What is a performance management system?

Almost all organizations around the world have realized that employees are their greatest assets. Their success largely depends on how effectively employees carry out their job responsibilities. So how can organizations empower their employees to achieve more at work? Running meaningful performance reviews is the key.

Gone are the days when annual performance reviews made the most sense. Employees expect their managers and HR teams to check in about their performance regularly and provide useful feedback that enables them to focus their efforts on the right aspects of their work. However, if your team does decide to hold more consistent performance reviews, it should be done properly. This is where a performance management system truly shines. In this blog post, we are breaking down the basics of a performance management system.

What is a performance management system?

A performance management system is an intuitive software tool that enables organizations to review employee performance from a single, centralized system. The system will have multiple features and modules to help organizations track the goals, KRAs, competencies, and skillsets of employees, conduct self-appraisals, implement 360-degree feedback, exchange feedback with employees, facilitate fair raises, and a lot more.

HR teams can assign performance admins to oversee the entire performance appraisal process and select reviewers for each set of employees. It also provides organizations access to a multitude of reports that provide insights about appraisal scores, overall ratings, raise status, and employee goal progress. It has everything an organization will ever need to run consistent performance appraisals and ensure employee performance aligns with overall business goals.

What are the benefits of a performance management system?

Here are some of the major benefits of implementing a performance management system:

• Enhances employee performance

The performance management system provides different avenues to help employees improve their performance consistently. Since it supports goals and KRAs, employees will be able to track how they progress toward their goals and understand what success and desired outcomes will look like in their roles. Similarly, the feedback module in the performance management system helps them understand their strengths and weaknesses, as it enables peers, reportees, and managers to provide constructive feedback.

• Closes skill gaps

As managers review employee performance regularly with the performance management system, they'll understand what's working and what's not working for their employees. Since performance management systems track skill sets, managers can get a clear idea of all the skills that their employees possess and lack. This helps the organization conduct more meaningful training and development programs.

• Improves employee morale

Performance management systems can truly help employees stress less by keeping the entire process employee-centric. For instance, employees will be able to provide their own perspective on their performance when they are being reviewed. Similarly, a performance management system also helps recognize employee efforts with suitable rewards and raises. All of these things go a long way towards making employees feel valued, thus improving their morale.

• Facilitates fair promotions

The performance management system can help organizations keep the entire process fair, transparent, and bias-free. Modules like goals, competencies, and skillsets provide a clear picture of an employee's performance. Features like 360-degree feedback enable reviewers to get a comprehensive view of an employee's performance from their peers, reportees, and managers.

• Eases the entire appraisal process

Since performance management systems automate the entire appraisal process, there's no reason why any organization wouldn't conduct performance reviews regularly. All performance administrators have to do is select the modules to evaluate employee performance, select reviewers and applicable employees, define the appraisal process period, and allocate a raise percentage, if applicable.

Wrapping up

The performance management system can truly take the tedium out of the appraisal process and provide a stress-free and productive experience to both employees and HR teams. We hope this blog post gave you a clear idea about the basics of the performance management system. Watch out for part two of this blog to understand what to look for in your next performance management system.

Zoho People, our HR software, comes with a robust performance management system that streamlines the entire appraisal process and enables organizations to run performance reviews in a way that aligns with their organizational practices. 360-degree feedback, goals, KRAs, skillset, competencies, salary increases, and continuous performance reviews are some of the many modules that our performance management system supports. Learn more about Zoho People's performance management system