Dear Anil
PMS ( Performance management system) is linked to many areas and helps in many area, direct use of it is to analyse the employee and appraise him according to his/her performance, but indirectly its also linked to employee engagement, training need analysis employee career development and business improvement
lets look at the past from 150 years there is vast change in the industry it became customer oriented from business oriented, performance appraisal is there on the earth from the very beginning. In old times when warriors use to perform they were awarded and recognition was given to them, the awards was based on how they performed but there was no structure , this got more uniformed and structured with time, lets go to first scientific theory Fredrick Taylor said you pay more to the one who work more ( pay based on work) then comes Management by objective ( by peter drucker) where the appraisal was on objective achieved that was pre-decided then comes 360 degree which not only focus on only objective achieved but how its achieved, first under MBO it was okay you achieved your sale targets but now in 360 degree how you achieved that target, the difference is, in earlier case what matters to employee was only achieving target it doesn't matter if he cheats client or what because he will be appraised on target achieved in these cases companies losses the customer but that was fine because competition was not intense at that time and customer had few choices so as the economic says the demand was higher than the supply but now the case is opposite, there is abundant supply, customer is bombarded with choices so company has to be careful dare, you cheat your client you will not only lose him but 10 more(word of mouth, internet is super fast) he will tell 20 more ohh! don't buy this product or service from this company, might even update on social networking site, and trust me it will ruin the company's reputation( remember what baba ramdev did to coke and Pepsi, 35 % sales went down) so cut it short to solve this problem and on basis morality company starts judging the employees on basis of there behaviour as well( how they achieved the target) there enter 360 degree, company even started involving the customer in appraisal, (note you fill form when you go to pizza hut and there is one question where you are asked to mention the employee's name who's work you liked most)
so as the industries evolved ( from lala's dukaan to more structurized and organised form) its focused changed, employer realized that he must not only think about his own profit but also his employees development and his customers requirement and this way he will gain loyalty and much more profit then he was getting earlier. observe the things in detail you will realise everything is linked to each other( branding, company's image ( why everybody wants to work at Tata beside the fact that they don't pay much)
see i can keep on writing, it was just the outer thing that how things changed and why they changed, i can also explain how its related to training need analysis and employee engagement and career development, If you want just update me.