STRATEGIC HUMAN RESOURCE MANAGEMENT Performance Management System PMS

STRATEGIC HUMAN RESOURCE MANAGEMENT Performance Management System (PMS)

Concept The major concern for the organization to assess the level of efficiency of the employees working in the organization. How the employees are performing, whether over performing or under performing all has to be judged in a relevant way to analyze the effectiveness of the employees and their contribution towards the goal of the firm.

Definition Performance management may be defined as a planned and systematic approach to manage the performance of individuals and ensuring their personal development and contribution towards organizational goals. - Ronnie Malcom

Combinations Consists of several terms: 1. 2. 3. 4. Performance assessment Performance appraisal Performance evaluation Performance management

Performance assessment The process by which data about employee’s past and current job performance is collected and reviewed. It involves the top-down judgmental approach where the manager acts as the judge for the employee’s performance and the adequacy.

Performance appraisal It is the system by which organization assign some score to indicate the level of past or current performance of an employee or group. The individual’s performance is compared to set with the given standards of the level when assigning the score.

Performance evaluation The process used to determine the extent to which an employee performs the given job effectively. Can also be called as merit ratings, performance review, employees evaluation.

Performance management It is a broader term that integrates goal setting, employee development, performance appraisal, reward system management into a common system to evaluate and measure the strategic goals of the organization in alignment with the personal goals of the individual.

Objectives Human resource planning – it include providing the information about human resource strengths and weakness and helps in determining the potential of all the employees of the organization. It constitutes the effective information base. Recruitment & selection – it includes the determination of effective recruitment systems and need of selections if any required.

Objectives Personnel decision – serves as the guide for making the appropriate decisions about promotions, layoffs etc. it helps in making the rational decision against any odds. Training & development – it helps in identifying the requirements in training and development in specific areas and helps to understand the deficiencies in the employees to curb out.

Objectives Feedback, motivation & personal development – helps in determining the actions plans for improvement and facilitate learning modules required for the same. Career planning & development – estimates the future growth opportunities for the employees. Requirement of counseling, assisting and implementing realistic career plans.

Objectives Compensation & reward – helps in taking decisions about fair reward system, rewards decision, bonus and compensation being subjectively distributed. Being the most effective way to motivate employees, reward system has to be linked up with the PMS. Internal employee relation – serves to maintain a perfect organizational culture and climate.

Classification of objectives � Evaluative objectives – validating selections, bonuses, incentives, promotions, salary/wage increase (manager is the judge and makes the reward decisions in this context). � Development objectives – feedback, motivation, T&D, career planning, HRP (manager acts as the coach who helps in performance improvement of the employee).

Importance � � � Helps in clarifying the mission, vision, strategy and values of the organization. Helps in improving business performance. Helps in attracting and retaining talents. Facilitates competency mapping, T&D, recruitment, selection and other major HR activities. Improves the organization’s ability to change faster and learn new techniques to cope up.

Imperatives to PMS � New developments � Cost containment � Performance improvement � Innovation � Continuous assessment

Elements of effective PMS � � � � Clarity and culture Process People management capability Measurement and reward Role of HR professionals Learning organization Motivation

Challenges � � � � Linking reward system with PMS Measuring organizational & employee results Using competencies in PMS Using PMS to improve organizational effectiveness Supporting organizational culture with PMS Developing & implementing PMS Aligning employees with organizational objectives and strategies

Questions