Crucial Elements of Performance Management Systems

The Mesh Team
Published on 
Apr 27, 2023
Read this blog to run a quick check on your performance management system to make sure it has these important elements.

Effective performance management systems are essential to the success of any business, no matter what size. While there are many approaches to performance management, there are certain key elements of performance management systems that you cannot do without.

What exactly does performance management mean?

Too often, performance management is correlated to annual performance reviews. While they are connected, a key difference is that performance management must be ongoing.

​As a definition: Performance management is the process of improving individual performance and as a result company performance by setting strategic goals, working towards achieving those goals, reviewing the strategy and goals and continuously improving your workforce to meet and exceed set performance benchmarks.

Why do companies need to prioritize performance management?

Performance management systems allow companies to run more efficiently, streamline processes and ultimately improve bottom lines.

Here are a few of the main reasons why companies need to have good performance management strategies:

Aligns individuals and teams to common goals

When goals are made clear and expectations are set as to what each person and team has to achieve, it becomes easier for everyone to work towards a common goal, that is, the success of your company.

It acts as a tool to monitor, review and improves systems and processes

Like any effective tool, it helps you improve your business. Performance management systems set clear goals for every function in your business, they also allow you to garner insights into what is going on at every point. The data you collect and analyze from your performance management systems allow you to monitor all your processes and improve your protocols and systems.

Allows transparency and improved communication

Quality data combined with regular feedback ensures that you have complete transparency throughout your organization. Essentially, everyone, from leadership to frontline employees should know what is going on and what part they play in the big picture. This kind of clarity and transparency allow for a culture of effective and open communication too.

Setting more accurate goals becomes easier

Over time, your performance management system will reveal what you are doing right, and perhaps more importantly, what you are doing wrong. This information is useful in ensuring that you are setting the right kind of goals and aiming for the right outcomes.

Highlights employee achievements

Sound performance management systems are centered on your people, this means that when your employees do well, you will be able to see exactly who has contributed exceptionally. Such information allows you to reward and promote such behavior, thereby making it a standard for everyone else to follow.

Elements of performance management

Here are six essential elements of performance management:

Management review

Many companies do not give enough weight to reviewing their management. That can be a pitfall. You have to understand what your employees think of your management team. This helps you understand if you have the right strategies in place from a management perspective too. While a manager might be doing everything right, it could simply be that they have not been allowed to acquire the skills required to manage their constantly developing team.

Performance management systems must incorporate management review systems too.

Continuous feedback

Feedback and communication are essential for your performance management strategy to work. Not only must your managers be able to provide feedback to employees, but they must also be able to collect and implement feedback effectively.

Here are a few tools that could be used to collect feedback:

  • 360° Feedback
  • Self-Evaluation
  • Behavioral Checklist
  • Management By Objectives
  • Rating Scale
  • Balanced-Scorecard
  • Peer Review
  • Upward Feedback
  • Team Performance Reviews

Regular feedback is vital. Whether it is formal feedback or casual discussions about how employees are doing, it is important to keep communication consistent. Create a culture around communication openly and effectively.

Development and improvement

Managers, HR, supervisors, floor workers and everyone else in between has to be given the opportunity to develop and improve. The best way to do this is to leverage data from your performance management system, understand what areas need focus and create and implement learning and development strategies that are geared to making your employees more effective at their jobs.

Yes, there are costs involved in training and development, however, the simple fact is, the more capable and skilled your employees are, the higher output they can produce at a higher quality.

For stressful jobs, it is worth noting that mental well-being and health improvement strategies are also extremely effective at boosting productivity and performance.

Review processes

Your performance management system reviews the performance of your workers and your manager and thereby your company. However, you need to have a team in place to review your performance management system.

Performance management systems have to evolve and constantly push boundaries of excellence. This can only be done when you have a clear idea of what is working with the performance management system and what isn’t.

Set a process to review the success of your performance management system at every level. You could break down these reviews into monthly or quarterly reviews or even base them on milestones.

Goal setting

Goal setting is another crucial aspect of performance management systems. There are a few things that go into setting the right kind of goals:

SMART goals

The goals you set must be specific, measurable, achievable, relevant and time-bound goals or SMART.

Be clear

Let your team members know exactly what is expected of them and how they should go about achieving their goals.


Your goals must be aligned with your overall company objective. Every small goal must contribute towards getting closer to your company’s overarching business goals.

If your team member’s personal goals are aligned with the performance goals you’ve set for them, they are much more likely to put in the right kind of effort to achieve those goals.

Perhaps the most important aspect of aligning your goals is getting the top brass to show that these goals matter. That they too are working towards those goals.


Yes, every part of your performance management system needs to be reviewed, constantly, that goes for goals too. It could be that your goals are far too easily achieved or that you’ve set unrealistic goals, or simply that your goals do not contribute in any way to the overall plan.

While you should set goals that are meant for the long run, if you see that they aren’t working for you, do not be afraid to tweak them.

Reward and compensation

The final crucial element of performance management systems is making sure your people know they are valued. When your team members do what you’ve asked of them, when they achieve their goals, be loud, be sincere and appreciate them.

Reward them with kind words, gifts and other rewards that will make a difference in their lives. Meshing your performance management system with your rewards program is a good way to ensure that you never forget to thank your employees.

When it comes to compensation, don’t be stingy, the more you give to deserving team members, the more they will give back.

With the right tools, performance management is a piece of cake

Performance management can be quite a tough game to hack. You will often find yourself under mountains of data and working against deadlines that are much too hectic. That is quite normal. The good news is that you don’t have to be in that situation.

With the right tools, like Mesh, you will be able to manage your performance, gain clear insights into every aspect of your business and reward employees with ease. Mesh is a one-stop platform for your performance management needs.

About the Author

The Mesh Team is a diverse group of passionate professionals at Mesh, dedicated to transforming the world of performance management. Together, we aim to provide you with valuable insights, strategies, and knowledge to empower your journey toward achieving exceptional performance in your organization.
The Mesh Team
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