Performance Management System – Assignment

Prior to beginning work on this discussion,Read Chapters 4 and 5 in Applied Psychology in Talent Management.
Watch the Week 2 Discussion 2 video above with Brenda Forde, the Program Chair of MBA.
Define and discuss the purpose of a performance management system. What are some of the benefits and challenges of a performance management system? Next, discuss how you have seen a performance management system working at a current or former employer or research a company online, noting the impact on employee behavior.

Performance Management System

A performance management system enables organizations to measure employees’ performance. It offers a professional management process through which managers or executives can assess the performance of employees and organizations (Ying, 2012). There are significant challenges when converting employees’ potential to deliverables. According to Ying, the system removes barriers and motivates human resources. It also ensures the work performance by each employee accomplishes the organization’s objectives and that all members of the workforce have a clear understanding of the quality and quantity of work expected. A performance management system has several benefits, including the following;

  1. It enhances work engagement because employees find themselves comfortable at work and more inclined toward better performance (Awan et al., 2020).
  2. It highlights training needs. It is possible through frequent reviews of individuals, which helps to understand employee skills and training needs proactively to avoid impacting entity productivity. It helps identify the right employees for promotion.
  3. It aids in defining career paths and supports workforce planning which is crucial for the long-term sustainability of a company.
  4. It increases employee retention of clear expectations and objectives.

Despite the benefits, a performance management system comes with a lot of challenges:

  1. There is a lack of flexibility: Dominant features of some sectors comprise the rigid structure, control, and uniformity (Kaupa & Olusegun Atiku, 2020), which makes it hard to employ the system effectively.
  2. The obstacles are associated with poor communication. Employees may not understand the set performance targets.
  3. It requires highly trained implementing officers.
  4. There might be inadequate leadership commitment.
  5. The executives may fail to implement appropriate change management processes for effectiveness.

Google is an example of a company that garnered significant positives from performance management. The company abolished numerical ratings in 2014, so each Googler gets subjected to a five-point scale ranging from “needs improvement” to “superb.” Peer reviewers then suggest one thing the employee could do differently and one thing they should do more. It happens twice a year. The managers then look at these reviews and make unbiased decisions. The managers decide the final employee evaluation, after which each individual gets informed of their compensation. The company separates pay discussions from peer feedback to ensure the right motivation. This system is transparent, and data of everyone is accessible. As a result, the company has increased its credibility and kept employee management on track. The current culture has enabled employees to feel valued and see the work’s impact on the company’s objectives. The company has increased job satisfaction ratings, which has improved its competitive edge massively.


Awan, S. H., Habib, N., Shoaib Akhtar, C., & Naveed, S. (2020). Effectiveness of performance management system for employee performance through engagement. SAGE Open10(4), 215824402096938.

Kaupa, S., & Olusegun Atiku, S. (2020). Challenges in the implementation of performance management system in Namibian public sector. International Journal of Innovation and Economic Development6(2), 25-34.

Ying, Z. Y. (2012). The Impact of Performance Management System on Employee performance.

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