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Performance Management System Tools, Its Benefits and Limitations

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Table of contents

  1. Key Performance Indicators
  2. Personal Development Plans
    Reward and Recognition Schemes
    Management Dashboard
  3. Performance Management System
  4. Conclusion

The public sector is part of the economy that is controlled by the state. It’s composed of both public enterprises and public services. Public enterprises, or state-owned enterprises, are self-financing commercial enterprises under public ownership; they provide various private goods and services for sale and usually operate on a commercial basis. Network Rail, Post Office and Highways England are just a few examples of this. Public sectors include public goods and governmental services such as infrastructure (water supply, sewers, bridges, tunnels, telecommunications, etc.), public transportation, public education, healthcare, leisure, police and military services. The primary aim of a public sector business is to provide a service to the general public that benefits all of society rather than just the individual using the service; they also allow services such as taking part in sport, accessible to as many people as possible. Local leisure centres are the most obvious examples of a public sector sports business.

Performance management is a management style aimed at setting goals and ensuring that such targets are achieved through a planning and control cycle. It embodies a set of activities, tools, and mechanisms intended to measure and evaluate results to continuously improve performance at both an individual level and at a corporate level. It’s also about creating a culture that encourages continuous improvement of individuals’ skills, behaviours and contributions to the organisation. It’s a key part of the relationship between staff and management. Performance management helps organisations become more successful and stay ahead of the competition. Over the past two decades, the introduction of performance measurement has been one of the most widespread international trends in public management.

There are many performance management tools designed to make the process easier and more effective. Here, I look at several of the most commonly used ones.

Key Performance Indicators

Also known as KPIs, is one of the top management performance tools. Key Performance Indicator is a quantifiable metric that applies at both an organisational and an individual level. At an organisational level, it measures how efficiently an organisation is achieving its goals. For example, in the leisure industry, a focus on client retention is very important. The best way to maintain profits is to keep paying returning clients, therefore you must provide an excellent experience that meets their general needs and keeps them coming back instead of slipping away to competitors. At an individual level, it could be a task set for an employee who is aiming for a promotion. For this you would need to make sure that the KPIs were SMART, this stands for: Specific Measurable Attainable Relevant Timebound

The second most commonly used performance management tool. It helps managers to identify the employees who deserve promotion and also to designate training programmes for less rated employees. Also, employers and their employees get to communicate with each other which helps in understanding one another’s skills and visions and also improves the professional bond between them. It allows the employees to discuss freely any goalsconcerns that they may have which they wouldn’t feel comfortable discussing in a group setting.

Regular performance discussions throughout the year improve relationships between managers and employees while building employee engagement levels and boosting productivity. Not to be confused with performance appraisals which are generally scheduled annually or every 3 months. Check-ins are much more frequent.

Personal Development Plans

PDPs are a valuable performance management tool, but in order to work effectively they need all parties to be fully invested in them. Both the manager and employee should create SMART PDPs that can be updated and reviewed online. By encouraging this in their employees, companies can benefit from a workforce who possess a sense of direction, focus and belonging.

Reward and Recognition Schemes

it has been shown that 80% of employees work harder when they feel appreciated and suggestion that recognition can improve team culture and reduce staff turnover.

Management Dashboard

This is one of the top performance management tools that are currently widely used. Companies such as Rolls Royce PLC and Toyota Manufacturing PLC are just a couple of examples. The management dashboard compiles all performance information together, including daily productivity, health and safety, extra workfocus, or anything specific, all in a single space. Information is often presented in charts or graphs and it will be available for all employees to see anywhere at any time. It’s usually a day-by-day process, updated at the beginningend of each shift. It’s easy to use and a real-time user interface.

Performance Management System

It works if employees understand what they must achieve and if they have the capacity and tools to perform to managers’ expectations. To set good worker expectations, goals should be SMART and thereby offer further advantages to a performance management system. As mentioned earlier, SMART stands for Specific, Measurable, Attainable, Relevant and Time-bound. Specific goals tell employees what must be achieved. Measurable goals enable managers to show members of their staff their progress in numbers, even using charts and graphs. Goals should be picked that employees can achieve and will agree to; they should also be realistic given an employee’s resources and have a time frame. SMART goals pave the way for success. So now we will look at some of the examples of performance management tools I mentioned earlier and see what their possible strengths and limitations are.


  • Measurable Results – As the sole goal of KPI is to monitor progress, it shows accurate benefits in the shape of amounts, metrics, or data. The worker, staff, or company can quickly quantify or track the development of their goal and subsequently know which part of the job requires more attention. Additionally, KPI gives weekly or periodical results in line with the prerequisites or variety of the objective.
  • Alignment – For a huge organisation with a large number of workers, it may become difficult to keep an eye on everyone’s progress. In this circumstance, KPI helps everybody remain aligned to the target since it makes the outcomes accessible to everybody involved with the job. This helps everybody stay inspired and also ensures everybody works in precisely the same direction.
  • Future Strategies – Tracking the progress via KPIs can enable the supervisors to redesign or alter their plans dependent on the prior target functionality. As KPIs assist the organisation to understand everybody’s capacity, performance indicator, and productivity, it helps create a strategy or establish future objectives.
  • Rewards – Any worker will be more efficient and elicit more effort when there is the potential to attain an increase or bonus for their hard work. With KPIs, every individual gets an opportunity to prove themselves and aid the supervisors to see any advancement, allowing them to benefit accordingly. Along with this, it helps workers to monitor their own performance and enhance their skills.


  • Decrease in Quality- With the prime focus on seeing results for short-term objectives, the likelihood of workers losing attention on the standard of the job is increased.
  • Short-term Oriented – KPIs are helpful for attaining short-term targets however they may prove disadvantageous in the instance of attaining long-term objectives.
  • Standardisation – Since the goals are somewhat more result-oriented, there is the potential of a reduction in the degree of creativity of the workers. As a result of this, it discourages workers to execute or consider innovative strategies.


A performance management system offers an organisation a systematic way to get employees to achieve goals. In theory, the collective results of this system should be the successful performance of the organisation. By paying special attention to underperforming employees, managers will enhance the collective advantages of a performance management system. Managers define the individual goals for workers and connect them to business unit and organizational goals. This goal-setting process enables managers to show employees why their work matters, to both motivate them and hold them accountable for their duties.

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