Designing an effective performance management system

An effective performance management system supports the cascading of organisational objectives from the management team down to the individual. It also will improve individual performance and in turn, team and organisational performance.

It creates a transparent culture that engenders employee engagement and loyalty.

designing-an-effective-performance-management-systemIf it does not achieve these targets, it will be an unnecessary overhead and waste of everyone’s time. So it must be effective, and be seen to be effective. It is advisable to regularly check the effectiveness of the system and alter as necessary.

The system depends on a series of processes taking place, with the appraisal meeting being just one of the processes.

Points to consider

  • Keep required documentation extremely simple.
  • Regularly review the scheme effectiveness, across a wide range of employees
  • Train appraisers, and appraises, in the process and the skills required


Annual appraisals are usually adequate, but more regular appraisals can be scheduled. This is useful, for example, for a person undergoing intensive training or acceleration of learning, or for someone whose performance is rated as under par and they have to improve rapidly to keep their job.

So you can see that a further use of appraisals is to monitor training and improvement in team members.


The preparation for the appraisal meeting is an integral part of the process, and should be carried out by both the appraise and the appraising line manager in good time for the meeting , and with sufficient time allowed for a comprehensive review of the period under discussion by each of them separately and independently.

The appraisee should consider

  • Their performance and achievements, particularly against targets
  • Targets not achieved, with reasons.
  • Barriers to performance, proposed solutions.
  • Improvement needed, how it can be achieved.
  • Learning and development needed
  • Support and guidance needed
  • What they enjoy and do well
  • How they might develop their role
  • Career Aspirations, possible future roles.
  • Targets and objectives for the next period.

The appraiser should consider:

  • performance and achievements, particularly against targets
  • Issues which have come up, proposing potential solutions.
  • Progress made against agreed targets
  • Feedback to be given, with supporting evidence.
  • Factors affecting performance, whether they are within or outside the appraiser’s control.
  • Pointers for performance improvement.
  • The appraisee’s career ambitions.
  • Planned Developments which may impact the job holder
  • Targets and objectives for the next period.( personal development targets rather than company targets. Target and goal setting is best dealt with separately to performance management )

The paperwork for this planning part of the process is more comprehensive than that for the meeting it, as it encourages participants to consider every aspect of the review.

I will propose and offer downloads for forms that may be used, in the next module, part 4, but each company may prefer to adapt the documents to their own requirements