Human Resource Management Performance Management System

2014

Group No: 1Dhruv MisraPRAJAKTA TALHATIOBIE THERATHANATH CHERIANAMIT NANKANIVENKATARAM GRANDHI

ContentsDoes the organization analyses its strategic and operational plans to identify objectives for their

performance management system?............................................................................................................3

How does the organization develop KPIs and how do they measure and assess their achievement?........4

How often do they engage employees in formal performance management sessions?.............................6

How are formal performance management sessions structured?..............................................................7

How do they document the outcomes of performance management sessions and how are these stored?

....................................................................................................................................................................8

How do they ensure that the performance management system covers a range of employment

situations?...................................................................................................................................................9

What methods do they use for providing performance feedback?...........................................................10

How do they gain support for their performance management system?.................................................11

References.................................................................................................................................................12

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Figure 1: Performance Management Cycle (Eckerson, 2009).

Does the organization analyses its strategic and operational plans to identify objectives for their performance management system?

Yes organizations analyses its strategic operational plans to identify objectives for their PMS because

that gives a clear linkage between peoples KRA’s and Companies goals, this also helps organizations to

clearly demarcate between each individuals responsibilities and roles.

To put more emphasis on linkage between organization’s strategy and PMS, Performance Planning and

Evaluation (PPE) systems are becoming popular in organizations. If the strategy is not aligned with PMS

the probability of organization achieving its goals becomes negligible. Under a PPE system a yearly

performance plan is mapped for every employee and at the year end the same is evaluated (Kramar, et

al., 2013).

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The above can be exemplified through an example of Mahindra and Mahindra limited:

Every year a process is conducted which is called Management Business Review (MBR). During the

process the president policy of that year is shared with all business CE’s and thereon they derive their

policy for their own business and this way this entire process goes to the lower level of officer in the

organization (Verma, 2014).

Figure 2: Example of Policy Linkage to PMS (Verma, 2014)

How does the organization develop KPIs and how do they measure and assess their achievement?

Ideally the KPIs should be Specific, Measurable, Achievable, Reviewable, and Time-bound (SMART).

The following 5 criterion are important for development of KPIs

STRATAGIC CONGRUENCE

It refers to the extent to which the KPIs stimulate the job performance that is in- line with the

mission, vision & goals of the company.

VALIDITY

The content of the KPI should not be deficient or contaminated. This means that the

performance measure should be able to asses all relevant aspects of the job description.

RELIABILITY

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This is a very qualitative aspect that asserts on the consistency of the performance measure.

It emphasizes on being fair to every individual irrespective of different managers reviewing

them.

ACCEPTABILITY

This depends on an individual’s perspective to view the performance measure. The KPI’s

developed should be accepted by the employees and the managers and not considered as a

waste of time or an unfair system.

SPECIFICITY

The KPI’s should paint a clear picture of what is expected out of an employee and methods by

which they can be achieved.

There can be various approaches to measure the performance and access the achievements. The type of

approach to be taken depends the type of organization. The Different types of approaches are

mentioned below.

Comparative approach

In this method the individuals in a team are compared with each other on the basis of their

performance and also on the basis of their designation.

There are various tools to implement comparative approach i.e. Ranking, Forced

Distribution and Paired comparison.

Attribute Approach

Under this a set of performance dimensions are developed with respect to job description.

These dimensions can be traits like leadership, initiates, team-work etc. The individuals are

analyzed on the basis of these traits using graphical rating scales and mixed standard

scales.

Behavioral Approach

In this the performance measure defines the behavior an employee should exhibit to

perform effectively. For instance in ‘critical incident’ approach the managers keep a note of

effective and ineffective performance instances of each employee also under the

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‘organizational behavior modification’ a behavioral feedback and reinforcement

mechanism is setup.

Results Approach

This approach focusses on final objective. Result approach is used by:

Management by Objective (MBO)

Here the top management defines the company’s strategic goals, which are then

passed on to the next management level and so on. At every level these strategic goals

are targeted for the goal setting process (Kramar, et al., 2013).

Mahindra and Mahindra uses Result approach to Measure the performance and also to develop the

KPI’s. The goals on organizational levels are developed during the blue chip meeting and MBR

workshops, these are generally 3 year goals which are termed as promises, on the basis of the long term

goals the KPI’s of the top management is decided and that becomes their goal sheets based on the goal

sheet of the top management the KPI’s of the middle management is decided department wise and that

further drills down to the operational level. For all KPI’s the level of performance are determined. Level

4 and 5 are mandatorily qualitative LOP’s and not activity based. Once these KPI’s are made in the start

of the year at the end of the year the performance of an individual is measured on the basis of the level

of achievement of each KPI which was given in his goal sheet (Verma, 2014).

How often do they engage employees in formal performance management sessions?The human resource department is responsible for the involvement of employees in the formal

performance management session. The frequency of this varies from organization to organization. In

general the minimum involvement comprises a formal session of training that delivers the details of the

performance management system and the working structure. After this at the beginning of every

financial year the goal setting session is held for all the employees. Here the KPIs and KRAs are identified

and with the consensus of the employee and the manager it is finalized for the year. The employee

starts working as per this and this is reviewed semi-annually. If there are any adjustments or revisions to

be made then it is done. The final review takes place when the end of the financial year nears by. In the

final review the ratings for the employee is given based on his performance with respect to his/her goal

sheet. The incentives are given based on these ratings.

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This process can be explained through an example of Mahindra and Mahindra limited. In this

organization the Measure of Performance (MOP/KRA) are drilled down to the lowest level of officer and

goal sheets are uploaded on line every year by 31st March for the next financial year. This is reviewed

semi-annually and then the final review is done at the year-end (Verma, 2014).

How are formal performance management sessions structured?In every formal performance management session the employee is rated on the basis of plan v/s actual

status of his/her goal sheet. This is doneby means of one-on-one interaction between the manager and

the individual. The frequency of these kind of reviews will be as mentioned in the previous answer.

Self-ratings have a tendency towards inflated assessments. The best use of self-rating is as a prelude to

the performance feedback session to get the employees thinking about their performance and to focus

a discussion on areas of disagreement (Kramar, et al., 2013).

In order to overcome the disadvantages of self-ratings a method of 360 degree feedback is roped in. This

refers to interacting with every stakeholder the employee deals with directly.

Managers, peers, subordinates and customers are also used as a source of performance information

apart from self.

The managers have adequate opportunity to see the day to day working of an individual and rate them

accordingly. The issue with only using manager as a source of performance information is that if the

manger is not able to observe the employee on a regular basis due to the job structure (e.g. Sales) or if

the structure of work is complex or varied (Kramar, et al., 2013).

Peers are an excellent source for performance information because they themselves are involved in a

similar job role and are actively interacting with the individual on the day-to-day basis. This context is

important in case of managing the performance of teams. A disadvantage of this method is that there is

a potential of personal feelings and biasness to overrule the actual feedback (Kramar, et al., 2013).

The third source can be subordinate that helps to evaluate how well a manager treats his subordinates

and also helps in evaluating an individual’s people management skills. The disadvantages to this is it

vests power in hands of subordinates over the mangers that can lead to mangers emphasizing more on

employee satisfaction rather than productivity (Kramar, et al., 2013).

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In a customer centric role customers can be used a valid source of performance information, many

organizations in service industry like Marriott and Whirlpool consumer service division conducts mail

surveys seeking feedbacks regarding the service provided to them (Kramar, et al., 2013).

To support the above with an example consider the structure adopted in Mahindra & Mahindra Ltd.

Once the KPIs and KRAs are defined in the goal setting procedures, the reviews are conducted on self-

basis. To support the same 360 degree feedback is preferred. The stakeholders involved in this are

decided on the basis of the job description the person relates to. For example an employee working in

the Sales and Customer service department is evaluated on the basis of customer feedbacks. For

employees in the Vendor Management department the Vendors are also preferred for a feedback.

Thus we can conclude that midyear and annual appraisal reviews are conducted and the structure

depends on the type of job description of the employees. For new joiners they have a performance

dialog in the sixth month of service before their confirmation (Verma, 2014).

How do they document the outcomes of performance management sessions and how are these stored?

The performance management sessions are undertaken frequently in the organizations and the

organizations ensure that the documented outcomes of these performance management sessions

are assessable and stored properly i.e. in accordance with the organizational policy (Kramar, et al.,

2013).

These documents/records can be used by the organization at any point in time in future and so it

becomes important to include all the material regarding the performance of each employee in a

particular format and store it formally and centrally (ideally on the central server).

The organizations keep these records very particularly as they can be of use to both either the

employer or the employee per the situation. The fired / dismissed employees can use these records

to challenge the decision to terminate them wherein the employer can use these records to

terminate the underperforming employees (Kramar, et al., 2013).

However, for the employees who are performing poorly from long period of time, this method could

run the risk of unfair dismissal actions without starting formal review procedures (Kramar, et al.,

2013).

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Mahindra & Mahindra Performance appraisals happens twice in a year one is a mid-year review and

the other happens at the end of year. The organization uses an online portal known as ‘Harmony E-

Portal’ all the data of PMS is recorded and stored via this portal on Server Online.

How do they ensure that the performance management system covers a range of employment situations?

The organizations ensure that the performance management system covers a range of employment

situations by implementing different options like Step Review System, Peer Review System, and

Ombudsman (Community Foundations of Canada (CFC ), 2014).

Even with the well implemented PMS, there may be situations where the employees are not

satisfied with the opinions of the managers about their performance appraisals and so to discuss

disagreement the employees can go through a procedure having options written above –

Step Review System – In this system, the disagreement of the employees is been heard

by the leaders and managers who are up in the hierarchy like the immediate bosses’

manager, the department head or even the executive director (Community Foundations

of Canada (CFC ), 2014).

Peers Review System – In this system, the small group of employee’s peers along with

the supervisor’s manager, look into the disagreement and take the decision

(Community Foundations of Canada (CFC ), 2014).

Ombudsman – In this system, the employees gain assistance from an individual within

the organization who is designated as impartial ombudsman (Community Foundations

of Canada (CFC ), 2014).

The PMS in Mahindra & Mahindra Ltd. Ensures that every employment situation is covered under it.

Once the companies objectives are finalized for the financial year the same is drilled down to each and

every department. The cumulatives of different objectives identified for each department sums up to

the organisational objectives. This can be very clearly observed in the KRAs and KPIs of indiviuals

working in different departments.For example – if the organisations objective is to be No 1. in Tractors

by volume then the a person working in ‘Sales department’ will have his KPI in terms of sales volume

increase. His counterpart of ‘Manufacturing department’ will have a KPI of maximizing the daily

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production rate in consensus with the sales target, also a person working in ‘Quality’ will be responsible

for zero defects at the same time.

What methods do they use for providing performance feedback?

The organizations use different methods to provide the performance feedback to the employees.

They provide the feedback in a way that shows positive behavioral responses to the employee to

which the feedback is provided. Some of the methods used for providing performance feedback

are:-

Providing Feedback more frequently than once a year - Providing feedback frequently is

better as it ensures that the employees become aware of the performance deficiencies

immediately once they get aware of them. Also, this will help them to be in line with

the final appraisal session so that they may not be surprised by the evaluation (Kramar,

et al., 2013).

Self-Rating before the session – The self-rating method helps the employees to think

about their performance as well as their weaknesses before the feedback session. This

practice also helps the session to go on more smoothly and let the discussion go on only

on those areas where the disagreement agrees between the manager and the

employee (Kramar, et al., 2013).

Encouraging employees to participate: - There are basically three methods or

approaches for this.

o Tell and Sell – Managers tell the employees how they have rated them and then

explain why they have given them the rating (Kramar, et al., 2013).

o Tell and Listen – In this approach, managers tell the employees about their

rating and then let the employees explain if they are satisfied or not (Kramar, et

al., 2013).

o Problem Solving – In this approach, both the manager and the employee work

together on the areas of disagreement and come to a common conclusion

without any arguments or disrespect for each other. This is as far the best

approach among the three (Kramar, et al., 2013)

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To support the above mentioned theory with an example of Mahindra & Mahindra Ltd. A formal

feedback session is held for every employee by his manager twice a year. Also during day to day work by

means of morning meetings and monthly Management Review Meetings (MRM) constructive feedbacks

are given to employees. To cater to the middle and senior management level such as ‘Deputy Mangers’,

‘Head of Departments’ and ‘Vice Presidents’ a third party known as ‘Gallup’ is hired. Under this system

an online survey is circulated among the employees to seek feedback regarding their senior managers.

This survey is very comprehensively analyzed and action plans for improvements are made accordingly.

How do they gain support for their performance management system?

The organizations gain support for their performance management system by regular

communication between their employees and the HR managers and especially from senior leaders.

In most of the companies the senior leaders like the CEO or Managing Director release

communication on regular intervals regarding the performance management system to motivate

the employees towards their regular duties as well as to bring transparency to the process. Senior

managers and leaders in the company also interact with the teams as well as individual employees

on regular intervals regarding any issues they are having with their subordinates or immediate

bosses.

For example, In HSBC, the senior leaders organize regular breakfast meetings with the individual

employees or a bunch of employees selected randomly from different teams and projects and

discuss about the grievances or problems which they are feel regarding the performance

management systems or feedback.

Their goal is always to link and keep in sync the employee activities with the strategic goals of the

organization as well as to furnish valid and vital information from the employees so that they can

use the same to make administrative decisions about them and to provide them with the useful

feedback regarding the same (Kramar, et al., 2013).

In Mahindra & Mahindra open communication is believed to be the key to success and hence PMS is

no exception to this belief. Regular communication especially from senior leaders, President himself

releases a communication mail on the same year on year. Communication mails from Chief people

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officer also comes at right intervals. To bring transparency to the process senior leaders of HR also

interacts every year during appraisal time with plant leadership teams (Verma, 2014).

ReferencesCommunity Foundations of Canada (CFC ). (2014, 8 2). HR Toolkit. Retrieved 8 2, 2014, from HR Council:

http://www.hrcouncil.ca

Eckerson, W. W. (2009). Performance management strategies:How to Create and Deploy Effective

Metrics. Seattle: TDWI. Retrieved February 8, 2014, from www.tdwi.org

Kramar, R., Bartram, T., Cieri, H. D., Noe, R. A., Hollenbeck, J. R., Gerhart, B., & Wright, P. M. (2013).

Human Resource Management in Australia (5th ed.). Sydney: Mc Graw Hill Education. Retrieved

Febuary 7, 2014

Verma, P. (2014, February 2). Human Resource Management in Mahindra & Mahindra Ltd. (D. Misra,

Interviewer)

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