Skills Management

ROI for Performance Management Systems

Simplify your performance management system to increase your ROI. Learn more in this article.


Figuring out the Return On Investment (ROI) for performance management systems (PMS) is at best a difficult proposition.

If you have at least some experience resolving HR dilemmas, you certainly know how much time and effort it takes to hire prospective and fire unproductive personnel. If your organization is medium or large, then you probably spend days and even weeks, trying to figure out the truth about your workers. Meanwhile, your competitors successfully reduce their HR costs and enhance workplace productivity. The secret is, actually simple: even a simple performance management system provides a positive ROI.

Now let’s see how you can calculate the benefits of using an employee performance management system and what exactly these systems can give you in terms of profits, productivity, and reduced costs.

The benefits of adopting an employee performance management system begin with improved productivity in the workplace. As an experienced owner or manager, you have definitely seen employees struggling with the projects they could not accomplish on time or doing things they could not ever do, either due to the absence of talent, skills, or interest.


Now imagine that your PMS system is dealing with all these things; diagnosing and setting clear objectives, and aligning them with your employees’ talents. A performance management system will let you improve your productivity in two essential ways: first, by choosing the right people for the right projects; second, by setting measurable goals and metrics for monitoring employees’ progress on the given project.

Another essential benefit of using employee performance management systems relates to employee turnover. It is no secret that modern organizations carry huge costs, if their employees are running away. The costs of finding and hiring a new employee are not limited to finances and time, but also include training, adjustment time, experience sharing, establishing new connections at work, etc.

Now you certainly ask yourself how your performance management system can help you reduce employee turnover. It’s simple! Basically, such systems are designed to help you figure out the reasons for which your workers decide to leave your company. They may find themselves too busy, with little or no time left for their family issues. They may experience difficulties adjusting to your organizational culture or face few career growth perspectives. Whatever the reason, you need to know it. You need to address the causes of high turnover, before it becomes you biggest problem.

One of the biggest mistakes made by contemporary organizations is in tying their compensation plans to the market situation, rather than the real order of things in the workplace. The market situation does not always reflect the real achievements and failures of productive workers in the organization. As a result, many employees suffer because they do not receive enough monetary reimbursement or recognition for their efforts. Your performance management system can help you collect and analyze employee responses regarding their compensation and recognition. Allowing you to better retain valuable employees.

Last, but not least, employee performance management systems save a huge amount of time. And time, as you know, is the most valuable business resource. Why not release yourself from the manual burden of performance management and focus on business growth and expansion?

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