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The Human Resources Institute of New Zealand

Human Resources Institute of New Zealand (HRINZ) is the professional body for those involved in Human Resource Management and the development of people.

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Performance Management

What is a Performance Management System?

Performance Management is the term used to describe the process set by an organisation to ensure all employees are aware of the level of performance expected of them in that role, as well as any individual objectives they will need to achieve to achieve overall organisational objectives.

You will find that most organisations will have a performance management system in place; however, the difference will be whether the organisation has adopted an informal or formal approach towards their employees.

It is not uncommon for smaller organisations, due to the nature of their business, not to have specific documented processes in place. Any employee goals and objectives set will be mutually agreed upon between the manager and employee, generally adopting an informal approach. Larger organisations will tend to have a more formal documented process in place for managing employee performance.

It is generally considered good practice to communicate what form of performance management system your organisation uses for its employees during induction process. By the end of the induction process the employee should be aware of their goals and objectives they need to achieve within their role to ensure they are performing satisfactorily.

The sole purpose of a performance management system is to assess and ensure that the employee is carrying out their duties which they are employed to do in an effective and satisfactory manner, which is contributing to the overall business objectives.

How Can it be Delivered in the Workplace?

At work, an employee may subjectively feel that he/she is carrying out the duties for which they were engaged, in a satisfactory manner. However, those above that employee and indeed those around may feel, objectively, that the employee is not carrying out those duties satisfactorily. If there is no feedback from management to the employee on their progress, then the employee will never realise that some aspect of their work is wanting.

Therefore, if the employee is identified to be working beneath his/her capacity, then this performance deficit will need to be addressed sooner rather than later with the employee. As this performance issue will have direct consequences for the individual, department and organisation performance. For example, the employee will have no opportunity to improve their performance; their quality and service may be compromised which can affect the overall business performance and productivity.

When dealing with an employee that is under-performing, you will have to identify in what areas they are under-performing in: effective behaviour, effective performance, achieving business targets.

You will also have to consider whether the employee's under-performance is due to personal reasons or purely performance related.

A performance management meeting organised to discuss the employee performance should be a two way discussion which will provide you the opportunity to find out whether there are any underlying issues that you may not be aware of that are affecting the employee's performance. For example: clashes of personality, domestic situations, lack of training, etc. From this discussion you will also be able to assess if the employees lack of performance is purely performance related. If so, has anything changed in the workplace to cause this issue or change in attitude?

At the end of the meeting the employee should be aware of the following outcomes:

  • Fully aware of their performance goals they need to achieve and/or expected behaviour required by the organisation
  • An agreed action plan to rectify the employees performance issues, with clear guidelines on how the employees performance will be measured going forward
  • Organise any training needs highlighted by the employee.
  • Mutually agree a date which is fair and reasonable to review the employee performance
  • Potential consequences that could result from the employee performance not improving. Disciplinary Matters
  • Benefits the performance management system can provide the organisation through Development and Training

An effective performance management system will have the effect of focusing employees in an organisation on the organisation, departmental and individual objectives. Through successfully identifying employees training and development needs, and by providing constructive feedback to your employees on their performance. This enable employees to improve and develop their skill sets within their role, showing the organisation commitment to the employee by providing them with ongoing career development and training by valuing and recognising their contribution to the organisation performance.

A remuneration and rewards process can be integrated into the performance management system to encourage employees to continually improve their individual performance and personal targets. The value to the organisation will be motivated and trained workforce which will be focused on the achievement of its strategic goals and maintaining business productivity through staff retention and succession planning.

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Disclaimer: This information has been written for and submitted to HRINZ for publication and has been published in good faith for the general information of HRINZ Members of the Institute. HRINZ accepts no legal responsibility for the contents of the Knowledge Base and appropriate professional advice and assistance should be sought in particular cases.

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