Types of Performance Management System-What are the Types of Performance Management System-What are Performance Management System Types

Top 12 – Types of Performance Management System

Managers and their staff work together to come up with objectives, employee goals, performance evaluations, appraisals, and feedback. Read on to learn more about types of performance management system and become the subject matter expert on it.

Many businesses use a performance management system to keep track of how well each employee is doing their job. The system uses a number of tools and procedures to make sure that all employees are on the same page with the company’s long-term goals and are helping to reach them. Read this interview with a leading expert for an insider’s perspective on objectives of performance management system subject.

Top 12 – Types of Performance Management System

Only a small number of businesses have figured out performance management, which is a problem. When done right, performance management will bring together individual efforts and organizational goals to create harmony. This is what drives (and keeps) continuous improvement going. The first step to getting things done is to set up a performance management system. This gives you a framework for how to go about creating alignment. In this post, we’ll examine the types of performance management system and grab extensive knowledge on the topics.

Review of How Things Worked in General

Most businesses use a standard performance review to keep track of how people are doing. We judge performance based on how well people meet goals, work together, and follow the rules of the company. Organizations use types of performance management systems to assess employee performance.

Key Performance Indicators Tracker

Key performance indicators (KPIs) are a way for managers to measure how well their employees are doing. If we set a sales quota as a key performance indicator for the quarter, we will base an employee’s success on how well they met that goal.

Another example is KPIs for project management that focus on reducing the time it takes to turn around or finish a task. Key performance indicators can also be based on ways to improve skills, like taking online courses or getting more experience.

Management Based on Goals

Peter Drucker, a well-known business consultant, came up with a management style called “Management By Objectives” (MBO), which has since been used in many different ways. The main goal is to come up with a small number of company-wide goals (two to six), which will help each employee reach their own goals.

It stands out because, among other things, its goals are not always in conflict with each other. (This is different from the BSC method, where goals are tied together as part of a bigger plan.) Leadership and staff can work together to come up with goals. The idea behind involving employees is that they will be more likely to buy into the plan and have a clearer path to success.

In MBO, the goals themselves are more important than the ways to reach them. Metrics and projects are the two tools that businesses use most often (but rarely both). Any MBO implementation must start with a framework that shows the difference between projects and KPIs. Because they work in different ways, putting them all together makes it more likely that people will get confused.

Even though “Management by Objectives” is a common phrase, official business plans rarely use it. Strategic plans, which could include a list of goals and objectives, can show that such a strategy is in place. Also, the company has set up a set of well-coordinated operations to reach the goals listed above.

Graphic Scales for Rating

A supervisor uses a graphic rating scale (GRS) to rate an employee on things like specific behaviors and personality traits. Most rating systems have anywhere from three to five tiers. Using this method, the rater can put the performance of an employee anywhere on a scale.

Distribution by Force

The boss spreads out each set of ratings for an employee along a bell curve, giving a certain percentage of the total ratings to each level of performance.

Managerial Evaluation

Supervisors who don’t regularly look at how their workers are doing could hurt morale. Employees might have ideas for how to make the service better. This will help managers become more aware and helpful leaders who can guide and inspire their teams better.

Balanced Scorecard

The Balanced Scorecard (BSC) is one of the best performance management systems, and for good reason: 88% of BSC users say it helps them a lot or a lot. The four Business Perspectives that make up the BSC—Financial, Customer, Internal Processes, and People—make it unique and help businesses understand and reach their goals.

Here are the most important parts: According to the four schools of thought, an organization’s objectives are its big, overarching goals that show where it wants to go. There are ways to measure whether a company is meeting its strategic goals.

Whether you call them projects or initiatives, these important steps are what will get you where you need to go. It makes sure that everyone is pulling in the same direction by connecting the goals of each division to the vision of the whole organization.

You can also see how different measurements at different levels of an organization relate to each other and to certain projects. There needs to be a clear way for everyone to report the same data. To make a BSC, you need to review your strategy often, which can only happen if you have a well-structured plan.

Employees do their own Self-evaluations

Self-evaluations may not seem useful because employees are the ones who judge their own work. Employees look at their work and figure out what they do well and what they could do better. It’s a great way to keep track of progress and find trouble spots.

Objectives and Key Results (OKRs)

There are several types of performance management system, including 360-degree feedback, rating scales, and objectives and key results (OKRs). OKR is a simple way to set and track regular goals, as well as to keep track of and evaluate how your efforts to reach those goals are going. In short, here are the steps: We expect every employee to meet a set of goals (usually between three and five) and achieve big results that help the company’s overall strategy.

Because of the way the organization is set up, OKRs are made at the level of the individual worker and then passed on to the manager, and so on. This means that managers, department heads, and so on should also meet their goals if their employees do.

Quarterly reporting is the norm in the business world. Many organizations choose to normalize their results on a scale of 0 to 1 or 0 to 100 percent to make reporting easier. OKRs can happen once a week or even more often if they need to. The OKR method is easy to understand and use, and when it is managed and structured well, it can lead to good results. Staff roles and responsibilities are clearly laid out so that everyone knows what they’re supposed to do, can keep track of their progress, and makes consistent contributions.

Evaluations that Change

We do evaluations on every part of a job, from management to subordinates. It helps identify your team’s strengths and weaknesses in knowledge.

Budget-driven Business Plans

Sometimes, organizations drive performance management based on the budget instead of the plan. The “work plans” tie the overall budget, and we give money to the best projects and programs. Even though some businesses have found success with this way of managing employee performance, they do not use it very often.

When executives are able to put income streams and expenses (called “line items”) into categories, they can find wasteful spending and opportunities to make money. This kind of work could be related to projects already in progress or brand new. This model is different from the others because it is not based on a strategic division. Instead, it is based on money.

The finance team usually starts the development process by showing a department how much it spent the year before and asking the department to list the tasks it wants to do in the coming year without increasing or decreasing its budget.

HR Review-driven Systems

A human resources-driven performance management system isn’t a replacement for objectives and key results (OKR). Instead, it’s just another way to measure how productive employees are. The OKR framework is more focused on strategy, with a focus on the parts of performance that are important for a person to meet their goals. For example, OKRs for the sales team might track how many leads were followed up on for a product demo.

HR-driven systems care not only about how well an employee meets goals, but also about whether or not they are getting better at certain skills and whether or not they fit in with the company’s culture. Even though these kinds of assessments aren’t usually part of an OKR framework, they may still need to be measured.

Frequently Asked Questions

Why is it Important to Manage Performance?

How well a company manages the work of its employees is what makes it successful. It makes it easier for them to connect their people, assets, and systems formally and informally to their strategic goals.

What are Examples of a Performance Management System?

Two of the most common are sales quotas and structures that are based on skills. When employees know what their jobs are and want to do them well, these methods can work well. Often, such companies have a defined hierarchy, sizable workforce, and quantifiable outcomes.

What does it Mean to Manage Performance all the Time?

Continuous performance management is a human-centered, cutting-edge way to increase productivity by measuring, rewarding, and analysing employee efforts. You might be able to make your company a place where people feel they can trust each other and that doing so will help them grow as people.


It might look like there are a lot of ways to manage performance. The answer will depend on how big your business is or how many people are in your group. The effectiveness of the performance management system relies on its application, impacting the attainment of objectives and staff enhancement. This article will go into types of performance management system in detail and provide some examples for your convenience.