What is performance management system? Why does your startup need one?


Isn’t it a great scenario, wherein managers and employees work together in planning, monitoring and reviewing work-related goals? Well, that is what an ideal Performance Management System does for your organisation.

Not just that, an ideal Performance Management System also helps to improve organizational effectiveness by helping the businesses to achieve their goals.

A good performance management system is a well-defined process with the prime focus on people-administration that shall bring about success for both the individual and the organization. It’s a Win-Win for all!

Essential Features of a Performance Management System


The following are some of the most important features of a good performance management system.

#1. Determine the goals

A collaborative goal setting process between the manager and the employees contributes to the success of the project. Goals and objectives need to be aligned with the overall business strategy which helps the employee to realize the impact of his/her goals towards the growth of the company.

A SMART goal framework targets all the job functionalities and responsibilities. SMART denotes:

– Specific: Clear-cut goals which help employees to understand the expectations of the company.

– Measurable: Milestones set to track progress and motivate employees to work towards the goals and objectives.

– Achievable: Attainable success levels set for employees to help boost their skill sets.

– Relevant: Goals set to influence the corporate strategy.

– Timely: Time-bound goals should be set to achieve maximum efficiency.

#2. Effective goal management

The secret of a good performance management system is that it should have features to enable managers and employees to review, edit and add goals through the performance cycle. Such information serves as a platform for discussions based on performance. Monitoring goals on a regular basis helps the team to review and adjust timelines, request additional resources (if necessary), or even broaden the goal as per data collected from other sources.

#3. Efficient appraisal process

A good appraisal process should proceed with listening to employees, observing and giving them a constructive feedback and providing recognition for their work. The most important part of the appraisal process is providing feedback about what the employee has successfully learned and still needs to learn, and then to create a plan that gives an opportunity for the employee to develop those necessary skills. This objective kind of approach ensures a highly skilled pool of talent for strategic succession planning rather than a subjective one.

#4. Proper flow of feedback

A timely and hierarchical feedback flow process across the organization should be provided.

Benefits of using a performance management system

The following are the crucial benefits of using a performance management system for an organization, especially startups:

– A wide-coverage of jobs in the organization and creation of comprehensible job descriptions for each of the organizational role.

– Assistance to the company in defining SMART goals that are aligned with strategic business planning.

– Establish an unambiguous communication channel among managers and employees for better execution of the mutually critical goals/projects.

– Easier identification of good performance by employees and immediate recognition and rewards.

– Enables good counselling services to employees to manage their stress and also empowers them with appropriate on-the- job training and other career development opportunities.


Importance of performance management system in startups

While in the initial years, startup companies mostly focus on their product, service, and finance; they tend to ignore the criticality of having a performance management system in place. Performance management is an integrated business management process that helps an organization to monitor the extent to which its employees are executing the defined strategic goals.

The phase of defining goals in startup companies can be a flexible one, in the sense that employees may adjust in accordance with changes in organizational priorities and be comfortable in pursuing multi-tasking activities when the situation demands.

Performance management process is important in startups because a clearly marked appraisal and management process ensures that the small multi-tasking team keeps in line with the defined direction and provides increased focus for performance. Also, a well-documented performance data will be very useful for continual tracking of employee progress and to review the ongoing achievement.

sumHR’s performance management system “Performance Reviews” feature has been designed keeping in mind what is desired by startups & small and medium businesses.

– sumHR offers a highly efficient performance management and appraisal system that scales along with the growing organization.

– sumHR follows an objective approach to performance appraisal process. The automated cloud-based performance management and appraisal software provides a win-win scenario for both the organization as well as its employees. The employees can benefit from appraisal analysis while the organization can make use of such performance data for better decision making.

– sumHR has made the task of appraisal so simple and easy like never before. It eliminates most of the real-time challenges associated to appraisal process in startup companies (for instance, employees and managers working from geographically different locations). It provides a pre-created performance review form for efficiently doing the job.

– sumHR allows 360-degree feedback across the organization which helps you to effectively monitor the review time-lines, review hierarchy and so on.

– The most attractive feature from sumHR performance management system is that it enables the user to create custom performance review forms and review questionnaires which is a simple and straightforward 3-step process.

– sumHR facilitates users to set review schedules at convenient timings and provides instant feedback/results/reports after an employee completes filling the review form.

sumHR’s automated performance management and appraisal software works best for your startup/ small and medium business. What’s more you can try it absolutely FREE. Simply click here to get started.

Jay is the Chief \”Go-To\” Officer at sumHR. He spearheads sales, support, product management and all things \”creative\”. Before this, he\’s worked in the startup teams at Burrp! and Directi.com. He loves writing whenever he gets the chance. Most often his writing will talk about sumHR, startups, leadership, motivation, inspiration and of course, HR best practices.

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