7 Steps in Implementing Performance Management System

implementing performance management system

Implementing a strong performance management system can help your organization to achieve higher employee engagement, improved individual performance and better performance.

An effective performance management system allows the senior management and employees to work together in achieving the ultimate corporate objectives and strategies. It helps the organizations to manage the continuous process of monitoring employee work performance, goal-setting, reviewing activities as well as provide timely feedbacks.

However, Performance Management Process isn’t an easy task to deal with. It’s been constantly evolving with latest trends and availability of new and sophisticated Performance Management systems in the market. If these systems are not properly implemented in your organization, then the employees will be left unengaged & unmotivated, and the managers will feel frustrated at the performance of their team.

A good performance management system is as crucial as a good management board of the organization.

Here are 7 Key steps in implementing a successful performance management system:

Start with the Preparation

Implementation of a performance management system requires the combined effort of many different parties within the organization. Specifically, the successful implementation of this system requires assessment of current performance management process, a clear understanding of how the new system works and at the same time also requires understanding of its benefits from different perspectives of all involved. This can be achieved through a proper performance management plan.

In other words, successful implementation of the PMS requires wide organizational support and acceptance. You need to make a proper business case study and also get budgetary approvals from the top management officials. If the organization doesn’t have a clear performance management strategy, it will lead to disconnect between the individual performance tragets and the overall business goal.

Identification of major objectives like what should be included in the system, what are the employee’s expectations, what does the Human Resource department expect to see in the performance review from HRS, etc needs to be decided at the very beginning itself.


Communication Plan

Organizations should strive to provide greater and better knowledge of performance management software as it leads to greater employee acceptance and satisfaction. A communication plan should be designed by the companies to ensure that information regarding the performance management strategy is widely communicated within the organization.

implementing performance management process

A good communication plan should answer the following questions:

  • What is performance management?
  • How does performance management fit into our strategy?
  • How does it work?
  • What are the top features of performance management softwares ?
  • What’s in for me?
  • What are my responsibilities?
  • How is performance management related to other initiatives?

The communication plan implemented by the organizations should be extremely detailed and should provide answer to most, if not all, of all the key questions that should be addressed by a good plan.

Gaining Employee Acceptance

In order to gain employee acceptance for the performance management software, it is important to include an appeals process. An appeals process allows employees in an organization to understand that if there is any disagreement regarding performance appraisal, they can resolve such disagreements in an amicable and nonretaliatory way.

Once the appeals process is set in place, the employees have the ability to question two types of issues: judgemental and administrative. While the Judgemental issue focuses on the validity of the performance evaluation, the administrative issues involve whether the policies and procedures are followed or not.

Thus, if such processes or policies are set in place, the employees feel assured that any disagreements will be treated fairly and as objectively as possible. This indirectly help gain support for the performance management system.


Training Programs for Acquisition of Required Skills

Training the managers who rates their employees is another necessary step in preparing for implementing performance management system. Providing the required training and development plan not only provides the required skills and tools to do a good job implementing the performance management process, but also helps increase the satisfaction with it.

implementing performance management training

Areas that can be included in Training Programs can include:

  • Rater Error Training (RET) – The goal of this kind of training is to make the raters or the managers using the PMS, aware of the rating errors they are likely to make and also help them to develop strategies that can minimize those errors.
  • Frame of Reference Training (FOR) – It helps to improve the accuracy of the rater by thoroughly familiarizing raters with various employee performance dimensions to be assessed.
  • Behavioural Observation Training (BO) – It focuses on how raters observe, store, recall, and use information about performance. Fundamentally, it improves raters skills at observing performance.
  • Self-Leadership Training (SL) – The goal of SL training is to improve a rater’s confidence in their ability to manage employee performance. It includes positive self-talk, mental imagery, positive beliefs and thought patterns.

Performing a Pilot Test

Before you implement your PMS, an action plan is required to test a version of the entire system so that adjustments and revisions can be made as required to achieve the organizational objective.

In the pilot testing phase, evaluations won’t be recorded in the employee’s files; however, the system is implemented in its entirety from beginning to end. It will include all the steps that would be required if the system had actually been implemented.

One of the primary aspects of the pilot testing is that all participants should maintain records taking into account any problems they encounter, ranging from issues with the appraisal form to how the performance is measured in the timely feedback received.


Ongoing Monitoring and Evaluation

Once the testing period is over and the performance management system is implemented throughout your organization, the next important priority is to use clear measurements to monitor and evaluate the system.

In short, a decision needs to be made about how to evaluate the system’s effectiveness, the extent to which the system is being implemented as planned, as well as the extent to which the desired results are achieved.

Evaluation data can include reactions to the system and assessments of the system’s operational and technical requirements. Some of the additional measures that can be used on a regular basis to monitor and evaluate the system are:

  • Total number of individuals evaluated
  • Performance ratings distribution
  • Information quality
  • Quality of follow-ups
  • Quality of performance discussion meeting
  • System satisfaction
  • Overall cost/benefit ratio or return on investment (ROI)

Making it Live

Once all the performance management process steps are implemented, it now time to go live. An e-mail or electronic newsletter can be used to circulate the information within the organization to communicate the updates regarding the system. A dedicated website can also be put in place to provide updates regarding the system.

implementing performance management system

Later the system can also be linked to other Human Resource management functions such as training and selection. In this way, if an employee receives a low rating on any one dimension, the system automatically triggers suggested resources that the employee can use to address his performance issue.


Books on Performance Management that you could try:


In conclusion, there are several factors that determine the implementation of an effective performance management program within the organization. By considering the above-mentioned steps, we can summarize the steps into three most important ones.

The first being that the process or the system needs to support and be aligned to the organization’s direction and important success factors. Second, in order to make the system user-friendly and well accepted by the employees, the system needs to be well-developed with efficiently administered tools and processes. Thirdly, the system should be used by the employees and manager is such a manner that it brings visible, value-added benefits to the company in the areas of performance development, performance planning, feedback and results.

Carefully considering these steps will also help you get clarity about the type of performance management system that would work best for your organization.

Merin is an HR professional with an MBA in Human Resource. She likes doing a lot of research and study in the field of Human Resource and can't help but share her knowledge on the same in this platform. She is also a great cook and during her free times she keeps experimenting with new dishes. Know more about Merin by clicking here.
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