The modern performance management system, or PMS, is often the Achilles’ heel of many organizations and their HR teams. It can be hard to nail down the ideal system to deliver on all of the necessary goals and metrics. These systems generally will have two goals, or purposes, that they serve for your organization:

  1. Employee decision-making
  2. Employee development

These are two interrelated aspects of managing your employees, but they each have their own considerations and factors. When you are setting up a PMS that is going to deliver the metrics and management tools that you need, you’ll have to cater to both elements. Part of that includes involving employees in the process of upskilling and development from start to finish. Performance management should be a collaborative effort, not a “boss-to-employee” conversation that is basically like being graded on your performance and not given a chance to engage in the process of development and performance management in the first place.

The old way of performance management typically consisted of a planning or goal-setting phase, an evaluation, and then a performance review. While this is effective enough, it doesn’t offer the strategic management that the modern business needs. Part of that strategy includes a proactive approach to performance management.

What does that mean? Well, it can mean several things. Primarily, however, we’re talking about creating a strategy that focuses on helping employees get involved in their development and performance management from the beginning. By giving them the chance to assume responsibility and take ownership of their own performance and development, you’re enhancing your performance management in several different ways.

Essentially, performance management drives employees to align their behavior with the organizational goals of the company because expectations are clear and there is more transparent information available regarding promotions and compensation, as well as upskilling opportunities.

The Two Primary Purposes of Your PMS and How to Embrace Both with Strategic Management

Employee Development

Employee development is the fundamental element of a successful growing business. After all, your organization cannot grow if the employees running things are staying stagnant in their skills and abilities. Utilizing a modern performance management system will ensure that you have the right platform and tools to keep your employees on track and ensure that everyone is getting the most out of learning and development.

Too often, employees get caught up in the process of development because they’re stuck on what they’ve done wrong or what they are not good at. The focus of performance management is to embrace those flaws or shortcomings and develop new methods of operation and training, including real-world application, to ensure that employees can improve their skills in every way possible. This benefits not just the organization, but the employees themselves.

Companies also hesitate to invest in employee development as part of the performance management process. Although the reasons are varied and include everything from a fear of losing the employee after investing all that money and time, the point is that you can’t hesitate. You have to trust in your people and hope that they will return that trust and respect by continuing to work for you once they’ve been upskilled and trained on new methods or other ways to thrive in their role.


The other purpose of your PMS is to help with employee decision-making. If you don’t employ the right system or educate people on its inner workings, you may see that people are unable to succeed in making decisions for the best interests of their position or the organization itself. What do we mean by decision-making? Essentially, we’re referring to the performance management system as a tool to help determine whether employees qualify for raises, promotions, or even special assignments. It could also identify areas where you need to reduce your labor force.

Thus, the decision-making isn’t for the employees themselves, but rather about the employees and what they mean to the organization. The right performance management system will help you get an overview of your employees and your organization so that you can make the right decisions about transfers, raises, promotions, terminations, and more.

What to Measure?

Essentially, the performance management system should measure behavior and results that will indicate that employees are competent and capable of getting the job done. Many competencies focus on things like resource management, communication and collaborative skills, critical thinking, planning and organizational skills, and so forth. The PMS should be used for metrics that can be tracked and should provide specific metrics and analytics to help you see how things are going and where performance tweaks may need to be made.

By setting realistic goals and expectations, you will be able to set up your organizations and your teams for success with the PMS, no matter what platform you choose or what kind of features it offers. It’s important to measure the behavior and results achieved when comparing metrics and the performance of employees and to attempt to strike the balance. Not all employees will be good at everything, but if they have a strong suit, you can use your PMS to highlight that and put it to work for the benefit of your organization.

It’s a Process and Its Purpose is Results: Get Your PMS in Place Now

Selecting, implementing, and using a modern PMS is a process that takes time and an understanding of how performance management works. It also helps if you understand the tools and performance review methods being used today so that you can continue to deliver those solutions for your team. You need to utilize all of the resources that you have, including the various ways you can use your PMS to foster employee development and organizational growth.

Some organizations may thrive on the traditional feedback process, but that’s rarely effective these days. That’s where a modern PMS and new management techniques will come into play. Real-time feedback and evaluations can do a lot more for an organization and thanks to modern technology and tools performance management solutions offer, it’s easy to embrace strategic performance management and get more out of your organization.