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Top 5 Benefits of Performance Management Systems

High-performing employees are a huge asset to any business or organization; a performance management system is the best way to measure the effectiveness of each employee. Performance management is the specific process used by a company to evaluate how individual employee performance (skills and productivity) contribute to how well the organization functions and accomplishes its mission and goals.


While there are different ways of accomplishing performance management, performance management systems are created to improve or maximize employee performance. Many companies set individual goals and have an annual performance review process; others choose to use performance management software, which is designed to improve business performance by encouraging employee productivity with real-time performance tracking, goal setting, and feedback.

No matter what type of performance management system your business has in place, you should be getting several benefits out of the process.


Top 5 Benefits of Performance Management Systems


Performance management systems can benefit both the employee and employer. Let’s take a look at the top benefits of performance management systems:


1. Increased employee morale and employee retention


A study found that organizations that provide regular feedback for their employees benefit from 14.9% less turnover that companies that do not. In addition, consistent employee feedback sessions can improve the quality of communication between managers and their team and generally boost morale when positive feedback is provided. By contrast, employees are twice as likely to be disengaged with their jobs if they are ignored by their manager – leading to dissatisfaction, lower productivity, and higher turnover.


2. Makes it easier to identify training needs


When employee skills and productivity are monitored in relation to company goals on a regular or ongoing basis, it is much easier to identify training needs. Once training opportunities are identified by comparing current skills with company needs, training can be provided to help bridge the gap.


3. Helps employees define career paths


Many employees will only stay with a company if they see opportunities for growth and career advancement. Using a performance management strategy is the best way to help employees define a career path that maximizes their skills and to identify employees who are suited to a promotion or department transfer within your organization. And because all employees are part of the process, managers are much more likely to provide equal opportunities to all workers.


4. Clearly defined goals and expectations


When employees are involved in a performance management process, they are much more likely to be informed about the goals and expectations they are expected to meet and how their job plays into company objectives. Managers are also more likely to receive feedback about what type of support their team members need to be successful. When employees know what is expected of them and managers know how to support their team, the company wins with higher productivity and morale.


5. Increases self-motivation and reduces micro-management


There is probably nothing that employees hate more than being micromanaged. When employees are aware of how their performance and productivity fits into the organization’s short and long-term goals and receive positive feedback for their work, they are more likely to be self-motivated. In turn, this should reduce the impulse to micromanage employees.


Partnering with Makai HR


Need help with HR but not interested in an in-house team? That’s okay; we’ve got you covered through HR outsourcing! When you partner with Makai HR you can get on with the business you are trying to grow while we take care of your employee needs from payroll to taxes, health insurance/benefits and worker’s compensation. You also gain peace of mind that you are compliant with all of Hawaii’s employer laws (if you’ve ever looked you know that the list is very long and changes happen). When choosing a PEO to partner with, there are many things to consider including cost, services, and technology solutions.


With the cost of doing business in Hawaii at record highs, we know how important it is to keep labor costs in line with revenue. Our plans are priced competitively and include value-added services like time-in/time-out systems. Our three tiers of PEO service plans are tailored to the size of your business and specific needs. We offer a 100% paperless solution which means that your employees can manage their needs through a computer, tablet, or phone. We can truly improve your employees’ work benefits while freeing you up to run your business.


What are you waiting for? Companies that partner with a PEO benefit from 7-9% faster growth, 10-14% lower employee turnover; and they are 50% less likely to go out of business. Contact us today to get started!

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