The many benefits offered by a Performance Management System help start-ups to achieve their business objectives within a predefined time-period and to stay ahead of their competitors, as it enables them to:

  • Formulate business objectives
  • Set clear goals for the employees
  • Provide consistent feedback to employees
  • Use feedback to drive performance and boost productivity
  • Foster effective communication between teams
  • Facilitate employee engagement


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Most start-ups are not aware of the usefulness of a performance management system and how it can help their closely-knit teams. Start-ups are also unaware of the benefits the performance management system offers in helping them conduct the performance feedback periodically and achieve business growth. Start-ups tend to implement a results-driven system instead of a process-driven system. The results-driven system doesn’t guarantee useful outcomes and isn’t effective in the long run. However, the process-driven system has a strong and well-established process in place. Hence the process-driven system is bound to guarantee distinguished results.  The startup organizations set-up dynamic goals and expect immediate results from them without a robust performance management system in place. Without the implementation of a powerful yet flexible performance management system, it is difficult for an organization to align its objectives with the individual objectives of the employees. And also, deters the organization to provide relevant feedback on employee performance. It’s as important for a small business or start-up to deploy a powerful Performance Management System as for the large businesses. This is because both small and large organizations need their help to set performance goals for their employees. When aligned to organization goals, this process helps to improve employee performance, deliver to business targets, and enhance overall productivity. This ultimately fosters business growth.

However, it isn’t necessary for a start-up to adopt all the features a performance management system has to offer. The system offers a set of essential features that can prove beneficial depending upon the business requirements. Investing in a powerful yet flexible performance management system for small business can prove to be lucrative in the long run. This is because it helps the business to set clear business objectives. formulate tangible goals for the employees, provide unbiased feedback, and drive business growth.

The following benefits offered by the performance management system will help start-ups choose the right performance management system depending on their requirements:

  1. Formulate business objectives

A good performance management system allows a business to formulate clear and well-defined business objectives that need to be achieved within a specific time period. A robust performance management system ensures that the business targets/objectives are specific, measurable, attainable, relevant, time-bound (SMART), and also tangible and agile.

  1. Set clear goals for the employees

Employees should be able to clearly understand their deliverables on a day-to-day basis, on what criteria their performance will be measured, and what skills and knowledge they are expected to possess to get the work done. This also enables the employees to determine where they are falling short and thus gain relevant skills through training and development programs. In effect, setting clear goals for the employees is one of the primary objectives of a performance management system

  1. Provide feedback consistently

Providing unbiased and consistent employee feedback enables the business and the employees to be on the same page in terms of deliverables and targets on a monthly or a quarterly basis. The feedback delivered should be constructive and focus on the behavior of the employee, not on the traits of the employee as an individual. Such constructive feedback promotes self-awareness amongst the employees and helps them deliver better performance and desired results to the best of their capabilities. Managers should also encourage their employees to participate in setting organizational goals. They need to incorporate their viewpoints about the work-culture prevalent in the organization and allow them to talk about the challenges they face in executing certain tasks. This builds a rapport between the manager and employee thus enhancing the employee’s engagement with the organization.

  1. Use feedback to drive performance and boost productivity

Missing targets or underperformance can be attributed to the lack of skills, miscommunication between the team members, family issues, or lack of motivation. This is where the role of team managers comes into play. Managers should strive to understand the reason behind the underperformance of the employees and conduct regular feedback. Also, conducting performance review meetings in a constructive way may help to drive employee performance to an expected level and thus boost productivity. Conducting regular feedback on a monthly or quarterly basis helps the employees gauge their strengths and also weaknesses. This helps employees to work on acquiring the relevant skills needed to get the job done.

  1. Foster effective communication between the teamsPerformance-Management-System

A good performance management system fosters effective communication between the team members and paves the way for increased productivity as the employees are well-aware of what is expected from them. Effective communication between the team members also ensures that the issues are resolved quickly so that it doesn’t hamper the progress of work. If the culture of honest and open communication prevails between the employees, there are more chances of building a strong team that works together with a larger purpose.

  1. Facilitate employee engagement

Aligning the organizational goals to the individual goals of the employees facilitates employee engagement towards the organization, this is achieved, as the employees feel a sense of satisfaction towards their work when constructive feedback is provided consistently. The employees feel their contribution towards organizational goals matters and they feel more appreciated and are motivated to deliver expected results. Employers can try to make sure that the employees feel valued and appreciated for their work. By not giving due consideration to the employees for their work, employers end up demotivating them. This hampers the quality and pace of their work and results in less engaged employees. Less engaged employees cause a higher attrition rate and hiring another resource costs a lot of time and investment for the company.

  1. Assessing the training and development needs of the employees

With consistent feedback about employee performance, the organization has a chance to evaluate the employee skill-set thoroughly. It enables the managers to identify the training needs of an employee whether the employes need to brush-up on particular skills or need to acquire an entirely new set of skills to perform the job well. The performance management system plays a significant role in bridging the gap in employee skill-set. Thus, enabling them to perform better with a newly acquired skill set.

  1. Workforce planning

Performance Management system aids in efficient workforce planning. It helps to identify how much workload an employee can withstand, so that, provisions can be made to hire another resource accordingly. Optimum resource planning is the key characteristic of a performance management system. With consistent feedback and review, the Performance Management System distributes the workload between the team members. This enhances the productivity of the individual employees and the employee retention rate in the organization.


It is indeed the need of the hour for start-ups to deploy a performance management system that offers all or most of these benefits tailored to the requirements of the organization. Aligning organizational goals to employee goals is the prime benefit of the performance management system to enable the organization to grow and prosper at a rapid pace. The timely feedback is an added advantage and helps to align employee performance with their goals.

Given the frenetic pace and dynamic changes which are the hallmarks of a start-up culture, it doesn’t make sense for the employees to wait for a year for the appraisal and performance feedback. The feedback should be provided frequently. So the employees can improve their performance without further delay and strive to achieve individual goals. A good performance review strategy requires consistent feedback- both formal and informal. It prioritizes employee recognition and employee engagement.

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