The first purpose of performance management systems is to help top management achieve strategic business objectives. By linking the organization’s goals with individual and team goals, the performance management system reinforces behaviors consistent with the attainment of organizational goals. Moreover, even if, for some reason, individual goals are not achieved, linking individual and team goals with organizational goals serves as a way to communicate the most crucial business strategic initiatives.

A second strategic purpose of performance management systems is that they play an important role in the onboarding process. Onboarding refers to the processes that lead new employees to transition from being organizational outsiders to organizational insiders. Performance management serves as a catalyst for onboarding. It allows new employees to understand the types of behaviors and results that are valued and rewarded, which, in turn, lead to an understanding of the organization’s culture and its values.