9 Signs Your Business Needs a Performance Management System

by Srikant Chellappa Mar 4,2022
Engagedly
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What is one sign that indicates that your business would benefit from a performance management system?

To help your business identify the signs that point to a much-needed performance management system, we asked business owners and HR professionals this question for their best insights. From employees repeatedly asking for reviews to high staff turnover, there are several signs that indicate a business would benefit from a performance management system.

Here are 9 signs your business needs a performance management system:

  • Employees Repeatedly Ask for Reviews
  • Numerous Missed Deadlines
  • Lack of Organization and Collaboration
  • Lowered Attendance
  • If You Know Your Metrics
  • Helps Track Goal Status
  • You Know Your Team’s Work Habits
  • Company Targets Are Constantly Being Missed
  • High Staff Turnover

Also Read: Leadership In Times Of Crisis: How To Lead Efficiently

Employees Repeatedly Ask for Reviews

When a pattern of employees asking for feedback emerges, then it may be time to implement a performance management system. Most modern workers value professional development and want to improve. Many employers fear employees being unreceptive to constructive criticism, yet overlook employees’ eagerness to receive input on performance. Team members should not need to chase down managers and beg for an evaluation. There should be a regular review process in place. Otherwise, employees may feel uncertain about their work or their future within the company. 

Also, contrary to common assumptions, hearing nothing but “you’re doing a good job and we’re happy” can frustrate ambitious employees who want to improve and would benefit from their manager’s advice and guidance. A performance management system can help leaders deliver feedback at regular intervals. It can also provide insights to better structure those conversations.

Michael Alexis, TeamBuilding 

Also read: 5 Common Teamwork Challenges In Workplaces

Numerous Missed Deadlines

Nothing indicates a lack of performance management more than numerous missed deadlines do. It is important as a company leader to monitor the turnaround time on each individual project and compare this data over time. More missed deadlines are an indicator of an opportunity to introduce a performance management system to boost your team’s performance. A performance management system helps in tracking projects and their deadlines easily.

Harriet Chan, CocoFinder

Lack of Organization and Collaboration

One of the most beautiful things to see in organizations is how they comprise multiple units, yet they collaborate together seamlessly. However, this can be nearly impossible to achieve without the proper coordination. Hence, this is where a performance management system can bring a structured framework.

When it comes to employee development, learning basic organizational skills really doesn’t cut it anymore. Instead, expand those techniques to include working with others across the company, and implementing everything you’ve learned from your traditional office environment, or from your remote working space anywhere across the globe.

Lauren Kleinman, The Quality Edit

Also read: Building A Successful Upskilling And Reskilling Program

Lowered Attendance

A performance management system does exactly that – it manages your overall team performance. And one sure sign that your company is in need of this system is when attendance begins to drop. In a business environment where employee retention is at an all-time low, monitoring your employees’ attendance may be more important than ever.

If an employee begins to miss a lot of days, be sure to schedule a meeting with them, or perhaps a quick call. If they’re not happily engaged and actually enjoy coming into work, then you need to understand why – and quickly find a way to change the scenario.

Lindsay McCormick, Bite

If You Know Your Metrics 

A performance management system is a tool. Similar to a hammer, it won’t do you any good if you don’t know where you want to drive your nail in and to what avail.
Here are a couple of questions you might wanna ask yourself:

– Could you define a single metric per role, which would serve as KPI?
– Are role responsibilities aligned between employees and management?
– How do you recognize performance?
– Do you have your processes documented?
– Do you have a continuous process review process?
– How does performance matter on a daily basis? How experienceable is performance in your daily operations?
– What are the consequences for the individual, the team/department if performance is high or low?
– How many different performance systems do you currently have?
– How transparent are your goal-setting and review processes?

Go for a performance management system if you can answer these questions, but please don’t expect the tool to answer them for you.

Reinhard Guggenberger, Soaring Fox

Helps Track Goal Status

Performance management systems are all about efficiency. One sign that your business could benefit from a new system is if you are constantly asking your team questions regarding goal or task status. Calling meetings just to gauge the status of your team’s work can really put a wedge in overall workflow and affect productivity. Project management systems relieve the need to call mundane meetings and make progress updates accessible to leaders at all times.

Peter Robert, Expert Computer Solutions

Also read: Hr’s Guide To Select The Right Goal Setting Software

You Know Your Team’s Work Habits

When some business owners think about performance management systems, they usually think of a big brother type oversight system that’s all about maintaining and optimizing efficiency. However, performance management systems can have a more empathetic use case. Instead of trying to optimize efficiency towards certain workflows, performance management systems can help business owners track and maintain workforce trends that are best for select teams. 

It’s impossible to improve business efficiency without knowing what’s actually working for your team members. As a business leader, you’re sometimes removed from what actually works for your employees, and what processes work in live business settings. Performance management programs can track what your employees are doing in real time. So you can actually follow the trends that work for them and make relevant suggestions, encouraging employee buy-in.

Kyle Risley, Lift Vault

Company Targets Are Constantly Being Missed

When the targets and goals of a company are being missed consistently, you know it’s time to implement a performance management system. HR teams and corporate leaders may not have the metrics they need to identify why company targets are missed in the absence of a performance management system. A performance management system can help close the gap in plan execution by detecting issue areas and ensuring that everyone is on track.

Sudipta Gupta, WebTopic

High Employee Turnover

If your business is experiencing a higher than expected employee turnover rate, this is a certain sign that a performance management system is required. Regularly losing staff to competitors is a costly issue. It can be detrimental to those employees who remain within the business, possibly leading to further resignations.

The reasons for large numbers of resignations can be varied, but normally they will be related to either insufficient compensation for the work performed, unsuitable work conditions, poor communication or leadership within the business, or a company culture which does not promote or encourage diversity and inclusion.

Also read: Continuous Feedback: What is it and its benefits 

A properly executed performance management system will help identify the reasons for your failure to retain staff, offering solutions which will provide greater satisfaction to the employees and reverse the trend.

James Crawford, DealDrop


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We created this article in association with Terkel. It is a community-driven knowledge platform that creates content based on expert insights.

Author
Srikant Chellappa
CEO & Co-Founder of Engagedly

Srikant Chellappa is the Co-Founder and CEO at Engagedly and is a passionate entrepreneur and people leader. He is an author, producer/director of 6 feature films, a music album with his band Manchester Underground, and is the host of The People Strategy Leaders Podcast. He is currently working on his next book, Ikigai at the Workplace, which is slated for release in the fall of 2023.

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