Importance of the Performance management System


Performance management is the practice of actively using performance data to improve the publics health. This practice involves strategic use of performance measures and standards to establish performance targets and goals, to prioritize and allocate resources, to inform managers about needed adjustments or changes in policy or program directions to meet goals, to frame reports on the success in meeting performance goals, and to improve the quality of public health practice.

A performance management system establishes a framework for planning, monitoring and revising what an organisation does, towards achieving improvement

"Performance management is a process which contributes to the effective management of individuals and teams in order to achieve high levels of organisational performance. It establishes shared understanding about what is to be achieved and an approach to leading and developing people which will ensure that it is achieved."

The term performance management system can give the impression that it is something separate, something in addition to what goes on in the day to day planning and management of the authority. Rather than being separate, effective performance management arrangements can help integrate planning, review, financial management and improvement systems, to enable managers to make informed decisions and improve services." A Performance Management', Improvement and Development Agency, 2004 guides their managers regarding the performance of the employees.

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"Managing performance is about more than having an effective performance management system. The elements of performance management, targets, indicators, plans and so on, are important, but they are not enough by themselves. In councils that are good at managing their performance, the people involved, councillors and staff, have a shared understanding of the Council's priorities and of what they need to do to realise those priorities. Because people know what matters most, they can solve problems and overcome barriers quickly. They recognise that the point of managing performance is not to hit targets and fulfil plans as ends in themselves, but to do so in a way that produces high-quality services for local people."

Performance management is a continuous business planning cycle. It does not work in isolation, but rather in a holistic fashion, pervading every aspect of the organisation. In performance management terms, the aim should be to create a culture where high standards and quality of service are part of everyday life of the organisation. It is not an end in itself. It's one of a set of tools, a way of working, that helps you to identify what needs doing, a means to deliver improvement and a way to maintain high quality services."

Either private or public sector organisations face increasing demands to demonstrate improvements in their performance. This requires a strong understanding of past and present performance, enabling the appropriate actions to be taken to ensure organisational aims are achieved. In short, performance management is taking action in response to actual performance to make outcomes better than they would otherwise be."

Employee Performance Management (EPM) encompasses a variety of HR processes (e.g., goal management, performance appraisals, multi-rater/360 feedback, compensation management, workforce & succession planning, development planning and training.) When harnessed correctly in an enterprise they are used to help employees understand their roles, strategic business objectives, expectations in their day-to-day activities based on the business objectives and performance success as viewed by the management, peers, customers, etc. Assessment proves more valuable when it serves as a guide for benchmarking alignment and performance against strategic business objectives and employee developmental and training. In Performance Management System  employee performance can be directed, monitored, and refined with SMART objectives for the organisation and the individual which have been clearly communicated and agreed is essential to any organisation or business that aims for continous improvement.

To keep a business competing successfully in markets that are increasingly more global, complex, professionally demanding, constantly changing and oriented towards quality and customer satisfaction a new approach is required. The beliefs and values that shaped organizations during the twentieth century will no longer ensure success. Management by objectives is part of the new story but on its own is not enough to instill people with the values and focus required to help organizations distinguish themselves from competitors and offer stakeholders superior value. The leading organizations of this century will succeed through their people and their ability to respond dynamically to the issues of the day, this is the essence of a performance focused culture.

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Performance measurement consists of the collection and collation of quantitative and qualitative data and information relating to performance, the processing of the data and its presentation in the form of reports, figures and charts. Performance indicators ( PIs) feature heavily in this process but performance measurement is not synonymous with performance management.

Performance monitoring involves examining the results of performance measurement, assessing any variations in performance indicators and making value judgements about performance, for example, good, bad, indifferent, better, worse, unchanged.

Performance management, as noted above, is a process aimed at improving or maintaining performance and depends heavily on performance measurement and monitoring.


"to develop and implement an agreed and effective framework for the management of policy performance to ensure the Scottish policy service is consistently able to collect, record, develop, use and report accurately, required performance information in the determined areas of business."

A Performance Management System is the continuous use of all the above practices so that they are integrated into the organization's core operations. Performance management can be carried out at multiple levels, including the program, organization, community, and state levels. The diagram shows that Performance Management includes performance standards, performance measures, progress report and quality improvement. To achieve these predetermined standards & goals higher level authorities assigned some performance tools and issue a progress report to their super seniors. On the basis of this report they can use quality improvement measure, motivational and learning programs.

Effective appraisal systems hinge on many different factors. Foremost the performance criteria being very clear and precise, the appraiser having the correct management information and having carried out all relevant research with specifics and the feedback being constructive. If there is a lack of appraisal skills and or communication the system will fail to achieve its objectives. The review process must have structure and substance.

The critical point about employee performance management is that handing out job descriptions, carrying out staff appraisals and issuing a list of objectives is just not adequate. The overall employee performance management system is key with managers that can use and understand the system effectively. In a recent survey (Personnel Today 29 Jan 2008) 87% of organisations state competent managers as the most effective tool to deter under-performance.


PMS helps their managers in taking appropriate decisions.

It provides an opportunity for manager to compare the employee's performance more accurately and consistently.

It helps to save time and efforts of managers in maintaining scorecards.

Due to that flexible tool, it helps in managing performance in different areas such as: strategy, operations, suppliers, teams, personnel motivation, risk mitigation, internal control & quality Balanced Scorecard, ISO, Six Sigma etc.

It define what, how and when to measure and how to present performance data with a rich collection of included templates for capturing performance information.

Performance management system provides a feedback regarding better performance of employees.

PMS Allow managers to monitor strategy performance with custom and roll-based interactive (drill-down) dashboards that are tailored to cover their areas of responsibility.