Lessons from experience: A new look at performance management systems

Abstract

The concept of performance appraisal has changed over the years. Performance has been usually equated with annual appraisals which measure the entire year's effort of an employee in terms of numbers. This paper points out the flaws in this system and suggests its replacement with the Performance Management Systems (PMS), offering a set of changes to make PMS more effective. Drawing from his own experiences of designing Integrated HRD systems for various companies, the author stresses upon the importance of understanding the nature, potential, and complexities of performance management systems (PMS). Evaluating an employee's performance on the basis of numbers assigned by another appraiser without an awareness of the context in which the ratings are assigned could inflict serious injustice to the performer. The outlook has to shift from an annual exercise to the on-going activities. Appraisal focuses on ratings while improvements focus on work, stakeholders, service levels, productivity, motivation effort and all such performance-related variables. Following changes are suggested in order to improve PMS as a system: � Change from 慉ppraisal' to 慚anagement' and focus on "Contributions and Improvement" � Recognize the comprehensiveness of PMS as a system � Recognize the complexities of the multi-dimensional PMS � Allocate adequate time and legislate the same and if required plan it into the company calendar � Take HR managers out of PMS, decentralize and shift PMS to Performance Managers developed from line jobs � Make PMS a part of the budgeting process and integrate with other systems of the company � Create a new Index�"Performance Index"梖or each employee and make it quarterly and annual � Use technology to support your work � Implement PMS rigorously and give it the seriousness it deserves. A questionnaire survey on a number of managers from three organizations: an MNC, a family-owned business, and a professionally managed company from abroad clearly indicated the potential use of PMS for performance enhancements and a similarity in the implementation of PMS in all these organizations. The author discusses how these insights helped him in designing the programme, popularly known as "Invest Twenty and Direct 2,000 to 20,000 �." The line managers and top management are being told that their managers can learn to direct 2,000 hours of their performance time to 20,000 hours of their junior's performance time by merely investing 20 hours of their time for planning their own and their juniors' work. PMS can be a great tool if designed comprehensively and implemented in all earnestness, the author affirms. � 2008, SAGE Publications Ltd. All rights reserved.