Page 13 - DMGT517_PERFORMANCE_MANAGEMENT_SYSTEM

Performance Management System

Notes Traditionally, the performance appraisals were organized in a bureaucratic manner and suffered
from unnecessary delays in decisions and corruption. Performance appraisals were mostly
narrowly focused and functioned in isolation without bearing any linkage with the overall
organizational vision or goals. The side effects of the performance appraisal system was it
generated skepticism amongst the managers and the employees on any new initiative of the
HR.

In the present scenario, the organizations have shifted their focus from performance appraisals to
performance management as a result of internationalization of human resources and globalization
of business. The functions of HRM have become far more complicated as today the major focus
of strategic HRM practices is on the management of talent by implementing such development
programmes which enhance the competencies of the employees. The performance management
approach focuses more on observed behaviors and concrete results based on the previously
established smart objectives. By adopting techniques like Management by Objectives (MBO), smart
objectives are established in terms of either facts and figures and in the entire process the superior

plays the role of a coach or a facilitator. The objectives are mutually decided at the beginning of
the performance season and serve as a standard of performance for evaluation. In this method,
the employees can offer a feedback on their contributions by filling up a self appraisal form.

Performance management is a much broader term in comparison with performance appraisal
as it deals with a gamut of activities which performance appraisals never deal with. This system
is a strategic and an integrated approach which aims at building successful organizations by
developing high performance teams and individuals and improving the performance of people.

This process starts when a job is defined. Performance management emphasizes on front end
planning instead of looking backward unlike performance appraisals and the focus is on ongoing
dialogue instead of appraisal documents and ratings. Thus, performance management may be
regarded as a continuous process.

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Caution The use of performance management in the best-practice companies is not because
it is a better technique than performance appraisal, but because it can form one of a number
of integrated approaches to the management of performance.

1.7 Challenges to Performance Management

Some of the key challenges to performance management are as follows:
1. Concerned with the output (the results achieved), outcomes, processes required for
reaching the results and also the inputs (knowledge, skills and attitudes).
2. Concerned with measurement of results and review of progress in the achievement of set
targets.

3. Defining business plans in advance for shaping a successful future.
4. Striving for continuous improvement and continuous development by creating a learning
culture and an open system.
5. Establishing a culture of trust and mutual understanding that fosters free fl ow of

communication at all levels in matters such as clarification of expectations and sharing of
information on the core values of an organization which binds the team together.
6. Procedural fairness and transparency in the process of decision making.

Task Make a discussion on key HR challenges faced by Indian corporates.

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