PERFORMANCE MANAGEMENT SYSTEM

Performance appraisal is a continuous system of tracking and measuring performance against agreed targets and identifying opportunities for improvement. In other words, performance appraisal is a set of policies to achieve a shared vision of the organization to help each individual employee to understand and recognize their contribution. But Performance Appraisal is also the tool to determine and communicate to an employee about his/ her performance on the job, ideally, establishing a plan of development for both parties. Managers are reluctant to provide candid feedback and have honest discussions with employees for fear of reprisal or damaging relationships with the very individuals they count on to get the work done. Employees feel that their managers are unskilled at discussing their performance and ineffective at coaching them on how to develop their skills. Many complain that performance appraisal systems are cumbersome, bureaucratic and time consuming comparing to the value that it adds. This leads both managers and employees to treat performance appraisal as a burden rather than a tool to a successful working relationship. The primary reason for having a PA program is to monitor employees’ performance, motivate staff and improve company morale. Monitoring performance requires routine documentation, which is accomplished through completing a performance appraisal form. When employees are aware that the company is paying special attention to their performance and that they could be rewarded with merit increases and promotions, they are motivated to work harder. Morale is improved when employees receive recognition or reward for their work. An effective PA program will assist the company in achieving its goals and objectives. Not only will training needs be identified and addressed during a PA review, but hidden talent can be discovered as well. Through identifying these training needs, staff can perform their jobs at the 20 highest level and be in a better position to address clients’, members’ and customers’ concerns and questions. A well-developed staff is more likely to be proactive, productive and resourceful, all of which helps to give the company a competitive edge, from improved customer relations to increased profits.

A performance management system includes the following actions.

• Developing clear job descriptions and employee performance plans which includes the key result areas (KRA') and performance indicators.
• Selection of right set of people by implementing an appropriate selection process.
• Negotiating requirements and performance standards for measuring the outcome and overall productivity against the predefined benchmarks.
• Providing continuous coaching and feedback during the period of delivery of performance.
• Identifying the training and development needs by measuring the outcomes achieved against the set standards and implementing effective development programs for improvement.
• Holding quarterly performance development discussions and evaluating employee performance on the basis of performance plans.
• Designing effective compensation and reward systems for recognizing those employees who excel in their jobs by achieving the set standards in accordance with the performance plans or rather exceed the performance benchmarks.
• Providing promotional/career development support and guidance to the employees.
• Performing exit interviews for understanding the cause of employee discontentment and thereafter exit from an organization.

According to Lockett (1992), performance management aims at developing individuals with the required commitment and competencies for working towards the shared meaningful objectives within an organizational framework.

Performance management frameworks are designed with the objective of improving both individual and organizational performance by identifying performance requirements, providing regular feedback and assisting the employees in their career development.

The major objectives of performance management are discussed below:

• To enable the employees towards achievement of superior standards of work performance.
• To help the employees in identifying the knowledge and skills required for performing the job efficiently as this would drive their focus towards performing the right task in the right way.
• Boosting the performance of the employees by encouraging employee empowerment, motivation and implementation of an effective reward mechanism.
• Promoting a two way system of communication between the supervisors and the employees for clarifying expectations about the roles and accountabilities, communicating the functional and organizational goals, providing a regular and a transparent feedback for improving employee performance and continuous coaching.
• Creating a basis for several administrative decisions strategic planning, succession planning, promotions and performance based payment.
• Promoting personal growth and advancement in the career of the employees by helping them in acquiring the desired knowledge and skills.

Some of the key concerns of a performance management system in an organization are:

• Concerned with the output (the results achieved), outcomes, processes required for reaching the results and also the inputs (knowledge, skills and attitudes).
• Concerned with measurement of results and review of progress in the achievement of set targets.
• Concerned with defining business plans in advance for shaping a successful future.
• Striving for continuous improvement and continuous development by creating a learning culture and an open system.
• Concerned with establishing a culture of trust and mutual understanding that fosters free flow 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.

The performance management approach has become an indispensable tool in the hands of the corporate as it ensures that the people uphold the corporate values and tread in the path of accomplishment of the ultimate corporate vision and mission. It is a forward looking process as it involves both the supervisor and also the employee in a process of joint planning and goal setting in the beginning of the year.

 Benefits of a Performance Management System

A good performance management system works towards the improvement of the overall organizational performance by managing the performances of teams and individuals for ensuring the achievement of the overall organizational ambitions and goals. An effective performance management system can play a very crucial role in managing the performance in an organization by:

• Ensuring that the employees understand the importance of their contributions to the organizational goals and objectives.
• Ensuring each employee understands what is expected from them and equally ascertaining whether the employees possess the required skills and support for fulfilling such expectations.
• Ensuring proper aligning or linking of objectives and facilitating effective communication throughout the organization.
• Facilitating a cordial and a harmonious relationship between an individual employee and the line manager based on trust and empowerment.