Page 168 - DMGT517_PERFORMANCE_MANAGEMENT_SYSTEM

Unit 14: Role of HR Professional in Performance Management

14.1 Appraising HR Functions Notes

Human Resources is responsible for initiating the performance appraisal process for the
department to assess the performance of its staff. On top of it, Human Resources is tasked to
design and develop the Performance Management System.

Human Resources would need to know the business for its critical success factors. Human
Resources play the role of business partner of the company. The key performance indicators
(KPIs) shall derive from the business indicators. These indicators can be tangible or intangible.

Few organizations meaningfully involve the HR function in formulating corporate strategy,
designing offerings, and managing partnerships.

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Caution ‘The business has two basic functions: marketing and innovation. Marketing and
innovation produce results; all the rest are costs.’
Peter F. Drucker
The objective of the HR function is to provide a favourable and supporting climate and appropriate
systems to align the human performance with business strategies of the organization. The two
major crises faced by Human Resource are:
1. Identity crisis in defining its role in the organization, and

2. Accountability crisis in demonstrating the value of HR contribution in improving the
organization’s performance

One major problem with the HR function is that its results are difficult to quantify in the balance
sheet of the organization, which leads to down-grading of its contributions. ‘Performance
scorecard’ methodology, based on the balanced scorecard method, can be evolved to appraise the
performance of the HR function, Performance scorecard enables the leadership to determine how
effectively HR is leveraging on human capital, as well as mobilize and galvanize the people within
the organization in terms of four perspectives-quality, cost, delivery, and responsiveness.
A performance scorecard helps in appraising HR functions from the following perspectives:
1. Operations Perspective: This perspective includes the internal business processes and their

alignment with HR functions. The HR function should find out the key problems and their
effective solution.
Metrics based on this perspective allow senior leadership to know the effectiveness,

efficiency, and quality of these HR processes in meeting organizational and environmental
requirements.
2. Financial Perspective: Another important HR function is to keep the cost of compensation

and benefits at an optimal level. The HR professions should consider the organisation’s
ability to pay and other growth perspective. The HR professional’s needs to focus on the
employee’s contribution in terms of financial data with respect to investment made on

employees.
3. HR Perspective: HR perspective includes employee training and corporate cultural attitudes
related to both individual and corporate self-improvement. In these days the organisational
success depends on how effectively the organisations are discovering and managing
their human resources. The key differentiator between the successful and unsuccessful
organisations is the effectiveness of knowledge-worker. Today’s HR function needs to
develop an innovative workforce capable of delivering results at all times, consistently and
continuously.

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