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Understanding the Performance Management System

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Performance Management System

Performance management systems are often associated with the urge to control and penalize underperformance. Despite the general employee perception regarding this matter, the main roles of performance management systems are totally different:

  • Facilitating strategy implementation;
  • Ensuring alignment of resources and activities;
  • Focusing on what matters the most for the organization;
  • Measuring performance;
  • Providing feedback and opportunities to improve.

Mapping the performance management system will enable managers to better understand the tools they are using and how they interact and generate the system’s dynamics.

Main tools

This is an example of a high level performance management architecture, provided by The KPI Institute.

Performance Management System

The first prerequisite for establishing a performance management system is to clarify the strategy by analyzing the organization’s current state and its external environment. The mandate represents a validation, coming from top management, to support the implementation process. The strategy plan should be translated into clear, actionable short and long term objectives.

The Desired State of Evolution communicates where the company wants to be in 3 or 5 years, in terms of clear, desired result levels. The strategy map also translates strategy into actions by presenting objectives and interconnections between them. These objectives are further detailed in the Performance Scorecard, where each of them has at least one key performance indicator (KPI) assigned. KPIs are used to monitor the progress done in achieving that specific objective.

The Portfolio of Initiatives, consisting in all organizational projects, should be aligned to the Desired State of Evolution, as they are the levers for strategic achievement. Initiatives should not receive approval unless they support the strategic plan.

The performance dashboard provides visibility to daily operations and enables managers to take timely actions at departmental level.

At employee level, each individual performance plan contributes to achieving the organizational strategy. The individual performance plans can consist in an individual scorecard, a competency and a behavior framework.

Main processes

Some of the most important processes that take place within the performance management system are:

  • KPI selection and KPI design;
  • KPI measurement;
  • Data gathering for KPIs;
  • KPI reporting.

In addition, there is a constant feed-forward and feedback process that provides the necessary information for the system to adapt to changes and function properly. This constant provision of information also facilitates the organizational learning process.

Governance

The Performance Management System should be designed and managed by a Strategy or Performance Office. Whether there is an entire team or just one person in the department, accountability is important for an efficient system management. Responsibilities of the Performance Architect or Strategy Managers include:

  • Coordinating the KPI implementation project;
  • Designing the framework and all instruments used;
  • Providing training and awareness sessions for all stakeholders involved, like KPI owners and data custodians, to better understand the system;
  • Providing support to KPI owners and data custodians;
  • Facilitating the organizational performance review meetings;
  • Maintaining an updated performance management system;
  • Facilitating strategic planning and strategy review;

The main purpose of a performance management system is not to control, but to provide a framework for implementing strategy, measuring progress and improving performance.

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Comments (56)

  • Alaa Abu-Alrub

    |

    It is an interesting and comprehensive article which clarified many important points in order to implement an effective performance management system which involve the roles of performance management systems, importance of mapping system for managers, Important steps for establishing a performance management system, Responsibilities of the Performance Architect or Strategy Managers and the end clarified the purpose of a performance management system is not to control, but to provide a framework for implementing strategy, measuring progress and improving performance

    Reply

  • Alaa Abu-Alrub

    |

    Content of Materials for Article of Understanding the Performance Management System:
    It is an interesting and comprehensive article which clarified many important points in order to implement an effective performance management system which involve the roles of performance management systems, importance of mapping system for managers, Important steps for establishing a performance management system, Responsibilities of the Performance Architect or Strategy Managers and the end clarified the purpose of a performance management system is not to control, but to provide a framework for implementing strategy, measuring progress and improving performance

    Reply

  • mohammad qawasmeh

    |

    Action :
    to communicate the data with the staff
    to review current available option in my organization
    To work collaboratively with quality team to standardize all KPI
    Note:

    1- the main roles of performance management systems are totally different
    2- enable managers to better understand the tools they are using and how they interact and generate the system’s dynamics
    3- main challenge for KPI establishment
    •KPI selection and KPI design;
    •KPI measurement;
    •Data gathering for KPIs;
    •KPI reporting.

    Reply

    • mohammad qawasmeh

      |

      Action :to communicate the data with the staff
      to review current available option in my organization
      To work collaboratively with quality team to standardize all KPI
      Note:1- the main roles of performance management systems are totally different.
      2- enable managers to better understand the tools they are using and how they interact and generate the system’s dynamics
      3- main challenge for KPI establishment
      •KPI selection and KPI design;
      •KPI measurement;
      •Data gathering for KPIs;
      •KPI reporting

      Reply

  • mohammad qawasmeh

    |

    the main roles of performance management systems

    enable managers to better understand the tools they are using and how they interact and generate the system’s dynamics
    main challenge for KPI establishment
    •KPI selection and KPI design;
    •KPI measurement;
    •Data gathering for KPIs;
    •KPI reporting

    Reply

  • Majdi Mohammed Saadeh Saadeh

    |

    The main purpose of a performance management system is not to control, but to provide a framework for implementing strategy, measuring progress and improving performance.

    Reply

  • Elsayed Ahmed

    |

    Very good article
    It is very important to also to raise the awareness and knowledge of the whole organization and employee about the importance of performance management system because every one in the organization has to know whats his role exactly in the process of improvement

    Reply

  • Bassam Yousef

    |

    I think the most important part when implementing the Performance Management System is the awareness. Because the purpose of the PMS is not to control is about providing a framework for implementing strategy, measuring progress and improving performance. This is crucial to highlight to all employees while implementing the PMS.

    Reply

  • ali AbdelHafeez

    |

    Possible Outcomes from Effective Performance Management
    • Clarifying job responsibilities and expectations.
    • Enhancing individual and group productivity.
    • Driving behavior to align with the organization’s core values, goals and strategy.
    • Improving communication between employees and managers.

    Reply

  • Khalid Alswat

    |

    • Very nice cornice article, addressing this important point (Understanding the Performance Management System PMS) The beauty about PMS is that it is translation and alignment of strategy into day today work/ actions, taking into account important steps in measuring success and accountability. Important process in in developing and implementing this system such as KPI selection, design, Measurement, Data gathering for KPIs and KPI reporting need to be in place with continuous and regular feedback for decision making. Off note, for successful PMS, the governance of the system is very important. So in any organization needs to have this responsibility managed by a person or team.

    Reply

  • ola

    |

    again the main point in establishing a performance management system is to have a clear strategy for the organization, 3 to 5 years ahead, in order to put and determine the achievement roadmap.
    However The strategy is important in order to know the drill down of the Vision, objectives, KPIs and Initiatives, till you reach to the Individual KPIs.

    Reply

  • Abdirahman Hussein

    |

    The article explained clear definition of the Performance Management system and its structure.
    In terms of the definition of PMS, I understood that the Performance Management System is way to capture an holistic approach to the management systems and control of organizational performance in order to make sure that resources are obtained and used effectively and efficiently in the accomplishment of organizational objectives.

    By studding the example of PMS architecture diagram in the article. It shows that the PMS contains three main structure and its branches:
    • Strategic process – Formulation and implementation
    • Documentation – Data gathering, visualization (Scorecard and Dashboard)
    • Ongoing management – organizational learning, maintaining PMS

    Reply

  • Mahmoud Farag

    |

    i think that the main factor for implementing KPI successfully is to aggregate all employees in it. we have to make our employees to be needed more than the top management as if the employees were convinced and believe in it, they we do all of their hands to success this program. if we implement it by forcing this project will fail

    Reply

  • Saurabh Joshi

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    Is performance not applicable in case ‘Strategy’ is not clearly defined?

    Reply

  • Rozaini Abu Hassan

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    Obviously, this article has provided an opportunity for me to expand my view about performance management system(PMS). The statement at the last paragraph had changed my outlook about PMS in which before this, I always think that PMS is a mechanism to control the performance of organization.

    Reply

  • Amr abd elwahab

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    very interesting and fine article , that expand the understanding of performance management system(PMS) and what we need from it.
    I believe that implementing the PMS without understanding the main purpose will only losing of time, as all employees have to understand and work on PMS even before top management.

    Reply

  • ibrahim elhadidy

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    Let me mention some of important features of an effective performance management system . The first is strong support by executives at all levels. Role modeling needs to begin at the top and it needs to be demonstrated by the appraisals being done on all members of the organization. It can’t be what the middle does to people at the bottom of the organization. It also needs to be an important part of the strategic management processes of the organization.

    The second feature is that there is no emphasis on setting clear performance goals in advance. Again, the research clearly shows that one of the most important determinants of the effectiveness of the performance management system is the goal setting process. When individuals set goals, particularly those that have rewards tied to them, they are motivated to perform well.

    Reply

  • Athari Ismail

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    The reason of having Performance Management System in an organization is mainly to make sure the fairness of evaluation and to give avenue for employee to communicate with their supervisor effectively in order to deliver their KPI and achieve target.

    Reply

  • Abdullah Mohammed AlQahtani

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    This article is really important as a guidance tools of how to implement sufficient performance management system. Article is added value to me in terms of KPIs selection and desgin technique and data gathering and reporting. Also the importance of governance.

    Reply

  • abdulakrem

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    I thought that PMS is to control the process and utilize the resources. but as the article mentioned in the last sentence “The main purpose of a performance management system is not to control, but to provide a framework for implementing strategy, measuring progress and improving performance.”. it makes sense. but I think control should be added as a main purpose beside the others.

    Reply

  • Mohamamd Al Ramahi

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    Very interesting article, full of intensive information, I can summarize as follow :
    – In order to put in place a robust performance management solution you need to have :
    • Clear Strategy Map to the Organization
    • Governance Module in place
    • Balanced KPIs that serves the Strategic Objectives
    • Proper KPIs cascading to departmental and employee level
    • Data gathering process Maps and Clear Roles and Responsibilities for each stakeholder
    • Suitable Documentation for each KPI as per the best standards showing all required information
    • Integration with initiatives that best serve the strategic behavior
    – The main purpose of a performance management system is to provide a framework for implementing strategy, measuring progress and improving performance
    – Initiative are considered the execution arms or levers for the KPI and strategic objectives so it is very important to select the most appropriate ones that serves the expectation and aligned with the vision and mission for the organization

    Reply

  • Nabeel Alrohily

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    Very good article. Individual awareness is key when implementing PM.

    Reply

  • Caroline Chinelo Nwobi

    |

    The article is rich and clearly shows why it necessary for an organization to embrace PMS. knowing that with Clear strategy stimulate the managing team to think deeply, gives direction the workforce. Going the route of desired evolution clearly suggests improvement and makes acceptability easier .Performance review as explained gives room good relationship within the workforce if rightly applied is the objective is improvement and fault finding. Focusing on what is important through careful KPI selection almost guarantees success which is quite interesting. providing feedback is a very great asset of KPI.

    Reply

  • Dr. Tanveer Ahmed Yadgir

    |

    The performance Management system Architecture design allow me to develop with my team similar performance management architecture.
    • Develop a set of performance indicators that reflect customer requirements and key business drivers
    • Use comparative information and data to improve overall performance and competitive position
    • Continually refine information sources and their uses within the organization
    • Use sound analytical methods to conduct analyses and use the results to support strategic planning and daily decision making
    • Involve everyone in measurement activities and ensure that information is widely visible
    • Ensure that data are accurate, reliable, timely, secure, and confidential
    • Ensure that hardware and software systems are reliable and user-friendly
    • Systematically manage organizational knowledge and identify and share best practices

    Reply

  • Haifa

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    This article has very well described the importance of implementing a performance management system and has mapped the process in the performance management architecture graph. Though not full description of the process was provided, however it has highlighted the key aspects of the process and that in it self was very insightful.

    Reply

    • abdullah

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      One of the benefits of this article is to explain to us how to build strategy, link goals, initiatives and build performance indicators

      Reply

  • Ali Bu-Helal

    |

    It is a comprehensive article which summarize main points in order to establish an effective performance management system. Organization needs to understand that the main purpose of a performance management system is not to control, but to provide a framework for implementing strategy, measuring progress and improving performance. In summary, the following are the main steps to establish a performance Management System:
    1. Organization to establish Strategy or Performance Office to design and manage the System.
    2. Organization to clarify the strategy by analysing the organization’s current state and its external environment.
    3. Organization to establish and communicate the Desired State of Evolution where the company wants to be in 3 or 5 years.
    4. Organization to establish the Strategy Map by presenting objectives, Portfolio of Initiatives and further detailed of the objectives in Performance Scorecard where each of them has at least one key performance indicator (KPI) assigned. In addition to dashboard and employees performance results.
    5. KPIs Selection, measurement, data gathering and reporting are main processes of Performance Management System.

    Reply

  • alia

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    strategy implementation is the key in implementing performance management because as we all know that no mater how the strategic planning is been set with a very nice strategy map and well defined objectives and KPI , if all these elements not been implemented successfully the organization as a whole will fail .

    Reply

  • Ni gao

    |

    Performance management system is a comprehensive system that includes :
    Facilitating strategy implementation;
    Ensuring alignment of resources and activities;
    Focusing on what matters the most for the organization;
    Measuring performance;
    Providing feedback and opportunities to improve.

    From strategy to individual behavior the control and management is all around so that the implementation of entire organization is integrated.

    Reply

  • lu zheng

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    Very good artical and give us a whole picture about the main roles of performance management systems, how the key prerequisites works with each other within the architecture and the main processes. It’s critical to understand the main purpose of a performance management system is not to control, but to provide a framework for implementing strategy, measuring progress and improving performance.

    Reply

  • Ahmad Almosa

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    very informative artical to show the important of performance management in improving process of organisation and keep it ahead from competitors and to meet future customer expectation.

    Reply

  • Shamsa al-Toqi

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    Very informative article highlighted important points to consider in order to ensure a successful performance management system (PMS). Perhaps one of those important points -that might be forgotten along the way- is that PMS should be used to monitor and improve performance in order to reach the organizational strategic goals; and not to control or punish underperformance.

    Reply

  • Amed Eod

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    i read most of the articles and i found them all very important for any organization that need to build a performance management system and they are all give a detailed and brief keys to how manage the organization performance measuring

    Reply

    • abdullah

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      As well as a useful way to link the steps of building a performance system

      Reply

  • Abdullah

    |

    This article is very useful, so to learn how to build a performance system which depends on

    Clarifying the overall strategy and building goals
    The extent of coherence of objectives and the construction of measurement indicators
    Initiatives should be supportive of the Strategic Plan
    Performance management is also preferred by the Office of Strategy

    This system helps me to apply it to our company’s strategic plan correctly

    Reply

  • Abdullah

    |

    The main roles of performance management systems are totally different:
    • Facilitating strategy implementation;
    • Ensuring alignment of resources and activities;
    • Focusing on what matters the most for the organization;
    • Measuring performance;
    • Providing feedback and opportunities to improve.
    The first prerequisite for establishing a performance management system is to clarify the strategy by analyzing the organization’s current state and its external environment
    Main processes
    Some of the most important processes that take place within the performance management system are:
    • KPI selection and KPI design;
    • KPI measurement;
    • Data gathering for KPIs;
    • KPI reporting

    Reply

  • Ahmed Abdualradi

    |

    Great definition of performance management system and Very good artical and give us a whole picture about the main roles of performance management systems and the main processes. It’s critical to understand the main purpose of a performance management system is not to control, but to provide a framework for implementing strategy, measuring progress and improving performance

    Reply

  • Yaser Eid

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    It’s very interesting explanations about the Performance management office. I do believe that the PMO (Projects Management Office) can be in charge and to activate as Performance Management Office in the same time in the projects, programs portfolio management organization. The projectized entity needs this kind of support through the PMO to control the implementation of the KPI and to be sure of the optimization of the desired results. It;s a manner comprehensive to cover the quality, quantity, effectiveness and efficiency.

    Reply

  • Mohamed Atef Hegazy

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    Establishing a performance management system PMS is to clarify the strategy coming from top management, by top-down alignements KPI as well as PKI cascading in order to support the implementation process. The strategy plan should be translated into clear, actionable short and long term objectives.

    Reply

  • Alaa

    |

    The most important parts of performance management systems

    •Facilitating strategy implementation;
    •Ensuring alignment of resources and activities;
    •Focusing on what matters the most for the organization;
    •Measuring performance;
    •Providing feedback and opportunities to improve.

    The first prerequisite for setting up a execution performance management system is to clarify the procedure by analyzing the organization’s current state and its outside environment. The order speaks to a approval, coming from top management, to support the usage handle. The procedure arrange ought to be translated into clear, noteworthy brief and long term objectives.
    The Desired State of Evolution communicates where the company needs to be in 3 or 5 a long time, in terms of clear, wanted result levels. The methodology outline moreover deciphers methodology into activities by showing destinations and interconnects between them. These objectives are encourage point by point within the Performance Scorecard, where each of them has at slightest one key execution pointer (KPI) assigned. KPIs are utilized to screen the advance worn out accomplishing that particular objective.
    The Portfolio of Initiatives, comprising in all organizational projects, ought to be adjusted to the desired State of Evolution.

    Reply

  • amal

    |

    very informative and interesting article to present the important of the Performance management office and developing process of organization and keep it ahead from rivals and to meet future customer expectation. it give us a whole picture about the key roles of performance management systems
    This system helps me to apply it to our organization strategic plan

    Reply

  • Mashael

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    Very good, clear article and that gives us a whole picture about the main roles of performance management systems, Clearly showing the Governance as accountability is an important point to consider.

    Reply

  • Giusppe Pessolano

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    Muy buen artículo, concreto, resumido y preciso donde se menciona la estructura o base de un sistema de gestion de desempeño. Me quedo con esta Frase El propósito principal de un sistema de gestión del rendimiento no es controlar.
    Saludos y Gracias.

    Reply

  • Suhail Dar-Ammar

    |

    It is an interesting and comprehensive article, and I agree that the Portfolio of initiatives, consisting in all organizational projects, should be aligned to the Desired State of Evolution, as they are the levers for strategic achievement.
    I really see that we must moving away from what is really happening in our institutions, that is, initiatives should not receive approval unless they support the strategic plan.
    To that end, we should actually provide training and awareness sessions for all stakeholders involved, like KPI owners and data custodians, to better understand the system, as well as providing support to KPI owners and data custodians. Bearing in mind that the main purpose of a performance management system is not to control, but to provide a framework for implementing strategy, measuring progress and improving performance.

    Reply

  • Luqman Eshkero

    |

    Great definition of performance management system and main roles of performance management systems and the main processes.

    Reply

  • Dr Solomon ihidero

    |

    The article re-enacts the true principle of performance management: a system that does not stand alone, but highly dependent on other components to function. Ludwig Von Bertalanffy’s “General Systems” theory gives credence to this perception.
    The article’s unique approach is thought-provoking: debunk the fatally flawed discernment of performance management system, then proceed to reinforce its true nature – an integrated approach to facilitate and align strategy, focus on what matters, monitor performance and provide feedback and opportunities to improve strategy implementation.
    The schema provides further visual enhancement to the essential components, steps and tools of PMS:
    1. Assess the organization (external and internal analysis)
    2. Formulate strategy (vision, mission, core values, policies and governance, strategic goals, risks, etc.)
    3. Communicate strategy (mapping, KPIs, targets, initiatives, etc.)
    4. Create operating plans (alignments, inputs, programs)
    5. Execute strategy and measure results (dashboards, scorecards, documentation forms, analysis, etc.)
    6. Apply learning (feedback loop to support continuous improvement and learning)

    Reply

  • Aneta

    |

    My point of view to ensure selected KPIs are cascaded from organization strategy aligned with values and vision and mission.

    Reply

  • Rami AlFawaz

    |

    Great article
    It is important to be careful when implementing a performance management system it is necessary to focus on the training to ensure the managers are well prepared to use the system.
    The Organization must utilize the system without any exceptions that might make the system useless.

    Reply

  • Ahmed Alghamdi

    |

    Performance management systems are often associated with the urge to control and penalize underperformance. Despite the general employee perception regarding this matter.
    This article gives a good impression that we need to be aware of:
    – Performance management system roles.
    – Performance management system tools.
    – Performance management system process.
    – Performance management system governance.
    – Performance management system for improvement.

    Reply

  • SALISU

    |

    PMS main purpose is to measure performance of organization and individual working in an organization. it ensure that Managers understand their targets and effective implementation. In performance Management the first thing to do is to clarified the Strategy by analyzing and organizing current state & its external environment.

    Reply

  • Najd Alnasyan

    |

    Interesting Read!
    The article is very informative and helpful especially when it comes to the main tools and main processes, and the sequence of each.

    Reply

  • Heni Zouaoui

    |

    This article is interesting to underestand the PMS that it enable us to track and monitor the performance of individual employees,departments, and the organization overall.
    Really appreciate this valuable article.

    Reply

  • AFRAH KHELIFA

    |

    Article 1: Understanding the Performance Management System – Written by Cristina Mihăiloaie on September 30, 2014.

    This article is crucial which highlights many aspects of the performance management system as well as its affect on organizational success as it ensures aligning the activities with the overall goal and strategy, tracking the progress and the constant growth of performance.

    The article shows also the role of the performance management system at the levels of the manager and employees using the main tools/architecture. It revealed the clarity of objectives, employees accountability for each assigned key performance indicator (KPI) and the managers to monitor the progress through communication and taking the necessary action to achieve the strategic goals of the organization.

    Another important concept of performance management that reflects management practices of designing and selecting the KPI, monitoring and measuring performance and reporting.

    Reply

  • Fahad Al Mohammed

    |

    Performance Management system is the back bone of all other systems in organizations to relay on for sustainability and managing human capital properly .

    Reply

  • Dr. Amira

    |

    The articles provide a clear understanding of what is the purpose of performance management system and how it is useful in facilitating the strategy implementation. As The main purpose of a performance, management system is not to control, but to provide a framework for implementing strategy, measuring progress and improving performance. Performance management architecture consist of the fundamental elements and the interlink between them : desired state of evolution strategy map ( connecting objectives ), performance scorecard, performance dashboard, Initiatives portfolio, KPI documentation form ( scorecard , dashboard), initiatives documentation form , individual plan ( budget , risk log , performance report ). This architecture shall be supported by governance structure and defined roles and responsibilities and main core processed that that take place within the performance management system: (KPI selection and KPI design; KPI measurement; Data gathering for KPIs; KPI reporting). Following the above fundamental concept, shall provide a clear guidance to start up a performance management section

    Reply

  • Niveen

    |

    Performance Management is crucial for all organizations even small and medium ones, as it objectively measures where they stand in implementing the strategy . If there is no strategy defined, when implementing a performance management system then the first step should be to define a strategy, linking KPIs up with Objectives ( as KPIs measure the objectives achievement ) and linking KPIs down with Initiatives ( as initiatives are needed to achieve KPIs’ target) will direct the organization to execute the strategy and measure the achievements at the same time , all in alignment
    Performance Management is to enable decision makers taking right decisions and give right directions moving forward , the purpose of Performance management is not for command and control , it’s a for implementing strategy , measuring progress and enable decision makers to decide on the improvements

    Reply

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