An HR performance management system is a software platform or set of features in an HRIS that help companies with performance management. Such software can help track employees’ performance and progress toward meeting goals. Performance management software can also gather data from those tracking processes and produce reports with vital insights that can help HR develop and improve company objectives.
Performance Management System Types
There are a number of different types of performance management systems. Which your company should consider depends on your company’s unique needs. There are five primary types of performance management systems:
- 360-Degree Feedback System
- Management by Objectives (MBO)
- Competency-Based System
- Forced Distribution
- Graphic Rating Scales (GRS)
360-Degree Feedback Performance Management System
360-degree feedback is feedback from everyone who works around a certain employee, including supervisors, colleagues, and subordinates. Feedback from all directions can provide a more comprehensive view of that employee’s performance. This type of performance management system helps to collect all of this data and compile it into a performance review.
MBO Performance Management System
In this type of system, the focus is on goal-setting. Often, this is collaborative, with employees contributing to setting their own objectives. Departments would similarly help to determine their own objectives and those of the company as a whole.
Competency-Based Performance Management System
This kind of performance management system measures employee performance by competency rather than by task. Managers and HR can identify which competencies are required for each position.
Forced Distribution Performance Management System
In this kind of performance management system, supervisors establish a bell curve on which employees will be rated. Here, only a certain number or percentage of employees can achieve each level of performance scoring, no matter what their actual scores were.
GRS Performance Management System
In a GRS system, employees are rated on several different factors like behavior and performance. The system then rates an employee on a continuum, usually made up of between three and five gradations.
Why Is Performance Management Important?
Performance management is important because it helps companies to use their most valuable resources: their employees. Performance management systems help to clearly define employee goals so that it’s obvious when someone has met or exceeded expectations. Tracking employee performance with a performance management system can radically improve the effectiveness of any performance management strategy.
Using software for the performance management process is essential to improving its effectiveness. A performance management software system doesn’t just reduce the use of paper. It also makes the whole process more efficient. On top of that, software can gather data from reviews and compile them into trends and insights that can help companies to improve their performance management strategies and see gaps in employee training and skills.
Increased Employee Engagement
Using a performance management system makes it easier for managers to define employee roles and objectives very clearly. Software can also track employee progress toward meeting those goals. Knowing exactly where they stand and how well they’re doing can improve engagement because employees know what is expected of them. Having clear goals can also help to improve productivity.
Improved Productivity and Performance
Annual performance reviews often aren’t frequent enough to address any issues that may arise with employee performance. Supervisors can more easily give feedback throughout the year when it’s most relevant so that employees can adjust their performance accordingly right away. Supervisors can also more easily recognize and reward employees who are most productive and who’ve exceeded expectations.
Reduced Turnover
Turnover can be very expensive. Employees who are more engaged are less likely to leave. Using performance management software, supervisors can help keep employees engaged and motivated by empowering them to meet goals and recognizing their achievements.
