Effectiveness of employee performance management can be measured by comparing the results achieved with the goals defined.

Key success factors are:

•  measurable goals have been defined
• an efficient measurement approach is established e.g. supported by IT

For employee performance management it is not always easy to define "hard" measurable goals, in quite a few cases it makes sense to define "soft" goals, that qualitatively describe a desired state.

In these cases, questionnaires that are answered by key stakeholder groups are a good approach to get a sense on how effective performance management was in the analysed period of time.

You need to spend a lot of time deciding exactly what you mean by performance--this is not easy--then have a way to develop objective measures--

Is there any tool to check the effectiveness of the system?

Dear Suraj,

your question is interesting. I am not familiar with tools purposely designed to assess PMS . Nevertheless, you can "bring this concern back"  before the implementation stage of the PMS and ask yourself "What can I do to make the PMS implementation effective?".

To this end, I suggest that you read the cornerstones of successful implementation of PMS of 

"Performance Management, A roadmap for developing, implementing and evaluating performance management systems" by the SHRM Foundation (attached).

Moreover, I found out a comment on a web article by Judy Capko stating that "A performance evaluation system should be a key component of your practice structure. When implemented effectively, it ensures fairness and accountability, promotes growth and development and encourages a sense of pride in your employees’ contributions to the practice".

As a result, you may expect to see these effects on the company and its employees if the PMS was well-designed and implemented.

Hope this may help you out.

Best wishes

Ilaria Barletta

I'll recommend you consult the book 'Performance Management' by Herman Aguinis. It may be very useful in answering your question.