What is Employee Performance Management?

Osmand Vitez
Osmand Vitez
Employees who receive high ratings are typically rewarded.
Employees who receive high ratings are typically rewarded.

Employee performance management is the process companies use to manage their employees to ensure organizational success. Performance management techniques include planning job goals and expectations, monitoring performance, making improvement in the employees' jobs and rewarding good performance. Employees are individuals companies rely on to complete business tasks and functions; employee performance management seeks to improve the company culture and employee goodwill. Improving these areas can help companies hire the best employees and retain valuable employees with key knowledge of business processes.

Some companies hold employee awards ceremonies in recognition of high-quality work.
Some companies hold employee awards ceremonies in recognition of high-quality work.

Companies can spend a lot of time and money hiring and training employees. Using employee performance management systems can be a way to ensure employees decide to stay with the company for several years. Many companies treat employees as valuable business partners, rather than traditional input resources needed to accomplish tasks and goals. Employees may be more willing to work harder to achieve success and recognition under the company’s employee performance management system.

Employee performance management usually contains several steps for guiding and evaluating employees. These steps include planning, monitoring, developing, rating and rewarding. The planning phase starts with companies deciding on the necessary employee jobs and tasks that need to be completed in the workplace. Managers will decide on the specific tasks and wages for each job prior to hiring employees. Once a suitable employee is hired, the employee performance management system moves into the monitoring phase.

The monitoring phase of employee management involves managers training and watching how the employee performs his job. The monitoring phase dovetails with the development phase of the employee performance management system. As managers monitor each employee, they will usually offer tips and advice for completing tasks more effectively and efficiently. These two phases usually make up the bulk of employee management, as they address the actual tasks and job performance of each employee in the company. These two phases are followed by the rating portion of employee management.

The rating phase of the employee performance management system is created by each company according to their management style and company culture. Most companies will explain the rating system to employees while scoring the employee appropriately based on his job performance and productivity. Rating employees is completed on a periodic basis, depending on the company and its employee performance management system.

After an employee is rated for his performance, the company will reward the employee. Rewards can be monetary or incentive based. Common monetary rewards include bonuses, merit pay increases or gift cards; incentive style rewards include banquets with recognition plaques or trophies, extra vacation days or physical gifts of goods or services. Companies may use a mix of rewards on a tiered basis, allowing employees to strive for the best reward available for their job performance.

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Discussion Comments


As an employee, I think that incentive style rewards are the best. I was rewarded with paid days off recently because of a successful project. I have to say that it was a great reward and it has motivated me too continue working hard. I think that every employee wants to be appreciated. Every time I complete a project, I feel very satisfied and accomplished. This is a reward in and of itself. But I can't deny that it felt great to stay home for a few days, relax, rest and prepare for another term of hard work. Since I'm a workaholic, being paid to take off work takes away the guilt for me.


@donasmrs-- Definitely. If the issue is institutional, there are institutional changes that can be implemented such as a change in procedures to help employees perform better.

If the issue is the employee and not the system, then periodic employee performance evaluations and the use of goals and tasks are usually effective. In this strategy, employees are given tasks and a period of time to complete the tasks. When the task is completed, their performance is evaluated. This is done periodically to see how performance is changing over time. A reward system can also be established attached to this evaluation system.

All of these are ways to motivate the employee and rewards systems especially help employees feel that they are part of the organization. So these strategies help strengthen organizational culture as well.


Are there mechanisms of employee performance management that can be used when an organization's employees are not performing well? For example, are there strategies that can be used to improve efficiency or to increase output?

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    • Employees who receive high ratings are typically rewarded.
      By: Adam Gregor
      Employees who receive high ratings are typically rewarded.
    • Some companies hold employee awards ceremonies in recognition of high-quality work.
      By: michaeljung
      Some companies hold employee awards ceremonies in recognition of high-quality work.