What Key Essentials Should Include in a Performance Management System
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What Key Essentials Should Include in a Performance Management System

What Key Essentials Should Include in a Performance Management System

Employee performance is an ideal way to measure a company’s performance and to forecast its goals as well. Hence, businesses are always in need of ways to evaluate and improve employee performance. Managing employee performance effectively results in increased profits at the end of the day. It is incredibly useful for streamlining employee skills and setting specific goals for individual employees that eventually result in overall improved business performance.

Earlier, HRs and managers relied on taking notes for making performance reports of employees. This involved a whole lot of stress, confusion, and complications and even bias in many instances. The previous system was simply not efficient and effective enough. To remedy these problems, business organizations began adapting to technology, which gave them excellent performance management systems.

In simple words, a Performance Management System (PMS) is a type of software that helps to track employee performance regularly and practically. It lets companies measure the performance of departments and individual employees in the entire business organization, which is extremely helpful in achieving the company’s business goals. When the goals of employees and companies are similar, this eventually results in excellent business growth.

Ideal PMS software helps to make the performance evaluation system more efficient and quicker so that companies get honest, unbiased, and regular feedback about employee performance.

Some of the top ways that PMS tools are known to help companies are:

  • Ensure constant performance management
  • Provide all-round performance reviews
  • Enhance feedback frequency
  • Enable and employ a fair and balanced performance appraisal process
  • Makes tracking employee performance easier
  • Determine requirements for effective employee training
  • Generate employee performance reports automatically

As companies realize the importance of performance management systems, increasing numbers of businesses are shunning conventional paper-based performance reporting and shifting to automated performance management systems.

Numerous studies have shown the incredible impact that businesses have experienced after adapting to PMS tools. Around 70% of enterprises have re-invented their performance management process by adjusting to PMS tools, as per a study by Deloitte on Global HR Trends. The report also shows that today’s performance management systems are not just useful for measuring employee performance. They have evolved to include employee engagement as highly motivated employees are found to be 125% more productive. Also, businesses have reported immense losses due to work-related stress on employees as it impacts productivity immensely. Besides, the report also shows that employers who take regular feedback from employees show nearly 15% lower turnover as compared to businesses that choose annual appraisals.

These performance management systems helped companies move from inefficient and unreliable manual performance reviewing and adopt an enterprise performance management software that helps with regular and frequent employee feedback. Choosing the right performance management system can become a tedious task because of the huge variety of software choices.

10 Must Have Features of Performance Management System

To enhance your business’s overall profitability by improving employee performance, you might get confused about the varieties of PMS available in the market today.

To help you buy the best PMS tool, we have made a list of the 10 must-have features of performance management system:

1 – Business needs

The first priority should be to identify the specific problems that you are facing with the current employee appraisal system in your company. Next, list the solutions that you require for these problems. Then check with the managers how a performance management system will make it easier and more efficient to create performance reports for employees.

An ideal performance management system needs to be able to track the performance of individual employees and their specific job goals and thus help to determine the short-term and long-term goals of the employee and company.

2 – Goals

An ideal performance management system should be able to help you set realistic goals for the company’s growth but under the current level of employee performance in mind. A rewarding and appreciation system is highly effective in increasing employee morale to boost production.

3 – Required features

Write down the specific features you wish to have in an ideal PMS that fulfills your business requirements. Ensure that the performance management system is usable with all types of platforms and devices. It is essential to have a detailed knowledge of the tools, features, and tasks you need to perform with the PMS.

An ideal performance management system should be flexible enough to:

  • Set overall transparent company and individual employee goals
  • Remind frequently of the goals that are set for employees
  • Provide swift feedback to employees for improving performance and implementing business’ goals
  • Help employees review their performance before the report is sent to managers

4 – User Friendly Interface

As performance management software systems are meant to ease the workload and complications of managers, make sure that the selected PMS provides incredible ease of use. Make sure that the chosen PMS is easy to learn and operate.

5 – Compatibility

Before choosing a new PMS, make sure that the existing system is not disturbed. Ensure that the new PMS tool will be easily integrated into the current system. Also, check to see whether existing modules, data, and reports can be transferred from the current system to the new one successfully.

6 – Feedback speed

Ideal PMS should facilitate faster communication and feedback between company and employee. It should allow almost real-time tracking of individual employee performance, appraisals, and report problems promptly.

7 – Support

A reliable software vendor is crucial. Make sure that the chosen software vendor offers optimal customer support for their software users so that you can minimize downtime, add, and update software effortlessly.

8 – Learning curve

A variety of learning modules are a must for the skill development of employees. Inducing a newly joined employee as well as helping existing employees hone their skills is a must-have for ideal performance management.

9 – Reports

Excellent performance management systems should provide employee appraisal and reports in real-time. This is essential for the best monitoring of employee performance and finding solutions to increase employee and company productivity.

10 – Software demo

Certain PMS software allows free trial periods. Hence, always make sure to try a selected performance management system to check if it suits all your requirements before deciding to buy the complete, paid version.


Performance management software is essential to increase employee productivity, which results in improved business performance. Hence, always make sure to choose a PMS which suits your individual business requirements and enhances the work of HRs and managers noticeably.

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