Performance management means measuring criteria for organizational progress helping to accomplish their set target and goals by taking suitable actions for the improvement of the company. Performance management system aims to achieve the following targets:

Enabling each employee to know what is actually been needed and what should be his role in achieving those targets.
It helps to maintain an honest relationship between the employees.
Enabling each individual employee to feel motivate at work and make him know about his valued contribution in the project.
Enabling organization to reward the employees for his exceptional contribution to the company.

Performance management system is being designed to successfully achieve the set objective as well as it also focus on helping the employees to understand what is being needed from them and how they could deliver it to the company.
Three components of performance management system
1. Initially setting up the required aim which is needed to be target and making the employees to clearly know what should be their contribution towards achieving the required target.
2. Distinguishing between the areas where the performance is strong and the area where there is a need for improvement therefore suggesting ways to improve the service delivery action.
3. Rewarding the employee with the best performance outcome.
Relation between motivation and performance management
Motivation refers to strengthening of internal activities which drives or boost the performance of man. There is a direct relationship between performances to motivation; if an employee is highly motivated then he/she is expected to perform better at job. Theories suggesting the following implementations are:
Reinforcement theory of motivation – this theory describes the effect of present behavior onto its future consequences, focusing on changing the employee behavior according to the surrounding situation through four types of operational conditioning:
Positive reinforcement
Motivating employees by the means by increasing wages, giving him bonus or either promoting him, all this reinforcement is being provided as a reward to the employee to repeat the desired behavior adapted by the employee at the workforce.
Negative reinforcement
Strengthening the employee behavior and raise it up the baseline attempt like avoidance or ignorance if the employee is not been working as he/she should be working.
Extinction
It is like not providing the employee neither with the positive reinforcement and nor with the negative reinforcement, if an employee is working then also he is not getting a thanks or a reward for his work.
Punishment
It is for decreasing the continuity of behavior which the employee is being following at the workplace.
The reinforcement theory on the management side:
Managers should be informing the employee about the things which they are doing wrong and shouldn’t be repeated while directing them to the way which could help them to receive positive reinforcement.
Managers should also understand it is important to reward employees for their performance because if the deserving candidate is not getting the reward then he/she may not be performing to the level previously used to.
Equity theory of motivation – supposing two employees worked equally at office but an employee A gets 20% percent increment while employee B gets 10 percent increment. Employee B is pleased with his performance because where other employees are getting only 6 % increment he got 10% but while comparing to A he will be rather disappointed therefore people compare their reward to the ratio of the reward what the other person is getting to the input applied.
Therefore in such a case managers must be very careful while they are rewarding and provide each employee with a specified target to motivate them and even this removes the indifference attitude within the employees about others. (analytictech website)
Four factors that need to be considered when managing performance
It is very crucial to review employee’s performance level which includes their behavior they should be exhibiting in the company.Factors that are needed to take in consideration when managing performance are:
1. Planning
It means setting up the performance goal and expectation which is required to be followed by the employees in line to achieve the set target, involving employees in the planning action to make them understand what the organization is targeting and what should be their contribution in the achieving the target.
2. Monitoring
Projects and assignment are monitored continuously for consistently measuring the performance and then giving them with feedback about their actions which is needed by them to follow for achieving the target, this regularly checking method helps to meet the determined standard as pert the organization requirement.
3. Developing
Developing in the terms means increasing the performance capacity through giving them assignment, regular training session which helps the employees to introduce new skills and perform well.
4. Rewarding
Rewarding employees for their talent and contribution to the company procedure result in better effect on to the company performance. (US office for personnel management )
Components of a total reward system
Rewarding system is being used as a tool by company owners to attract the talent they have been looking for their company and to retain the talent with company and from seeing the employees perspective rewards are the payback for their commitment and loyalty towards the company.
Components of rewarding system are:
Individual growth
It includes with investing in people, learning opportunities through training programs and career opportunities through new job openings, promoting or handling oversees assignment project.
Compelling future
It is very critical component of the rewarding system including company’s growth and success, its reputation and image in the market and in front of the employees, stakeholders, company’s vision and values.
Positive workplace
This category includes leadership, commitment and thrust towards the company, working attitude towards his colleges and outside people, his communication inside the company and involvement of the employee.
Total pay
This category includes the performance criteria, recognizing the employee talent and giving him base pay, variable pay according to his work, providing the employee with additional benefits and pay for his performance in the company. This recognition gives a special entity of the employee in front of his colleges for his actions and performance in the task given to him. (schuster zingheim , 2012)