5 Reasons Why You Need to Incorporate a Performance Management System into Your Organization

Today, most people in the workforce have held jobs where they knew exactly what was expected of them each day. They filled a quota, reached a target, or remained busy for a set number of hours.

And many of the same people have also held jobs where the daily parameters were more ambiguous. Maybe they worked on a major project with a deadline of more than two months away, and each day they inched incrementally closer to achieving the goal.

In either case, a detailed performance management system would help the company and its employees document their day-to-day activities and ensure they were on track to succeed.

Companies that use performance management techniques work to set measurable goals and objectives for employees. With this method, employees always know where they stand concerning the organization’s overall success.

That way, when it comes time for an annual review or evaluation, employees already know their performance is based on the standards in place, and no surprises will occur.

If your company is struggling with employee performance or turnover, you should consider installing enterprise performance management software into your organization. It will help your personnel department and your personnel.

Five Reasons

Here are our five reasons you need to incorporate a performance management system into your organization.

1. Communicates the Desired Results

Every employee wants to know they are doing a good job. And they want to know consistently, not just when an annual review comes up.

On the flip side, there’s nothing worse than working for a whole year only to find out you were not meeting expectations when it’s time for your annual review and raise.

That won’t happen when performance management systems are in place. Performance management is an excellent way to continually communicate with your employees that they are (or aren’t) meeting the standards you expect from them. It helps develop a culture of trust.

When you notice an employee consistently making or exceeding standards you can congratulate them privately or publicly any time of year. When an employee falls short of expectations, you can intervene with extra training, coaching, or monitoring long before it’s too late.

Either way, employees are fully aware of expectations because you communicate with them, and they can work to achieve company goals and standards.

2. Manages Personnel Decisions

When specific targets are in place, your personnel decisions become much easier to make. You can promote, demote, transfer, or terminate based on data. The numbers don’t lie.

Performance management systems give you the agreed-upon tools to identify those who are consistently meeting standards, consistently not meeting standards, and everyone in between. You now have documentation about each employee’s performance.

With that info, you may discover a hidden talent or determine that your “star” employee is less than advertised.

Just as a set of performance management targets continually communicates with employees, it also gives management the necessary information to make critical workforce decisions.

3. Provides Strategic Direction

Performance management systems operationalize SMART goal concepts. SMART is an acronym that stands for:

  • Specific
  • Measurable
  • Achievable
  • Relevant
  • Time-bound

Each company should list specific strategies and tactics for each position that ultimately align with its goals. Likewise, each employee should know what they are supposed to do each day and how that contributes to the company’s overall success.

But performance management systems provide much more detail than a simple outline of expected duties in a job description. When used effectively, they include the measurability, specificity, and timeliness pieces, so employees know exactly where they stand throughout the day, week, month, quarter, and year.

Organizations using performance management techniques track each activity by each employee and ensure everyone is working toward the same goals.

As situations change, SMART goals, strategies, and daily metrics can be modified to reflect new realities.

4. Helps Visualize the Situation

We’ve all seen those motivational posters that companies hang on their walls. They soon become an ignored part of the backdrop.

But when presented with visible reminders of relevant information, we tend not to ignore it. A bar graph going down from the last two quarters is a stark reminder that we’re not doing as well as we might have thought.

Plus, people learn in different ways.

Some maintain information simply by reading a book or article. Others need to be told what’s going on. And still, others need visual or tactile objects to increase their ability to retain information.

Educators have long asserted that people learn better when they see, demonstrate, and discuss new concepts.

Enterprise performance management software provides visual and discussable stimuli. One study of European companies found that adding visual elements to their performance management systems enhanced collaboration and fostered innovation.

That can happen for your company as well. Give your employees something meaningful to look at, and they will often improve productivity.

5. Helps Employees and Managers Work Together

Individual employees play a crucial role in helping companies achieve their strategic and monetary goals. Upper and middle management must understand how best to encourage and maintain optimum achievement levels.

Since no two employees are the same, performance management systems help supervisors understand diverse employee motivations and develop tools to account for those differences.

That might mean providing detailed guidelines to one employee while letting another have free reign. It might also mean frequent face-to-face meetings with one employee and only monthly check-ins with another.

Managing employee expectations and performance on an individual level is key to any company’s success.


Numerous reasons exist for companies to incorporate enterprise performance management software, especially if they wish to improve overall employee success.

Managers use them to track employee and team achievements against written standards. They closely monitor and communicate ongoing situations through frequent check-ins and collaboration.

Most of all, they ensure each employee knows the expectations and is judged on how well they meet documented performance levels.

In short, performance management systems provide a great way for companies to fairly appraise each employee’s contributions in an ongoing manner.

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