BLOG / What Is An Effective Performance Management System

What Is An Effective Performance Management System

June 12, 2023

What Is An Effective Performance Management System

You’re aware that everyone who works for you plays a role in your business’s success. It’s a challenging task for you to understand every employee’s contribution to your business. If you don’t have the right tools, things like a performance review become tedious, costly, and time-consuming tasks. You’ll be able to discover the role of effective performance management in this post, along with some valuable data that will help you pick the right solution.

Role Of A Performance Management System

What Is The Role Of A Performance Management System?

Business owners need to review the performance management processes they use. Research shows that the traditional appraisal process causes problems and often leads to employee dissatisfaction. Some of the major problems that traditional systems bring include:

  • It reduces the motivation among some employees
  • It can disrupt teamwork
  • There are issues related to efficiency
  • The process is not flexible
  • It costs a lot more compared to more modern systems

This brings us to the more modern available options, which often take advantage of continuous performance management. The role of these systems is to consistently keep track of employee performance, most often on a per-individual basis.

We need to move past the use of spreadsheets and paperwork to track employee performance. In one survey, over 50% of companies still used these outdated performance reviews.

So, what role will performance management systems play in your business? They give you a modern, digital solution to track the performance of the people who work for you.

When you have an effective performance management system in place, then these are the primary roles it will play:

  • Effective performance management systems will help to drive greater profits for your company. You’ll also be able to improve your profit margins.
  • They will help to motivate employees and guide them on the career paths that are most suitable for each.
  • The system offers valuable feedback that plays a role in employee development. Poor performing employees can be notified not only of their weaknesses but also their strengths. Those with effective performance can be praised.
  • It’s also helpful to use a performance review with this system to ensure employees’ goals consider business objectives.

The Properties Of An Effective Performance Management System

Effective Performance Management System

When you turn to a more modern option for effective performance management, you should understand the properties of a good solution. This will also help you better understand what to expect and what the system will do for your performance management process.

We’re going to discuss a few key properties that an effective performance managing and monitoring system will offer your business:

  • Continuous Process: Traditional appraisal and review systems are usually done once a year. It takes significant time, as everything needs to be manually evaluated. A modern performance management solution will automatically keep track of various aspects and provide you with reports as needed.
  • Communication: These systems often prioritize enabling employees and management to communicate effectively. Activity logs also ensure communication is recorded and available for future reference, should there be a need for it.

Reviews And Evaluations: By recording employee data, these systems can provide you with evaluations. It reduces the need for manual reviews and frees time in the human resources department. When you set strategic objectives for your business on the system, it can evaluate the employee’s performance expectations toward these goals.

How To Choose An Effective Performance Management System

Performance Management System

To implement an effective performance management solution, it’s important to assess your options carefully. Several systems are available, but they do not all offer the same level of functions. The cost can also differ greatly between these solutions, which is another thing you should keep in mind.

Here, we’ll discuss a couple of key factors you should consider to ensure the system you choose improves performance, helps to retain goal alignment, and makes the life of HR professionals easier:

  • System Type: You’ll have to choose from two types of performance management systems. This includes suite options and standalone software. Standalone options can sometimes integrate with existing systems that you already use. This ensures managers do not have to go through a steep learning curve to get used to how your new performance management solution works. A suite can give you a wide range of applications in one dashboard, which is helpful if you don’t have systems up already.
  • User Interface: You want to move away from the time-consuming traditional appraisal systems and to something more streamlined. This is why you should also consider the user-friendliness of the system. If you are not using development plans to create custom software, make sure the application you opt for is easy to use. Its interface should make navigating through reports and other functions easy.
  • Feedback: Take note of how the system handles feedback. Regular feedback is important, such as the ability to draw reports at any time. Some of these options may also give you an annual review option. When reports are provided, they should have a positive impact. This means positive feedback should be prioritized, but the system should still outline shortcomings in individual goals that employees could not reach.
  • Customization Options: Another essential aspect is how well you can customize the system that fits your company goals. A generic system with few customization options is difficult to use. The performance management solution should allow you to adjust various settings, including the dashboard, to show the most valuable data that you work with.
  • Cost: Some software options have a once-off fee, while others demand a monthly subscription fee. You need to consider how well each solution’s cost will fit within your business’s budget. There’s no use in trying to get performance improvement among your teams if the software cuts too much into your budget.

Implementing Performance Management Systems

You’re ready to take a more modern approach to performance management and looking to implement an appropriate system. The problem is you may not know where to start. Talking with senior management about the available options is a good start while keeping the criteria we discussed in mind.

Here are the most important steps that you should take when you want to implement a modern continuous performance management system for your business:

  1. It all starts with planning. You need a clear overview of what you expect from the system you will implement. This will ensure you know what features to look for as you analyze different solutions.
  2. Talk to your team and get feedback. Having managers and employees provide their input can help you choose the right system. You’ll still be in the driver’s seat, but you get valuable data that you can use to help with the decision-making process.
  3. Customize the software once you make a decision. Different organizations have unique goals. Research and determine the key performance factors you will use to evaluate your employees.
  4. Ensure employees know their goals and have access to the system to report their progress. This can help to streamline the data entry process. If the system integrates with your sales software, it can further streamline the process of collecting data related to your employees’ performance. For example, sales gamification software can help to give you regular feedback while creating a heightened sense of motivation when appraisal includes rewards.
  5. If employees do not understand the system, provide them with the appropriate support. This will help them focus on sending through reports and engaging with the digital systems you will use to assess their performance.

Once everything is up and you collect data, checking in regularly is essential. Provide employees with feedback and ensure each team also knows how they are performing.

Boost Results with Spinify

There are a couple of performance management systems and solutions that you can use. They allow you to assess performance individually and see how teams, management staff, and entire departments perform. 
For those who need to boost individual performance, gamification can be a great option, especially for sales teams. Learn how Spinify can help you implement gamification in your sales departments to drive friendly competition and significant increases in closed sales.

Put those insights into practice.

Set your team up for success by improving their performance through gamification.

Back to blog