Why do we need a performance management system?

This month I continue with my series of articles, aimed at grassroots organizations, on need for and basic structures of different HR processes.

-

Two common terms used in organizations are 'Performance based cultures' and 'Performance management system'.

What do these terms mean? How are they relevant for your organization? Does your organization need an 'off the shelf' or a 'customized' solution?

I will draw an analogy with a business planning exercise, where we decide firm’s objectives and lay out periodic milestones.

Similarly, a performance management system ensures such an objective and milestone setting exercise at team and individual level.

Outcomes of business planning exercise are cascaded down to performance management system. Objective setting is an important but not only key component of a performance management system. Periodic reviews and linkage to rewards are other two key components.

If you refer to motivation theories you will find that these 3 components cover 4 important individual motivation aspects:

1) We need 'goal clarity'

2) We need periodic feedback

3) We need to feel differentiated

4) We need money to sustain our hygiene needs.

What kind of a performance management system does your organization need? What are choices you want to make for each of 4 motivational aspects mentioned above?

-

Sourav