Employee Performance management process is an essential tool in each and every visionary organization. A performance management system can be described as a tool used by the human resource managers to track and monitor each employee’s performance as well as the overall organization’s performance. This system has the following basically characterized by; a list of accomplishments, goals, ratings and personal development (Solomon, 2009). Bititci, Carrie and McDevitt describe performance management as the process where all organizational activities, tasks and feedback can be obtained so as to ensure efficiency towards recognition of the organizational goals. According to them, the overall purpose of having this system is to encourage improvement in the overall company performance which will aid in the attainment of organizational goals (Bititci, Carrie and MC Devitt, 1997). This article will therefore aim at analyzing in details what performance management is the resultant importance as well as the challenges associated with the system.

Good management information system

A good management system would be characterized by effective communication between employers and employees, completion of given tasks on time, increased productivity levels and effective use of resources. Having a stable management system means creation the creation of development opportunities, increased team and individual productivity, minimization of litigation risks, improved decision making, professionalism in running the business and compliance with the regulations set. Identification of various setbacks will also occur when great leadership is enforced, and ways in which such problems can be mitigated through the process.

Performance management cycle model

A performance management cycle can be described as a continuous process through which an organization can achieve their desired objectives. This process basically involves five major steps. Each stage is vital in performance management in that it describes what needs to be done, when, why and how. The 5 step cycle analyses a decision making strategy vital during project management, outlining the tasks and responsibilities for both the managers and the staff.

performance management cycle

Planning calls for a foreplay which will ensure that the expected goals are met. Monitoring employees determines the level of progress and performance made regularly. Developing employee’s ability through training and coaching, Rating your staff according to the level of performance delivered and finally rewarding them in appreciation of a job well done, basically through promotions, rewards, and increased pay rates (Shane & Shane, 2008).

Employee appraisal and the resultant benefits.

Employee performance appraisal is said to be the key roots to the success of any business. This term can be best described as reviews given to the employees by the managers aimed at evaluating an employee’s skills, achievements, and growth (Falcone & Tan, 2013).  Employee appraisals help the staff to improve of on the different areas where they are incompetent basically through teamwork. Additionally, employees use this phrase to reward their staff for a job well done where their efforts can be recognized though pay increase, promotions and rewards. Moreover, managers get to learn from this through identifying the specific areas worth improving on and the relations existing between them, the employees and the managers.

Employee appraisal enables the senior staff to identify and determine who needs training, who need promotion, who needs demotion and who need to be fired. This process is therefore vital for any organization for the following reasons. One, it enables the management to identify the strengths and weaknesses of its employees and thereafter place them in a job that best suits them.  Second, managers are able to maintain a record for compensating employees as well as provision of feedback regarding their performance (Hai, 2012). Finally, the system serves as a basis for influencing working habits to employees as well as it serves as a motivation factor to employees.

Performance appraisal methods

Employers can employ different methods when it comes to managing employees. Each method used in appraisal carries its strengths and weaknesses. This means that different methods of appraisal can be suitable for some businesses and non-suitable for another. Different researchers have come up with different classifications on these methods. According to Tapamoy, performance appraisal has been categorized into past and future oriented methods, whereas Rohrich classified the methods in three categories namely; absolute method, relative method and the objective method (Rohrich, 2007).

However, in our modern times, a wider classification of appraisal methods can be grouped in two major categories the modern and traditional methods. Traditional methods of appraisal focused on the employees or an individual’s personal traits such as creativity drive, leadership potential, dependability, self-drive and intelligence.  These methods include a field review method, the essay method, a graph rating scale method and the check list method among others. Modern methods on the other hand, tend to be more inclined to the set objective in a given project (Bogardus, 2007). They include, MBOs, BARS, use Assessment centers, 360 degree appraisal and the cost accounting method.

Management by objective (MBO)

The MBO can be described as a process in which both the superior and subordinate managers of an organization identify the common goals and areas of responsibility and use them as guidelines for operating the unit. This program consists of four major steps which include goal setting, performance standard, comparison and periodic review. The process helps an organization to identify their set goals and develop a plan which will aid in the achievement of such goals.

Limitations of MBO

Although MBO is an effective method, it has a number of drawbacks. First, it is time consuming in that all the activities involved in goal setting and employee progress measurement takes too much of a time. Second, setting unclear and un-measurable objectives can be a limitation to a company. Finally, where MBO performance appraisal method is used, mistrust problems between managers and the staff are to be experienced.

Behavioral anchored rating scales (BARS)

These are the descriptions of different behavioral degrees with regard to a specified dimension of performance. This method offers more equitable appraisals when compared with MBO’s. Additionally, this method involves five steps which are; generation of critical incidents, developing performance dimensions, Incidents re-allocation, Incidents scaling and development of final bars instruments. The Major advantage of this method is that employee performance and productivity is guaranteed.

Assessment centers

In businesses, assessment centers can be used to evaluate executive and supervisory potential in a business. An assessment center can be defined as a certain set location where managers meet and participate in stimulated exercises, assessed by Human resource specialists for a set duration of days. The main advantage of using this method is that at the end of the exercise, feedback relating to the managers strengths and weaknesses are broadcasted. Due to this, the method is said to be accurate as minimum or no biasness is witnessed. However, this technique is costly and time consuming and demotivates those employees rejected to participate in the assessment.

employee performance management process

Need for employee performance evaluation

To begin with, it is important for organizations to determine their current financial and economical state for planning and decision making purposes. Prior on this discussion, performance management allows for both the subordinate and the senior staff members to come together simultaneously with an aim of achieving some or all set objectives. For this to happen, the organizational managers are required to exercise a process which will aid to the achievement of the set goals. The process they ought to undergo can be grouped in five stages namely, planning, monitoring, developing, rating and rewarding stages respectively.

However, this cannot be effective without occasional employee evaluation. Employees on the other hand are expected to perform their duties diligently and conscientiously in that their contribution will impact the overall wellbeing of the organization positively. Additionally, once the process is conducted with zeal and with a basic understanding of what is expected, not only will the organization receive positive results, but also both the employees and the manager in unity and cooperate in order to achieve the set company objectives.

Consequences faced as a result of poorly implemented management system.

Incompetent management can affect both the employees and the company’s overall operations. Existence of incompetent managers globally is on the rise and it has brought about in-effectiveness in business organizations. In most cases, organizational managers fail to understand the importance of having a management system.  Instead of focusing on employee management, possible time frame for a given task and the effectiveness of the task, majority of such managers focus on the ultimate goal which is making profit. Failure to exercise this system especially in large organizations will bring about drawbacks.

These include, poor accounts management, poor employer-employee relations, it will affect the overall employee morale towards a given task, reduced productivity levels by employees, decreased overall profits by the organization which will result to the failure of the business. A business experiencing poor leadership poor leadership will be characterized by poor skills and knowledge towards a given task, miscommunication or lack of communication between the senior and subordinates, intimidation by managers to employees and lastly micromanagement.

Disadvantages of a poor management system

Low morale and reduced productivity

It is easy to identify an organization with a poor management system. An organization experiencing bad leadership could bring about reduced employee towards a given task or activity. This can be identified through; complaints employees discuss among themselves, through minimal effort taken to complete a given task or failure to complete it. Notably, favoritism could bring about such or poor supervision in which employers fails to identify the needs and wants of their employees. Resultantly, reduced morale will result to reduced productivity levels in an organization. Therefore, managers should have set standards and conduct performance appraisal regularly to test on their performance.

Decreases profits and business failure

Decreased profits as a result of poor management could be experienced through two ways; failing to supervise employees in the right manner and failing to balance the company’s budget. Due to this, the company will be forced to pay out industrial wages for minimal or low output. In case the sales sector department is affected by poor management, the overall gross profits will be directly impacted once the quotas are not met. Also in case the expenditures are too high, reduced revenues will be experienced.

Business failure

Globally, the main reason why companies have completely closed their businesses was a result of poor management. Poor leadership brings about a significant employee turnover, in that the costs required for training and recruiting employees becomes prohibitive. Coffers could also be affected by poor leadership in case the funds are mismanaged or in case of exaggerated budgets to the revenues earned. Without adequate business reserves, a business will not be in a position to absorb constant loses which may result to a company downfall.


In conclusion, both performance management and performance appraisal are necessary in the identification of the achieved goals and objectives. In contrast, performance appraisals are needed especially during employee evaluation while performance management basically reflects on the continuous nature of the overall improvement of a company, its work systems and the team contributions. In order to cumber out the possibility of business failures, organizations are urged to employ highly professional employees and allocate them in accordance to their skills. Through this, the possibility of businesses failure will be eradicated.


Bititci, U. S, .Carrie, A. S., & McDevitt, L. (1997). Integrated performance measurement systems: A development guide. International Journal of Operations & production management, 17(5), 522-534

Solomon, C. (2009). Select a performance management system: Performance improvement. Alexandria, VA: American Society for Training & Development.

Shane, J. M., & Shane, J. M. (2008). Developing a performance management model: Your action guide to What every chief executive should know : using data to measure police performance. Flushing, NY: Looseleaf Law Publications. Falcone, P., & Tan, W. (2013).

The performance appraisal tool kit: Redesigning your performance review template to drive individual and organizational change. New York: AMACOM, American Management Association.

Hai, M. A. (2012). Performance Appraisal Effectiveness: An Evaluation of McDonald’s in the UK. Saarbru?cken: LAP LAMBERT Academic Publishing.

Tapamoy, D. (2008). Performance appraisal and management: Concepts, antecedents and implications.

Bogardus, A. M. (2007). PHR/SPHR: Professional in Human Resources certification study guide. Indianapolis, Ind: Sybex.

Rohrich, M. (2007). Fundamentals of investment appraisal: An illustration based on a case study. Place of publication not identified: R Oldenbourg Verlag Gmbh


Drive goals, engage employees and promote a culture of feedback.

Please Sign-Up below to book a free demo of SuccessDart.