Page 118 - DMGT517_PERFORMANCE_MANAGEMENT_SYSTEM

Unit 10: Performance Management Implementation

10.3 Factors affecting PM Implementation Notes

The factors affecting effective use of performance management are listed here.

1. Corporate culture: The implementation of a performance management system depends on
the culture of the organisation. Corporate culture should be such that it encourages team
working, ownership of problems, risk taking or entrepreneurship, and orientation towards
continuous improvement.
2. Skilled Staff: Staff that dedicated, knowledge and skilled in performance management.

3. Leadership and Commitment: Leadership that actively supports and sustains performance
management throughout the organization.
4. Alignment: The alignment of individual goals and strategies with the organisational goals
helps in effective implementation of performance management system.
5. Ongoing Monitoring and Mentoring: A continuous review of the strategy, the performance
is important. The performance management should be used for improvement and learning,
rather than control.
6. Effective Communication and Reporting: Communication and reporting of performance
and feedback on an ongoing basis is essential.
7. Employees Participation: Employees participation plays an important role in

implementation of PM system. Involvement in the selection and definition of measures
can reduce the employees’ and the manager’s resistance to performance management, and
increase their usage level of performance measures.
8. Reward link Pay: The reward link pay improves the employee motivational level and
affects the performance of employees.

IDBI Bank Implements Variable Pay for Offi cers

DBI Bank has initiated the implementation of the variable compensation scheme for its
officers from January onwards. But the complete implementation of the scheme, along

Iwith the Performance Management System (PMS), will take over six to eight months,
said Mr Pramod Sadarjoshi, Executive Director and Group Head-Human Resources, IDBI
Bank.
The package, which will cover over 8,000 officers, will include a 70-per-cent fi xed component

and a 30-per-cent variable component.
As part of the PMS, the bank will create a system to differentiate between the performances

levels of its employees. This will include building methodologies to define job descriptions,
by Key Result Areas (KRA) and job objectives.
Differentiator
“The idea is to differentiate performance and pay on the basis of the performance. We are
trying to implement the PMS in a phased manner,” Mr Sadarjoshi said.
Each department or group within the bank has started work on its individual methodology
and the PMS implementation would start as and when they are ready to be rolled out.
The frequency at which the variable component will be paid could be three months or six

months and a final decision is yet to be taken.
Contd...

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