Performance management system

Literature review
A Performance Management System (PMS) should ideally incorporate a holistic approach to the management of people embracing the whole employment cycle; recruitment and selection, induction, performance objective setting and reviews, training and development, compensation and reward, promotion, through to an employee exiting an organisation (Heathfield, 2006). Its purpose is to provide a clear understanding of, and link between, organisational objectives and the requirements of each employee (Ruiz, 2006,p.3) and aid tracking of organisational performance (Amaratunga and Baldry, 2002,p.221). This is acquired by cascading business objectives down through the organisation (Norcross, 2006,p.42&44; Ruiz, 2006,p.1), embracing the management of performance as a continuous process and striving for continuous improvement (Latham et al, 2005,p.77; Norcross, 2005,p.45). good

A PMS can be described as a management system with the primary objective of improving organisational efficiency and overall performance through providing direction and support to employees by assessing their performance (Busi and Bititci, 2006,p.14; Amaratunga and Baldry, 2002,p.218; Pettijohn el al, 2001,p.756) and developing a high-performance culture where continuous improvement is part of organisational culture (Robson, 2005,p.138). However, improved organisational performance is not always guaranteed (Bourne et al, 2005,p.374).

Due to the variety of literature and vastness of the subject matter this review will mainly concentrate on the performance appraisal/review. The key themes to be analysed are the benefits of using a PMS, different PMS models, the performance management cycle, linkage of performance and pay, why PMS fail and the use of technology within the PMS.

2.1 Benefits of introducing a PMS
Traditional performance measures are often concerned with financial aspects of the organisation, used as a control mechanism to identify the state of the organisation’s