Characteristics That an Ideal Performance Management System Must Possess

Published in Human Resources Articles category by MBA Skool Team , Published on October 20, 2014

A performance management system (PMS) in an organization must possess certain particular characteristics to be an effective, fair and meaningful one. In absence of these essential traits, a PMS will fail to satisfy the very reason for which it is in place. By characteristics, we imply criteria like the way a PMS should be implemented, the way it’s results and data should be used, the reviewers that should take part in the process, the range of employees that need to be covered by the PMS, timing of the assessments, ethical issues etc. We are going to discuss some of these essential traits that every effective PMS must possess.

First and foremost, the PMS should be such that it checks or assesses whether and to what extent individual goals, team or unit goals and organization goals are strategically aligned. A superior performance means nothing if it ultimately doesn't contribute towards accomplishment of some organizational objective. PMS envisages setting of goals and objectives, whether at individual or team or unit level, which are clearly and unambiguously linked to organizational goals and objectives. Hence, the assessment phase also must have methods that can beyond any doubt establish this strategic congruence between the actual performance and organizational performance.

Image Courtesy:

An effective PMS needs to be all-pervasive when it comes to deciding who all will come under its purview, what all responsibilities are to be assessed, what’s the review period, type or nature of feedback to be provided etc.

- The process should be followed for all employees, including managers. Everyone’s performance counts. Therefore, PMS is meant for everyone in the organization.

- As for responsibilities, all major responsibilities of an employee need to be evaluated. The behaviour demonstrated by this employee and the results achieved for all these responsibilities are taken into consideration.

- Review period refers to the entire period that’s supposed to be evaluated, and performance for this entire period is considered for assessment. Not doing so will lead to primacy or recency error.

- While providing feedback, managers may often tend to harp on the negative or weak areas that call for attention and improvement. This is not the proper method of feedback. An employee’s strengths must also be pointed out, his good performance appreciated. A feedback that is solely negative will bring down the morale of the employees, fail to serve the desire or need for recognition and appreciation and project the image of the organization as one that does not care for its employees.

A PMS to be widely accepted by employees and management of an organization alike needs to be:

- Easily comprehensible and easy and time efficient to use so that it’s not perceived as a system adding on to the work and stress load

- Not so expensive such that the benefits accrued through its usage are outrun by its cost of implementation and cost of use.

A PMS will be meaningful when it employs relevant standards of assessment, evaluates only those tasks that are under the control of an employee, uses reviewers who have sufficient awareness about the performances of the employees they are assessing, and ensures that the data and results obtained through the process are used for decisions related to promotion, increments, training etc.

It is of paramount importance that employees perceive the PMS in place as a fair and just one. To ensure that:

- A PMS needs to strictly ethical in nature – it should have provisions or methods that ensure that there is no scope of fabrication of an employee’s performance, or an employee does not become a victim of reviewer’s personal biases against him. A 360 degree feedback system is an instance that helps in making fair decisions, since the feedback from a relatively large no. of employees is solicited.

- The PMS also needs to be transparent – employees need to know how it works, how it assigns them their ratings. An employee needs to know why and how he got a particular rating or whether this rating actually reflects his performance or not.

- Results obtained through PMS should only be used for the purposes communicated to the employees. If an employee knows that he is undergoing an assessment just for developmental purpose, but later finds that the same information was used for making other decisions like pay rise, promotion etc., he will lose trust on the fairness of the organizational policies and processes.

- Asking feedback of employees regarding the perceived acceptability and fairness of the PMS is important. It is necessary to know if they perceive the evaluation received against their actual performance as a fair and correct one, if they are satisfied with the reward level associated with their ratings, and last but not the least, whether the procedures adopted for assigning a rating or deciding on the rewards are perceived as just ones.

There is a no. of levels of performance between the most superior and most inferior level. A PMS needs to ensure that the assessors know how to identify these levels of performance, how to differentiate a more effective performance from a lesser one. Clearly put down performance standards and expectations should be there to judge the level of performance.

Since PMS to a large extent plays the role of a measuring instrument, it must have the two characteristics that are common for any measuring instrument – reliability and validity. Reliability implies consistency of results and absence of inaccuracies and biases. Using a robust PMS, an employee will get similar rating and feedback from any no. of assessors at a given point of time. Validity means that the measures of performance should be relevant and should be covering all important aspects, while filtering out the irrelevant ones or those that, as mentioned earlier, are beyond an employee’s control.

An ideal PMS needs to be participative and inclusive in nature. Necessary inputs and feedback must be solicited from employees who are being assessed as well as all other relevant or concerned employees who can either make important contributions about the employee’s performance, or who are likely to get affected by the assessment decisions. Employees should be encouraged to freely communicate their concerns regarding the process as well as dissatisfactions with it, if any, and those should be taken care of at the earliest.

Designing and developing an ideal PMS is one of the most crucial steps that an organization needs to take. All said and done, an ideal PMS should also be correctible, i.e. it should be flexible enough to allow for future changes or corrections in case problems or difficulties are encountered. Organizational requirements and scenarios are often highly volatile and to adapt to the changing needs and demands and situations, PMS should also be changeable or correctable without the necessity of spending much time and effort.


This article has been authored by Priyanka Biswas from XIMB


Views expressed in the article are personal. The articles are for educational & academic purpose only, and have been uploaded by the MBA Skool Team.

If you are interested in writing articles for us, Submit Here

Share this Page on:
Facebook ShareTweetShare on Linkedin