to measure employee / department performance towards obtaining those goals resulting in rewards and recognition.

The way goals are usually set, when an employee or a department attains them, fresh goals are set, or scales are revised. A natural conclusion is that over a period of time, as they keep attaining goals, the organization will grow, scale and prosper. Therefore, it becomes imperative to know if the Performance Management System in place is effective in helping improve performance.

The efficiency can be measured in several ways.

  1. Analyze the organization’s growth trend and correlate it to the goals set.
  2. Conduct surveys of employees about the Performance Management System and analyze the feedback to see if employees are able to effectively use the system to track and report their progress.
  3. Evaluate if the Performance Management System is effective in identifying areas of improvement. If no areas of improvement are being identified, chances are that the system is unable help identify them.
  4. Are the rewards and recognition programs being utilized effectively? If the ground report (as a result of the surveys) indicates that employees don’t feel that they are being rewarded or recognized sufficiently, the Performance Management System may need to be reconfigured or else employee morale may sag.

Analytical tools play a great role for any management to slice and dice the data to measure such aspects. However, a Performance Management System itself must allow for such data to be available so that it can be analyzed.


Performance Management Systems are an important tool for organizations to thrive. If these systems are at fault for stifling growth, it may be too late before it comes to notice. Therefore, using techniques such as mentioned above, organizations should periodically check the efficiency of these systems.

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