A New Look at Performance Management Systems for Organization Development

Paper presented at the Summit on Globalization of Human Resources, 2010, Taipei, World Trade Center, Nangang Exhibition Center, Taipei, Taiwan, September 24-25, 2010

T. V. Rao
Chairman, TVRLS

Performance Management System (PMS) as a HRD tool if designed and implemented properly gives rise to multiple advantages. This presentation focuses on PMS as a talent management tool. This presentation explains the multiple dimensions of PMS in promoting a performance culture, besides a discipline of planning, talent utilization, upward learning, human capital building, on-boarding, integration and assimilation and OD. The presentation outlines the essential elements a PMS should have to serve as an OD and change management tool. The session draws from various contemporary experiences of Indian corporations in various sectors. Some metrics for scoring and enhancing the value of PMS also are highlighted.

Learning Objectives.

  1. To understand the hitherto unexplored dimensions in the design of Performance Management Systems that meets multiple objectives of Organization Development and Talent Management.
  2. To share the experiences of various organizations and draw lessons for effective implementation of PMS.

Most performance appraisal and management systems across the world seem to have one or more of the following components:

  1. Performance Planning through Key Performance Areas (KPAs) or Key Result Areas (KRAs)
  2. Competencies and competency definitions
  3. Rating scales for assessment
  4. Performance Review Discussion (PRD) or Performance Coaching
  5. Identification of Developmental Needs
  6. Performance Analysis
  7. Self appraisal
  8. Appraisal or assessment by Seniors or Supervising Managers
  9. Potential assessment
  10. Recommendations for Recognition and rewards

One of the reasons for failure of performance appraisal systems across the world is an overemphasis on them as objective performance measurement tools. A deep look into the theory of numbers and the theory of scaling indicates that measuring performance of managers and supervisors using numbers and treating them as following properties of an interval scale (additive, multiplicative and subtractive and divisive) has a serious flaw. When two departmental managers are assessing their juniors, each one of them are using their own frame of reference and the circumstances under which each manager or employee functioned are not often comparable by virtue of the function and other things associated with the work. For example the circumstances in which a Research and development Manager is performing in pharmaceutical organizations are entirely different than the circumstances under which a Personnel manager or a Marketing Manager function. Yet we try to compare the ratings in distributing the incentives and attempt to apply normal probability curve etc.

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