Company’s goals and objectives will be well communicated to the employees and in this way this system is also beneficial for employers.The most important benefit of performance management system for employees is the motivation to perform better than others (Lindner, 1998). This will be explained with the help of an example of the performance management system in information technology companies. Other companies might have the same type of appraisal system. Appraisal happens twice in a year i.e. after every six months. In the starting of the year, employees set their goals with the help of their managers and then at the end of six months, human resource department starts the appraisal system. In this system, manager discusses with the employee and tries to find out that if the employee has achieved his goals or not and then on the basis of that he has to give him rating, for example out of 4. 1 is the best and 4 is the least. Those who will get 1 rating will get extra bonus at the end of the quarter and those who will get rating 4 might be thrown out of the company. So extra bonus or incentives always motivate employees to improve their performance. Employee will be able to stay focused to his goals. There will be no confusion in his mind about the roles and responsibilities because all the roles and duties will be clearly defined while setting the goals at the starting of the period. He will align his goals with the objectives of the organization and can work towards it.