Essay on Impact of Performance Management Systems

Published: 2021/11/12
Number of words: 2624


Performance management system is an outlined approach of measuring employee’s performance in a given organization. This approach is used by organizations to set their objectives, use available resources, set goals and mission, set their priorities and systems. The significance of this process is to allow an organization, company or business to execute administration frameworks by linking it to their objectives and targets. A successful performance management system should be able to align a company’s manpower to its management strategy, documentation, communication, organizational maintenance, developmental goals, and administrative changes. This allows the company or a given business to grow steadily while performing appraisals, promotions and introducing new systems which target the goals, missions, and objectives of that company, business or organization. The system often acts as a management tool that allows the leadership of a certain organization to engage with their employees and other stakeholders at a different level that does not hurt the organization’s values and standards as well as respecting the set regulations. It keeps in check the growth of an organization by allowing frequent maintenances, identification of gaps and setting strategies to bridge those gaps. This paper centers its focus on the impact of performance management system through conceptual and theoretical analysis on the economy and the society at large.

Overview of Performance Management Systems

Performance management systems can be referred to as the “Achilles hill” of human resource management as they include employee development and performance appraisals. It is a global perspective on human resource management issues especially performance management of employees (Budhwar, Varma & Denisi, 2008).Effective performance management systems have the capability of applying the employees’ potential to the fullest extent, clarifying employee responsibilities and expectation, setting a culture aligned with company objectives and informs operational human capital decisions (Pulakos, 2004). Despite its ability to turn around the development of an organization, performance management systems suffer a variety of flaws in many organizations. This is because of the reluctance of many managers to review the surveys, poor performance management systems and their fear that the process is often personal threatening employees’ and managers’ existence in the organization (Mayer & Davis, 1999). The process when performed with positive mindset, provisions of actual facts by employees and candid feedback from managers, performance management system has the capability of exposing gaps in job competencies, failure to perform responsibilities and the need to reduce the workforce thus threatens the future of ineffective employees in an organization (Mihai, Bajan & Cretu, 2017).

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There has been an increase in global competitiveness in terms of business thereby employees require the best input and output from their employees (McMahon, 2013). This means that employers currently set their eyes on certain competencies and values from employees to keep check with the competitive environment. Performance management systems in this circumstance are heaven sent tool for employers, managers and the overall leadership of organizations. It allows them to root out poor practices while at the same time boosting their ratings and development in the industry (Nkwane, 2012). In this process, employees are not left behind because they are given the chance to improve their potential through constant reviews that win them extra training and quality improvement programs (Gruman & Saks, 2011).

Objectives of Performance Management Systems

Around the world today, performance management systems have become the top priority in both the public and private sectors. It allows employers to track constantly the performance of their employees. It gives employees a better chance of monitoring employee performance in relation to the set standards and works delegation as well as assessing the areas in need of training and development (Benedikt, 2014). This keeps the employers at a vantage point in the organization because they have a chance to point out the flaws in their organization and developing strategies to close the gaps thereby maximizing the potential of the organization. Performance management systems allow staff members to understand clearly the targets set for the year thereby aligning their energy on ways of achieving these targets. It acts as a guiding tool for employees because equipping an employee with their specific responsibility and targets for the company, performance management systems ensures that employees are ready to perform their duties (McIntyre, Rodgers & Heier, 2001).

An organization’s vital resource is the employee directly connoting that empowerment of the employee positively affects the performance of the organization. Employees having known their competitive advantage as human capital, through performance management systems theytry to keep pace with technical and scientific skills and organizational strategies to maximize their performance (Mustafa, 2013). This way the crucial objective of performance management systems tends to be focused on motivation and developing the skills of employees for future performance. Many times every individual in a company has the urge to know what their managers and other seniors think about their performance in the company. The candid feedback expected from employers acts as a fulfillment of this urge thereby creating satisfaction and a form of indirect appreciation in the company (Van Doreen, Bouckaert, Halligan, 2015). It is indirect in the sense that whether an employee receives a promotion or not after performance reviews are conducted, that employee will have recognized how their employer in the company values them. This goes a long way in developing a culture of hard work and honesty in the organization thereby creating a long-term solution to the constant problems associated with employment (Woyessa, 2015).

Another key objective of performance management systems is employee involvement (Evans & Davis, 2005). The process often considers employee specific behavioralstandards, values and jobs thus allow employers to recognize developmental needs in the performance cycle (Boxall & Macky, 2009). The end product of a performance cycle includes well-trained employees with skills to tackle daily issues that are attached to their specific field. It allows diversification of employees which makes it easier for an employee to know their specific function in the performance chain. This eliminates constant wrangles that always circulate in the employment, which in turn leads to the development of the organization and the overall industry (Abulkadir, Isiaka & Adedoyin, 2012). Lack of employee involvement in the performance management systems is one of the key factors that can lead to failure of the process. There is a great need to involve employees in all stages of performance management systems to achieve effective implementation outcomes.

In the administrative sectors of different organizations, employers, managers, and leaders are faced constantly with situations that require their decisions. The choice or criteria for making decisions is often informed by implementations of management performance systems, which allow managers to make inept decisions (Pulakos & Hanson, 2015). An example is a situation whereby an employer would like to raise salaries for employees in an organization with diverse sectors and different job specifications. An employer will be required to assess the performance of employees to understand job responsibilities and the amount of workload of each employee. This ensures that every individual in the company is rewarded according to their contribution to the organization thus eliminating inequality. On the other hand, employees during management performance processes are afforded the chance to grow and develop their potential as an individual in the organization (Ferreira & Otley, 2009). This redefines aspirations and development needs as well as shedding light on the requirements that a company should undertake for future success.

The Impact Performance Management Systems

The impact of performance management system on business, company, economy or an organization is largely dependent on the target of the process. Performance management system is a cycle that seeks to identify specific issues that are sort after by the managers or employers in every organization. Organizations around the world have their diverse goals, objectives, and visions which performance management systems seek to link for the success of the organization. Performance management systems are either results-oriented or development-oriented (Ricci, 2016). Development-oriented performance management systems have a great impact on the employees as it allows them to evaluate, monitor and adjust their performance towards the requirements of the company. This allows employees to be at a constant pace with the developmental needs of the company thereby putting them at constant pressure to train and gain the essential skills. This allows employees to increase and improve their competency levels and boosts their morale thereby improving the overall achievements of the organization (Ying, 2012). Results-oriented performance management systems, on the other hand, lay down the goals that challenge the employees to improve their performance in the organization (Qureshi & Hassan, 2013).

Performance management systems have the capability of tracking developmental stages of a government initiative or a department. It acts as an incentive for the government to monitor the services provided by various parastatals and identify the gaps that need to be filled. This is achieved through published performance indicators of selected governmental department affording the public a chance to see the track record of development in their country. In government sectors, the success of implemented performance management systems depends on the political goodwill (Mohd Saudi, 2014). Sabotage of the process for example while it is still in its planning stages ruins the chances of success thereby before embarking on such a venture, government stakeholders are required to conduct proper sensitization. Application of performance management systems varies within different states depending on established culture, government policies, and political goodwill. Performance management systems may thrive in United States governmental sectors but fail in states such as China because of the existence of collectivist culture in China and the absence of that in the U.S (Fryer, Antony & Ogden, 2009).

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Performance management system has a great impact on service delivery. It allows employees to have knowledge of the mission statement, visions, goals, objectives and the overall purpose of the organization thereby creating a sense of ownership of organizational goals. Since these organizational goals are the greatest objective of the existence of that organization, aligning energy, strategy and policies towards achieving the goals evolve the organization. The process also involves managers, subordinates and other stakeholders of an organization during planning and implementation stages thus creating a paradigm shift in service delivery (Radebe, 2013). Performance management system outlines the developmental needs of the employees. This gives the employer a chance to focus on specific sectors of the organization to train and equip their employees with the requisite skills (Deepa, Palaniswamy & Kuppusamy, 2014). In addition, training of employees develops them holistically thereby they have a clear focus of approaching issues within the organization (Armstrong & Baron, 2000). Such developments within a company allow employees to have proper skills to handle clients thus improving service delivery.


Performance management systems is a tool that allows companies, governments, and organizations to conduct performance reviews. The process is crucial in the development of organizations as it allows them to be at par with the requirements of the competitive markets. The process is beneficial to both the organization and the workers because they are either development-oriented or results-oriented. Development-oriented performance management systems are tailored towards monitoring and improving employees’ skills while results-oriented performance management systems always pursue the overall performance of the organization. The process greatly impacts governments, delivery of services, employee skills and the economic sector as it leads to the development of skills and improvement of performance. This should be approached with great caution when it comes to governments because proper political goodwill is required for the survival of the venture. Performance management system in a broader perspective is the tool that every manager or leader is required to exercise regularly to achieve proper outcomes.


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