Why should I have a performance management system (PMS) in my company?

This is an obvious first question that all CEOs (not only HR Directors) should ask themselves. By the prosperous times before Lehman Brothers collapse, this question didn´t seem so crucial, since money flowed profuse. Today the situation is completely different (maybe fortunately) and  most of the corporate decisions must be solidly justified.

Let´s explain it simple.

1) Strategic alignment.

A PMS is a useful tool to make people follow corporate goals. Undoubtedly any strategic goal can be translated to personal goals and behaviours, so that personal accomplishment drives corporate success.

2) Provide feedback.

Any department or person needs a corporate reference to be aware if its performance is correctly oriented. Sometimes we look for this reference from clients, workmates, friends… but corporate feedback is irreplaceable.

3) Talent management.

What is the model that your performance in the company must be appraised under, what arguments should HR function use to decide who will promote, what candidate choose or who must have a higher variable salary? All that questions (and many others) must be responded by an objective and unique system (a PMA system). Of course these issues are anyway solved in companies, but the point is how to respond efficiently and fairly.

No matter if I was called by a well-adviced prospect or just I am talking with an expert in other managerial subject, the question remains. But if you really need a PMS, you will find the answer in one of these points, perhaps in the three.

4 thoughts on “Why should I have a performance management system (PMS) in my company?

  1. Nice to meet you again Ignacio… From the talent management field, don´t you think that your approach to PMS is quite tightening to inspire innovation and let the talent flow from people minds? Just a bit of controversy 😉

    • Hi Michael! A PMS can use a wide range of criteria to appraise performance. For instance: innovation can be an excellent competency for one company, but seem odd for other.
      Certainly we must adjust our PMS according to our strategy, culture and situation.
      Thank you!

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