How to implement a Performance Management System, PM


Performance Management, PM is a process where managers and employees work together on a plan on how to monitor and evaluate an employee’s goals and overall contribution to the organization. A Performance Management review is more than just an annual performance assessment, PM is a continuous process of setting goals, assess progress and provide ongoing coaching and feedback to ensure that employees meet their goals and career goals.

Performance Management is the fundamental goal on how to asses and monitor the performance and how to promote and improve employee efficiency. This is a continuous improvement process on how employees and manager can work together to build a plan on how to monitor and evaluate an employee’s work objectives and goals. By this cooperation one can build an assessment tool on how to give feedback to the employees on his or her overall contribution to the organization.

Performance management should:

  • Be vocational, covering a wide range of jobs in the organization
  • Adjust with the organization’s strategic direction and objectives
  • Be practical and easy to understand and use
  • Give an accurate picture of each employee’s performance
  • Bring a technical cooperation process to set targets and assess performance based on two-ways communication between manager and employee
  • Monitor and measure results (what) and behaviour (how)
  • Include both positive feedback for a job well done and constructive feedback when improvement is needed
  • Provide training and development opportunities to improve performance
  • Ensure that employees’ work schedules support the strategic direction that has been decided for the organization
  • Establish clear communication between managers and employees about what they expected to achieve
  • Give constructive and continuous feedback on performance
  • Identify and recognize employee achievements
  • Identify areas of poor performance and establish plans to improve performance
  • Support staff in achieving their work and career goals by identifying training needs and development opportunities
  • Support administrative decision about promotions, terminations, compensation and reward
  • Provide legal documentation to demonstrate due diligence for legal challenges relating to the termination or vicarious liability (an employer can be held liable for acts or omissions of its employees during the employment)

The establishment of an effective Performance management system requires time and resources, and therefore it is important with support of the board, CEO and other senior executives (middle managers play a significant role). When developing a new Performance management process, an organization should establish a coordinating committee consisting of employees, managers and directors to increase the buy-in, understanding and decision of the process.

The decision by the management to lead and develop the organization after the results of Performance Management is also required to ensure that good performance is recognized, insufficient profits get necessary support and / or training to improve performance and consistently poor performance could result in a change of responsibility or at worst, a dismissal, which must be regarded as appropriate.

Whether you are introducing a new Performance management system, or if you are modifying an existing work process, it is important that you communicate your purpose and steps of the work process the staff before it is implemented. Remember also to review the Performance management system after the first year, and make continuous adjustments as necessary.

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Scorecard phase

Performance management is much more than the traditional annual performance review. As mentioned in the introduction, performance management is a continuous process of planning, monitoring of the employee performance.

Phase 1 – Plan

The planning process is a collaboration phase where one need to involve both managers and employees:

  • Reviewing employee job description to determine if it reflects the work that the employee actually does. If the employee has taken on new responsibilities or job has changed significantly, should the job description updated.
  • Identify and assess the relationship between the employee’s job description, his or her work plan and the organization’s goals, objectives and strategic plan.
  • Develop a work plan (production schedule) describing tasks or deliveries to be completed, the expected results and measures or standards that will be used to evaluate performance.
  • Identify three to five areas that will be key targets for the year. The choice of area to improve can be determined by the organization’s strategic plan, the employee’s desire to improve their performance in a particular part of the job, or when needed to emphasize a particular aspect of the job at this time. These are goals that are vital to the overall success of the post. If the employee does not fulfil his / her critical objectives, then overall performance will be assessed as satisfactory.
  • Identifying training goals that will help the employee to develop his or her skills, knowledge and expertise related to their work.
  • Identify career goals that can be part of a long-term career planning.

Setting goals and measurements

Often the hardest part of planning is to find the correct and clear language to describe the targets and measures or indicators of success. Managers must ensure that goals are a good representation of the full range of tasks performed by the staff, especially those everyday tasks that may take time, but is often overlooked as an important achievement.

Objectives and indicators must be SMART


Specify clearly what should be done, when it should be done, who should do it and how much to be done.


Ask questions like: How much? How many? How do I know when it is accomplished? to use more action if possible, for example, quantity, quality, schedule and cost.


Ensure there is reasonable way to achievement and feasible chances that you will get there.


The objective needs to match the level of complexity to the employee’s experience and ability and no insurmountable forces outside the control of employees to prevent their achievement.


The goals must be timed as when they should be achieved.


Phase 2 – Monitoring

The Performance management system should be an effective system where the employee’s development and results are continuously monitored. To monitor day-to-day performance does not mean monitoring all aspects of how employees carry out assigned activities and tasks. Managers should not micromanage employees, but rather focus their attention on results achieved, as well as individual behaviour and how group dynamics affecting the working environment.

Evaluate progress towards meeting targets

  • Identify any barriers that may prevent the employee from achieving targets and what needs to be done to overcome them

Share your feedback on progress towards the goals

  • Identify any changes that may be required to work as a result of a change in the organization’s priorities or if the employee is required to take on new responsibilities
  • Find out if any additional support is required from management or others to help the employees to achieve their goals

Continuous training

  • Performance Management includes coaching and training of employees to raise questions and issues related to performance, so it is a positive contribution to the organization. Coaching means to provide direction, guidance and support required on assigned tasks and duties. As a coach, managers must know the strengths and weaknesses of the employees and work with employees to identify opportunities and methods to maximize strength and improve weak areas. The role of the coach is to demonstrate competence and giving the employee engagement back and encouraging while he or she is practicing new skills. Good listening skills along with the ability to deliver honest feedback is crucial. In a coaching role, you are not expected to have all the answers. It is first and foremost the ability to ask the right questions.

Give feedback

  • Positive feedback means telling someone about good performances. Does this feedback timely, specific and frequent. Recognition for good performance is a powerful motivator.
  • Constructive feedback gives a person answers and insights into how their performance can be improved. It is descriptive and should always be directed to the action, not the person. The main purpose of constructive feedback is to help people to understand where they stand in the stands in relation to expected results.
  • Often it is the positive and constructive feedback that is easiest and easily shared, while finding the right way to give constructive feedback is often more frightening and difficult to find. If an employee does not meet expectations for performance, managers must provide constructive and honest feedback. It is important to do this when a case first occurs – before it escalates into a major issue.


  • Think through what you want to discuss in the meeting, confirming the facts of performance challenges, and make sure you know and can describe what happened or happens
  • Be clear about what the problem is and the consequences if the employee’s performance does not improve
  • Plan to meet in a place where there will be minimal disruption
  • Be quiet, so you can approach the discussion objectively and with clarity

Repeat facts

  • Describe performance challenges in an objective, factual, not judgmental way, and give concrete examples
  • Identify the negative impact on people in the workplace or on the organization


  • If the employee has a different perception and understanding of their perspective. Be open to new insights that may arise.
  • Although we can sympathize with an employee’s unique personal circumstances and their reasons for why they are not performing, it’s important to stay focused on performance problem. If you change what is required of an employee (ie “bend the rules”) must be prepared to do it for all employees.

 Agree on an action plan

  • Ask the staff for their suggestions for addressing the issue and offer your suggestions if needed
  • Agree on a concrete plan of action: including what the employee should do, how they intend to do so, and within the time period
  • Documents action and placed in the employee’s personnel file.
  • Set consequences for the employee if the performance challenges are not met

Follow up

  • Monitoring results and hold meetings periodically to discuss progress
  • Give positive reinforcement to improve and continue to offer support
  • If the problem has not improved or resolved within the specified time period, adopt consequences as discussed in the Action Plan

Phase 3 – Evaluation

Performance evaluation or assessment meeting is an opportunity to review, summarize and highlight the employee’s performance during the evaluation period.

Self-assessment is a standard part of most appraisals. By using performance plan and assessment form as a guide, employees can evaluate their performance evaluation meeting. This process can identify gaps between the employees’ self-perceptions and how the manager perceives the situation.

Managers should review its management notes of achieved performance and documentation generated during the year to build greater efficiency. Only cases which have already been discussed with the employees should be part of the assessment and meeting. This will ensure that managers manage performance challenges when they occur, and that there are no surprises during the review meeting.

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