1. Human Resource
Management
Performance
Management System
2014
GROUP NO: 1
DHRUV MISRA
PRAJAKTA TALHATI
OBIE THERATHANATH CHERIAN
AMIT NANKANI
VENKATARAM GRANDHI

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Contents
Doesthe organizationanalysesitsstrategicandoperationalplanstoidentifyobjectivesfortheir
performance management system?.....................................................................................................2
How does the organization develop KPIs and how do they measure and assess their achievement?........3
How often do they engage employees in formal performance management sessions? ...........................5
How are formal performance management sessions structured? ..........................................................6
How dotheydocumentthe outcomesof performance managementsessionsandhow are these stored?
..........................................................................................................................................................7
How dotheyensure thatthe performance managementsystemcoversarange of employment
situations?.........................................................................................................................................8
What methods do they use for providing performance feedback?.........................................................9
How do they gain support for their performance management system?..............................................10
References.......................................................................................................................................11

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Figure 1: Performance Management Cycle (Eckerson, 2009).
Does the organization analyses its strategic and operational plans to
identify objectives for their performance management system?
Yes organizations analyses its strategic operational plans to identify objectives for their PMS because
that givesaclear linkage betweenpeoples KRA’s and Companies goals, this also helps organizations to
clearly demarcate between each individuals responsibilities and roles.
To put more emphasisonlinkage betweenorganization’s strategy and PMS, Performance Planning and
Evaluation(PPE) systemsare becomingpopularinorganizations. If the strategy is not aligned with PMS
the probability of organization achieving its goals becomes negligible. Under a PPE system a yearly
performance planismappedforeveryemployee andat the year end the same is evaluated (Kramar, et
al., 2013).
The above can be exemplified through an example of Mahindra and Mahindra limited:
Every year a process is conducted which is called Management Business Review (MBR). During the
processthe president policy of that year is shared with all business CE’s and thereon they derive their

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policy for their own business and this way this entire process goes to the lower level of officer in the
organization (Verma, 2014).
Figure 2: Example of Policy Linkage to PMS (Verma, 2014)
How does the organization develop KPIs and how do they measure and
assess their achievement?
Ideally the KPIs should be Specific, Measurable, Achievable, Reviewable, and Time-bound (SMART).
The following 5 criterion are important for development of KPIs
 STRATAGIC CONGRUENCE
It referstothe extenttowhichthe KPIsstimulate the jobperformance thatisin- line withthe
mission, vision & goals of the company.
 VALIDITY
The content of the KPI should not be deficient or contaminated. This means that the
performance measure should be able to asses all relevant aspects of the job description.
 RELIABILITY
Thisis a veryqualitative aspectthatassertsonthe consistencyof the performance measure.
It emphasizesonbeingfairtoeveryindividual irrespective of different managers reviewing
them.

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 ACCEPTABILITY
This depends on an individual’s perspective to view the performance measure. The KPI’s
developedshouldbe acceptedbythe employees and the managers and not considered as a
waste of time or an unfair system.
 SPECIFICITY
The KPI’sshouldpainta clearpicture of what isexpectedoutof an employee andmethodsby
which they can be achieved.
There can be variousapproachesto measure the performance andaccessthe achievements.The type of
approach to be taken depends the type of organization. The Different types of approaches are
mentioned below.
 Comparative approach
In thismethodthe individualsinateamare comparedwitheachother onthe basis of their
performance and also on the basis of their designation.
There are various tools to implement comparative approach i.e. Ranking, Forced
Distribution and Paired comparison.
 Attribute Approach
Under thisa setof performance dimensionsare developedwithrespectto job description.
These dimensionscanbe traitslike leadership,initiates,team-worketc. The individuals are
analyzed on the basis of these traits using graphical rating scales and mixed standard
scales.
 Behavioral Approach
In this the performance measure defines the behavior an employee should exhibit to
performeffectively.Forinstance in‘critical incident’approachthe managerskeepanote of
effective and ineffective performance instances of each employee also under the
‘organizational behavior modification’ a behavioral feedback and reinforcement
mechanism is setup.
 Results Approach
This approach focusses on final objective. Result approach is used by:
Management by Objective (MBO)

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Here the top management defines the company’s strategic goals, which are then
passedonto the nextmanagementlevel andsoon.At everylevelthese strategic goals
are targeted for the goal setting process (Kramar, et al., 2013).
Mahindra and Mahindra uses Result approach to Measure the performance and also to develop the
KPI’s. The goals on organizational levels are developed during the blue chip meeting and MBR
workshops,these are generally3yeargoalswhichare termedaspromises,onthe basisof the long term
goalsthe KPI’sof the topmanagementisdecidedandthatbecomestheir goal sheets based on the goal
sheetof the top managementthe KPI’sof the middle managementisdecideddepartmentwise and that
furtherdrillsdowntothe operational level. Forall KPI’sthe levelof performance are determined. Level
4 and 5 are mandatorilyqualitativeLOP’sandnotactivity based. Once these KPI’s are made in the start
of the yearat the endof the yearthe performance of anindividual ismeasuredonthe basis of the level
of achievement of each KPI which was given in his goal sheet (Verma, 2014).
How often do they engage employees in formal performance
management sessions?
The human resource department is responsible for the involvement of employees in the formal
performance management session. The frequency of this varies from organization to organization. In
general the minimum involvementcomprisesaformal sessionof trainingthatdeliversthe details of the
performance management system and the working structure. After this at the beginning of every
financial yearthe goal settingsessionisheldforall the employees.Here the KPIsandKRAsare identified
and with the consensus of the employee and the manager it is finalized for the year. The employee
starts workingasper thisandthisis reviewedsemi-annually.If there are anyadjustmentsorrevisionsto
be made thenit is done.The final review takesplace whenthe endof the financial year nears by. In the
final review the ratingsforthe employeeisgivenbasedonhisperformance with respect to his/her goal
sheet. The incentives are given based on these ratings.
This process can be explained through an example of Mahindra and Mahindra limited. In this
organizationthe Measure of Performance (MOP/KRA) are drilleddowntothe lowestlevelof officer and
goal sheets are uploaded on line every year by 31st March for the next financial year. This is reviewed
semi-annually and then the final review is done at the year-end (Verma, 2014).

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How are formal performance management sessions structured?
In everyformal performance managementsessionthe employee is rated on the basis of plan v/s actual
statusof his/hergoal sheet.Thisisdoneby meansof one-on-oneinteraction between the manager and
the individual. The frequency of these kind of reviews will be as mentioned in the previous answer.
Self-ratingshave atendencytowardsinflatedassessments.The best use of self-rating is as a prelude to
the performance feedbacksessiontogetthe employeesthinking about their performance and to focus
a discussion on areas of disagreement (Kramar, et al., 2013).
In order to overcome the disadvantages of self-ratings a method of 360 degree feedback is roped in.
This refers to interacting with every stakeholder the employee deals with directly.
Managers, peers, subordinates and customers are also used as a source of performance information
apart from self.
The managershave adequate opportunitytosee the day to day working of an individual and rate them
accordingly. The issue with only using manager as a source of performance information is that if the
mangeris notable to observe the employee on a regular basis due to the job structure (e.g. Sales) or if
the structure of work is complex or varied (Kramar, et al., 2013).
Peersare an excellent source for performance information because they themselves are involved in a
similarjob role and are actively interacting with the individual on the day-to-day basis. This context is
importantincase of managingthe performance of teams.A disadvantage of thismethod is that there is
a potential of personal feelings and biasness to overrule the actual feedback (Kramar, et al., 2013).
The third source can be subordinate thathelps to evaluate how well a manager treats his subordinates
and also helps in evaluating an individual’s people management skills. The disadvantages to this is it
vestspowerinhandsof subordinatesoverthe mangers that can lead to mangers emphasizing more on
employee satisfaction rather than productivity (Kramar, et al., 2013).
In a customer centric role customers can be used a valid source of performance information, many
organizations in service industry like Marriott and Whirlpool consumer service division conducts mail
surveys seeking feedbacks regarding the service provided to them (Kramar, et al., 2013).
To support the above with an example consider the structure adopted in Mahindra & Mahindra Ltd.
Once the KPIsand KRAsare defined in the goal setting procedures, the reviews are conducted on self-
basis. To support the same 360 degree feedback is preferred. The stakeholders involved in this are
decidedonthe basisof the job descriptionthe person relates to. For example an employee working in

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the Sales and Customer service department is evaluated on the basis of customer feedbacks. For
employees in the Vendor Management department the Vendors are also preferred for a feedback.
Thus we can conclude that midyear and annual appraisal reviews are conducted and the structure
depends on the type of job description of the employees. For new joiners they have a performance
dialog in the sixth month of service before their confirmation (Verma, 2014).
How do they document the outcomes of performance management
sessions and how are these stored?
The performance management sessions are undertaken frequently in the organizations and the
organizations ensure thatthe documented outcomes of these performance management sessions
are assessable andstoredproperly i.e. in accordance with the organizational policy (Kramar, et al.,
2013).
These documents/records can be used by the organization at any point in time in future and so it
becomes important to include all the material regarding the performance of each employee in a
particular format and store it formally and centrally (ideally on the central server).
The organizations keep these records very particularly as they can be of use to both either the
employerorthe employee perthe situation.The fired/dismissedemployees can use these records
to challenge the decision to terminate them wherein the employer can use these records to
terminate the underperforming employees (Kramar, et al., 2013).
However,forthe employeeswhoare performingpoorlyfromlongperiodof time,thismethodcould
run the risk of unfair dismissal actions without starting formal review procedures (Kramar, et al.,
2013).
Mahindra & MahindraPerformance appraisalshappenstwice inayearone is a mid-yearreview and
the otherhappensat the endof year.The organization uses an online portal known as ‘Harmony E-
Portal’ all the data of PMS is recorded and stored via this portal on Server Online.

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How do they ensure that the performance management system covers a
range of employment situations?
The organizationsensure thatthe performance managementsystemcoversarange of employment
situations by implementing different options like Step Review System, Peer Review System, and
Ombudsman (Community Foundations of Canada (CFC ), 2014).
Even with the well implemented PMS, there may be situations where the employees are not
satisfied with the opinions of the managers about their performance appraisals and so to discuss
disagreement the employees can go through a procedure having options written above –
 StepReviewSystem –Inthissystem, the disagreementof the employees is been heard
by the leaders and managers who are up in the hierarchy like the immediate bosses’
manager,the departmentheadoreventhe executive director (CommunityFoundations
of Canada (CFC ), 2014).
 PeersReview System –Inthis system, the small group of employee’s peers along with
the supervisor’s manager, look into the disagreement and take the decision
(Community Foundations of Canada (CFC ), 2014).
 Ombudsman – Inthissystem, the employees gain assistance from an individual within
the organizationwhoisdesignated asimpartial ombudsman (Community Foundations
of Canada (CFC ), 2014).
The PMS in Mahindra & Mahindra Ltd. Ensures that every employment situation is covered under it.
Once the companiesobjectivesare finalizedfor the financial year the same is drilled down to each and
everydepartment.The cumulatives of different objectives identified for each department sums up to
the organisational objectives. This can be very clearly observed in the KRAs and KPIs of indiviuals
workingindifferentdepartments.Forexample – if the organisations objective is to be No 1. in Tractors
by volume then the a person working in ‘Sales department’ will have his KPI in terms of sales volume
increase. His counterpart of ‘Manufacturing department’ will have a KPI of maximizing the daily
productionrate inconsensus withthe salestarget,alsoapersonworkingin ‘Quality’willbe responsible
for zero defects at the same time.

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What methods do they use for providing performance feedback?
The organizations use different methods to provide the performance feedback to the employees.
They provide the feedback in a way that shows positive behavioral responses to the employee to
which the feedback is provided. Some of the methods used for providing performance feedback
are:-
 ProvidingFeedbackmore frequentlythanonce ayear - Providingfeedbackfrequentlyis
betteras itensuresthatthe employeesbecome aware of the performance deficiencies
immediately once they get aware of them. Also, this will help them to be in line with
the final appraisal sessionsothattheymay not be surprisedbythe evaluation (Kramar,
et al., 2013).
 Self-Rating before the session – The self-rating method helps the employees to think
abouttheirperformance aswell astheirweaknessesbefore the feedback session. This
practice alsohelpsthe sessiontogoon more smoothlyandletthe discussiongoononly
on those areas where the disagreement agrees between the manager and the
employee (Kramar, et al., 2013).
 Encouraging employees to participate: - There are basically three methods or
approaches for this.
o Tell andSell – Managers tell the employeeshow theyhave ratedthemandthen
explain why they have given them the rating (Kramar, et al., 2013).
o Tell and Listen – In this approach, managers tell the employees about their
ratingand thenletthe employeesexplainif theyare satisfiedornot(Kramar, et
al., 2013).
o ProblemSolving – In this approach, both the manager and the employee work
together on the areas of disagreement and come to a common conclusion
without any arguments or disrespect for each other. This is as far the best
approach among the three (Kramar, et al., 2013)
To support the above mentioned theory with an example of Mahindra & Mahindra Ltd. A formal
feedbacksessionisheldforeveryemployee byhismanagertwice ayear.Alsoduringdayto day work by
meansof morningmeetingsandmonthlyManagementReview Meetings(MRM) constructive feedbacks

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are giventoemployees.Tocaterto the middle and seniormanagementlevel such as ‘Deputy Mangers’,
‘Headof Departments’and‘Vice Presidents’ a third party known as ‘Gallup’ is hired. Under this system
an online surveyiscirculated amongthe employees to seek feedback regarding their senior managers.
Thissurveyisverycomprehensivelyanalyzedandactionplansfor improvements are made accordingly.
How do they gain support for their performance management system?
The organizations gain support for their performance management system by regular
communicationbetweentheiremployeesandthe HR managersand especially from senior leaders.
In most of the companies the senior leaders like the CEO or Managing Director release
communication on regular intervals regarding the performance management system to motivate
the employees towards their regular duties as well as to bring transparency to the process. Senior
managersand leadersinthe companyalso interactwith the teams as well as individual employees
on regular intervals regarding any issues they are having with their subordinates or immediate
bosses.
For example, In HSBC, the senior leaders organize regular breakfast meetings with the individual
employees or a bunch of employees selected randomly from different teams and projects and
discuss about the grievances or problems which they are feel regarding the performance
management systems or feedback.
Theirgoal is always to link and keep in sync the employee activities with the strategic goals of the
organization as well as to furnish valid and vital information from the employees so that they can
use the same to make administrative decisions about them and to provide them with the useful
feedback regarding the same (Kramar, et al., 2013).
In Mahindra& Mahindraopencommunicationisbelievedtobe the keytosuccessand hence PMS is
no exceptiontothisbelief. Regularcommunicationespecially fromseniorleaders, Presidenthimself
releasesacommunicationmail onthe same year on year. Communication mails from Chief people
officeralso comes at right intervals. To bring transparency to the process senior leaders of HR also
interacts every year during appraisal time with plant leadership teams (Verma, 2014).

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References
CommunityFoundationsof Canada(CFC).(2014, 8 2). HR Toolkit. Retrieved82, 2014, fromHR Council:
http://www.hrcouncil.ca
Eckerson,W. W. (2009). Performancemanagementstrategies:How to Createand Deploy Effective
Metrics. Seattle:TDWI.RetrievedFebruary8,2014, from www.tdwi.org
Kramar, R.,Bartram, T., Cieri,H.D., Noe,R.A.,Hollenbeck,J.R.,Gerhart,B.,& Wright,P.M. (2013).
Human ResourceManagementin Australia (5thed.).Sydney:McGraw Hill Education.Retrieved
Febuary7, 2014
Verma,P.(2014, February2). HumanResource ManagementinMahindra& MahindraLtd. (D.Misra,
Interviewer)