A performance management system is a structured approach employers use to set expectations for employees, establish goals, assess performance, provide feedback, and identify opportunities for improvement and professional development. Performance management systems are often supported by digital platforms or human resources technology that helps organizations track goals, document feedback, conduct performance reviews, and maintain information about employee development.

Performance management is broader than a traditional annual performance appraisal. It can be an ongoing process in which employees and managers regularly discuss performance, goals, skills, development needs, and changing job expectations. Performance management systems may support activities such as:

• Setting individual, team, and organizational goals
• Providing ongoing feedback and coaching
• Conducting performance reviews
• Identifying skills and professional development needs
• Recognizing strong performance
• Addressing performance problems
• Supporting career development and advancement
• Connecting employee performance with organizational goals

As organizations place greater emphasis on skills, performance management systems may also be used to identify the skills employees have, skills they need to develop, and opportunities for learning, internal mobility, or advancement.