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.

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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?

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Sourav

Bell Curves!

I had drafted this post a little more than a week back. 

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I have been neck deep into moderations (fitting employees in bell curve) over last half a week. I managed to complete the exercise by the end of the working week too. There was this sense of exaltation when I completed the exercise.

Over weekend, I have been wondering 'Moderation exercise has been completed successfully. But  has that ensured in better performance management?'

This question led me to another question 'Why do we have performance management systems? Why are they required?'.

The following are my answers. A good performance management system would have 4 elements effectively incorporated:

• Goals- clarity, mutual acceptance (SMART is one way of defining characteristics of effective goals), etc.
• Work planning- it's important that along with the 'what' the 'how' also gets captured. The 'How' is largely company specific.
• Review/feedback- an individual needs to know whether s/he is headed in right direction; and what changes in 'what' and 'how' need to be made.
• Rewards- employees must experience rewards process to be procedurally and distributively just.

What I experienced over last week was only distribution part of 'rewards' piece in the performance management framework.

I am eager to see what is the quality of discussions between a manager and his/her reporting employee at goals, work planning, and review/feedback stages.

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Sourav