MEP ASSIGNMENT 1

8/9/2019 MEP ASSIGNMENT 1

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Well designed PMS: A key to improved organizational

Performance.

Hitesh Mehta (name changed), 24 is a young

MBA graduate from a reputed B-school,

bright student, merit ranker of the institute

and hence was easily placed in a top MNC.

However within the next year he left the

company. Hitesh describes his experience as

follows, the work was well defined

however the appraisal systems were unclear

and I didnt know the basis on which I was

judged. This is the story of many fresh

graduates joining a company and even thosewho are presently working. What may be the

reason behind this? Was the performance

management system faulty? What makes a

well designed performance management

system (PMS)? And what are the effects of a

well designed PMS? The present article tries

to focus on these key issues.

Performance going by dictionary can be

defined as achievement of quantified

objectives. Measuring performance is

essential for any organization as it represents

the present state of the company and steps

required to reach a desired future state.

Performance management is key area in any

organization as it gives the picture about

how well the various department and

organization as a whole is functioning. It

gives feedback which helps to takecorrective actions. The design of a PMS is

critical in this context. The aim of a well

designed PMS is to develop a culture where

individuals and teams take responsibility for

continuous improvement of business process

and their own skills. In this type of system

there is proper alignment of strategic goals

with individual and team goals. A well

designed PMS means the job description,

the competencies required, the appraisal

parameters, the training and development

need are all well defined. It ensures that only

Performance management systems are essential for efficient management of large scaleorganization. The main aspect of PMS is that it integrates all the HR functions likerecruitment, selection, appraisal, training, etc. A well designed PMS helps in proper alignmentof strategic goals with individual goals. The present articles focuses on various issues andaspects of a well designed Performance management system.

Key words: Performance, Performancemanagement system, Design of PMS,goals of PMS.


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those employees whose competencies match

to job profile are acquired. The employees

know the parameters on which they are

judged. In case of Hitesh, we can say that

the PMS in his organization was not well

designed. The system described the roles

clearly however there was a lack of

communication and openness. We can say

that a well designed PMS is one which is

near to ideal characteristics of PMS. A well

designed PMS must at least contain

characteristics like specificity, reliability,openness, strategic congruence,

meaningfulness, validity and it should be

able to identify effective and ineffective

performance.

The four phases of performance

management is Plan, Act, Monitor and

review. In a well designed PMS these phases

are properly implemented. The well

designed PMS describes clearly the roles

and responsibilities of a particular job and

competencies required. Thus it helps duringrecruitment to get employees which have

necessary skills. The employees know what

they are accountable for. There is a clear

communication regarding the performance

measure. The employees get chance of

negotiation during performance agreement

process. Once the employees agree there is

evaluation done every week, every month or

once in three months. This helps employees

to know their performance and areas of

improvement. The organization is benefited

as it knows which areas have to be given

more attention. In case the employees are

not meeting required performance, the

training and development function ensures

that they are given required skills to perform

adequately. Thus training is imparted to proper employees. Then a performance

review is carried out half yearly or yearly

which helps to judge how employees have

performed against the Key Performance

Indicators (KPI). Thus a well designed PMS

ensures proper utilization of financial

resources. The overall effectiveness

increases as there is less errors in

recruitment, training and development and

performance appraisal system. The well

designed jobs, roles, responsibilities and

KPI help employees to obtain correct

feedback. It helps in continuous

improvement of employees and processes. It

helps to meet the expectation of shareholder

and stakeholders. It can help an organization

to become an Employer of choice and thus

reduce employee turnover. The main feature

of a well designed PMS is that it takes into

Key words: Phases of PM, KPI and KRA,overall effectiveness.


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consideration the interest of employers and

their employees. It helps to achieve

operational efficiency and better

coordination between different functional

units.

There are examples of companies which

have benefited by a well designed PMS.

Tata Iron and Steel Company (TISCO) a

Tata group company launched a new

performance management system under its

restructuring program which included the

alignment of key result areas (KRAs) with

business strategy at all levels. It developed

clear career path and growth opportunities

for employees. The compensation was

linked to performance and linked to market.

This PMS and compensation system was

clear, transparent, fair and acceptable by

employees. The other example is of Arvind

Mills. Arvind Mills was the third largest

producer of denim in 1990s, however with

change in fashion from denim to gabardine

and corduroy, the business was severely hit.

The company adopted many new policies,

one of them was Management by objective

(MBO). This approach was focused on

producing results desired by management to

achieve organizational objectives and

focusing on satisfaction of employees. This

approach helped to generate harmonious

balance between top management and

workers. These examples show that a well

designed system not only helps to improveorganizational performance but also helps in

easy implementation (Som, 2003).

The various aspects and advantages of a

well designed PMS have been mentioned.

To conclude I would like to say that a well

designed PMS ensures that an organization

is on path to achieve its strategic goals,

obtain efficiency and effectiveness and keep

employees satisfied. This system affects the

overall HR functions and leads in

development of a Best organization which

differentiates itself from the Rest.

REFERENCES

Abrudan, M., & Coita, D. The importance of

implementing performance management

system in romanian firms (pp. 1204-1210):

University of Oradea.

Bhattacharya, S., & Nicolaou, A. (2005).

Organizational performance effects of ERPsystems usage: The impact of post

implementation changes. International

Journal of accounting information systems,

7 , 18-35.

Key words: Company in focus Tata Ironand Steel Company.


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Gliddon, D. (2004). Effective performance

management systems. ABI/ INFORM

Global, 43 (9), 27-34.

Johnson, G., Scholes, K., & Whittington, R.

(2005). Exploring Corporate Strategy Text

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Murphy, K., & Olsen, M. (2009).

Dimensions of high performance

management system. International Journal of contemporary hospitality management,

21(7), 836-853.

Muse, L., Harris, S., Giles, W., & Feild, H.

(2008). Work-life benefits and positive

organization behavior: is there a connection?

Journal of organizational behavior, 29 , 171-

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Shields, J. (2007). Managing employee

performance and reward (1 ed.). Sydney:

Cambridge University Press.

Som, A. (2003). Bracing competition

through innovative HRM in Indian firms:

lessons for MNEs . Essec. Cergy-Pontoise

Cedex.

Roos, G., Fernstrom, L., & Pike, S. (2004).

Human resource management and business

performance measurement. Measuring business excellance, 8 (1), 28-37.

Turner, T., Creighton, S., Nudurupati, S., &

Bititci, U. (2004). Implementing a web

enabled performance measurement system.

Measuring business excellance, 8 (2), 40-54.

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MEP ASSIGNMENT 1