This study examines the current status and development of performance management systems in large and medium-sized Croatian manufacturing companies and attempts to establish whether there is a correlation between the existence of performance evaluation and rewarding system and business performance indicators. Data were collected by means of a questionnaire, from 22 manufacturing companies. We distinguish four groups of employees - managers, specialists/administrative staff, sales staff and production workers. The performance is evaluated for 80% companies for employees in sales and 65-70% of companies for other employee groups, while rewarding, except for production workers, was carried out for a significantly smaller number of employees. Performance management systems are often not clearly defined and formalized. Employee evaluation most often has impact on the employee salary. Dominant among sales staff and production workers is the monthly assessment of performance, while for managers and specialists/administrative staff annual assessment is dominant. The proportion of variable pay in total salary in most companies is up to 30%, and the superior manager is the one who always participates in the performance evaluation, usually as the only person who assesses performance. No statistically significant difference was found for business efficiency indicators between companies evaluating and rewarding their employees and those who do not, nor a correlation between the frequencies of assessment and rewarding with business efficiency indicators. Statistically significant correlation was found between companies using a one-time incentive programs and financial stability. Companies which give their employees extra vacation days and provide better retirement benefits than those stipulated by law, have a lower total assets turnover than those companies not providing those benefits for their employees.