Prerequisites for a Performance Management System

Performance management can be regarded as a continuous process managing the performances of people for getting desired results. Performance management is beneficial to all the major stakeholders of an organization by clearly describing what is supposed to be done for attaining certain desired goals. Performance management is the heart of any HR processes in an organization as it influences the rest other HR functions or processes. Focus on performance management may be fruitless without the existence of proper organizational design and management systems.

Some of the essential pre requisites without which performance management system will not function effectively in an organization are:

• Should attract very high levels of participation from all the members concerned in an organization. It should be a participative process.

• Top management support and commitment is very essential for building a sound performance culture in an organization.

• Organizational vision, mission and goals should be clearly defined and understood by all levels so that the efforts are directed towards the realization of the organizational ambitions.

• Clear definition of the roles for performing a given job within the organizational framework which emanates from the departmental and the organizational objectives. The system should also be able to explain the linkages of a role with other roles.

• Open and transparent communication should prevail which will motivate the employees for participating freely and delivering high performance. Communication is an essential pre requisite for a performance management process as it clarifies the expectations and enables the parties in understanding the desired behaviors or expected results.

• Identification of major performance parameters and definition of key performance indicators.

• Consistency and fairness in application.

• A commitment towards recognition of high performance. Rewards and recognitions should be built within the framework of performance management framework.

• Proper organizational training should be provided to the staff members based on the identification of training needs from periodic evaluation and review of performance. This will motivate the employees for a superior performance.

Tata Iron and Steel Company (TISCO), a flagship company of India involved in manufacturing of cost effective steel can be appreciated for their initiatives in the implementation of an effective performance management framework and innovative HR practices.

TISCO initiated a management restructuring programme for transforming into a high performing and a growing organization. In the HR front, the management focused on providing exciting career opportunities and building a team of high performing professionals for which they hired Mckinsey and Co. The consultants firstly started with building a lean and a flat strategic business unit with enriched jobs, increased accountabilities and autonomy.

A Performance Ethic Programme (PEP) was also introduced for promoting young and dynamic professionals and this was a replacement of seniority based promotions.

A new Performance Management System (PMS) was introduced for aligning the KRA’s with the business strategies and identifying superior performers in the organization by defining clear career paths and accountabilities.

The rewards and recognitions were linked with the PMS. The new measures in the direction of performance management boosted the employee’s motivation and performance.

The job satisfaction also improved due to the introduction of a fair and transparent reward system.

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