"Performance management system" means two different things. In human resources it usually describes appraisals and goal-setting for individual employees. In operations it describes how a business manages the performance of its processes: safety, quality, delivery and cost. This page covers the operational meaning. It is sometimes called a performance management framework, and in lean organisations it is closely related to a daily management system.
What an operational performance management system includes
- Objectives and KPIs. A short list of measures for each team, linked to site and business goals.
- Targets and thresholds. A clear definition of on target and off target, so a miss is obvious.
- Visibility. Results shown on a visual management board or dashboard that people can read in seconds.
- A review rhythm. Regular meetings, from a frontline huddle to site leadership, where results are compared with targets.
- Escalation. Rules for which issues a team owns and which pass to the next level.
- Action tracking. Every gap gets an owner, a due date and a status that is reviewed until closed.
How the cycle works
| Step | What happens |
|---|---|
| Set | Goals are agreed and turned into KPIs and targets for each level |
| Measure | Results are captured at the source, ideally as the work happens |
| Review | Teams compare actual with target in a short, fixed-time meeting |
| Act | Gaps get owners and countermeasures; larger issues are escalated |
| Learn | Repeat problems are analysed and the standard or target is updated |
Operational versus employee performance management
Employee performance management reviews how a person is doing against their role. Operational performance management reviews how the process is doing against its target. The two are linked, because a clear view of process performance gives leaders a fair basis for coaching, but they use different tools. Operational systems start from the process and ask what is getting in the way, not who is to blame.
Common mistakes
- Tracking too many KPIs, so nothing gets attention.
- Reviewing results monthly, long after the cause has gone.
- Measuring what is easy rather than what the team can influence.
- Holding meetings with no action tracking, so the same problems return.
- Keeping safety, quality and production results in separate systems that never meet.
Example
A packing line misses its daily output target. The shift huddle sees the red result on the board, the team leader records a countermeasure and an owner, and because the cause is a supplier delay the issue is escalated to the site meeting the next morning, where it is tracked until it is closed.