What are the Purposes of Performance Management?

Performance management is an effective technique for aligning all primary organizational activities and sub-functions so that the organization's emphasis is on achieving its objective. A well-designed performance management system may be critical in simplifying employees' operations to accomplish the organization's ultimate goal and vision.

Performance management is a much bigger system since it encompasses planning, executing, assessing, and evaluating to maximize development and productivity on an individual and organizational level.

By clearly outlining individual- and team-based tasks in the form of key performance indicators (KRAs) and fostering an awareness of shared reciprocal accountability, a sound performance management system promotes, empowers, and encourages staff growth.

Managing employee performance is one of the most difficult tasks that firms face today since it depends entirely on the individual's dedication, competency, and clarity of performance. A performance management system may be a powerful instrument for employee motivation and growth when handled effectively via a well-thought-out incentive system and feedback mechanism.

Purposes of Performance Management

Let us have a look at some of the purposes of Performance Management −

Find Organizational Problems

Appropriate performance level specifications and appraisals can aid in diagnosing organizational problems. This record assists in diagnosing organizational issues. It provides insight into where work is going wrong and what improvements are necessary to improve the organization's performance status.

Filtering Employees

Employees who perform poorly can have a negative impact on the entire organization, and if performance issues are not addressed, they can spiral out of control. The management makes a variety of critical decisions based on the performance management records. Appraisals provide legal and formal organizational justification for employment decisions such as promotion of exceptional performers, weeding out marginal or low performers, and training, transferring or disciplining others.

Concerning Documentation

Due to the prevalence of documentation issues in today's organizations, human resource management must ensure that the evaluation systems in use meet the organization's legal requirements. This database stores information about an employee's performance level, skills, knowledge, expertise, and regular rewards.

Concern for Development

While this individual's performance may be adequate, peers may suggest that some improvements could be made. In this case, development may include exposure to a variety of teaching methods, such as increasing the number of laboratory exercises, real-world applications, internet applications, and case analysis in the classroom.

Development of Contented Workforce

One of performance management's goals is to stay current on engage-ment trends, to conduct employee engagement surveys, and to ensure that all efforts are made to keep employees engaged, motivated, and happy.

Feedback Mechanism

Performance management system aims to develop a systematic feedback mechanism. Its purpose is to create a path through which the employees become aware of their performance and contributions to the company. As mentioned previously, it also conveys the improvement requirements to the employee to meet the set standards.

To Encourage Teamwork, Collaboration and Communication

HR management often looks for ways to create a sense of community and teamwork within their organisations. This aims to result in improved communication and collaboration, which is good for business performance. Collaboration tools such as Slack provide the capacity for real-time communication, whereas teambuilding exercises and after work social activities help to break the ice among employees and develop a sense of togetherness and team spirit.

Determine Potential Development Areas

Determining the potential development areas is one of the main purposes of having a performance management process in an organization. By concentrating on development needs, managers and employees together can create effective plans aimed towards improvement of individual performance and, ultimately, improved organizational performance.


Performance management is more or less the same for all types of organizations. Nowadays, performance management is becoming integrated with talent management, career management, performance-based compensation, development, and talent management processes.