Components of a Performance Management System
Key Components:
1. Goal Setting and Planning:
Establish clear, SMART goals for individuals and teams.
2. Continuous Monitoring:
Track performance regularly against set objectives
3. Performance Review and Evaluation:
Evaluate employee performance, provide ratings and feedback.
4. Feedback and Development
Provide constructive feedback and development opportunities.
Objectives of Performance Management System
Objectives of Performance Management System
Goal Alignment: Ensure individual performance supports organizational goals.
Employee Development: Identify areas for improvement and foster growth.
Accountability: Hold employees accountable for their performance.
Motivation and Engagement: Boost employee morale through regular feedback and
recognition.
Data for Decision-Making: Use performance data to inform rewards, promotions and
development programs
Types of Performance Management Systems
Different Approaches:
1. Traditional Annual Reviews: Performance evaluated once or twice a year.
2. Continuous Feedback Systems: Real-time feedback and development conversations.
3. 360-Feedback: Multi-source feedback from peers, subordinated and supervisors.
4. Balanced Scorecard: Measures performance across multiple perspectives (financial,
customer, internal processes, learning and growth.
Benefits of an Effective Performance Management System
For Organizations:
Increases alignment between employee output and business strategies.
Enhances decision-making through data-driven insights.
Reduces turnover by fostering a culture of development.
Employees:
Clear expectations and goals.
Opportunities for professional growth.
Regular feedback enhances performance and motivation
✓ PMS is an ongoing process, not just a one-time appraisal.
✓ Its crucial for both organizational success and employee development.
✓ Different approaches can be used and technology can enhance the process.
Incorporating PMS into Management Accounting
Incorporating Performance Management Systems (PMS) into a Management Accounting
course is essential because these systems directly impact the financial performance and
strategic goals of an organization. Here are several reasons why PMS is an important part of
the course:
1. Aligning Financial and Non-Financial Goals
2. Improved Decision-Making
3. Cost Control and Efficiency
4. Measuring and Monitoring KPIs
5. Budgeting and Forecasting
6. Linking Performance to Compensation and Incentives
7. Risk Management
8. Supporting Strategic Objectives
9. Accountability and Transparency
10. Enhancing organizational Agility
The Concept of Performance Management
Performance has a linkage with the individual potential and how best it is realized by the
individual. With regard to manage, his/her potential becomes the input to the productive
process and performance is the output.
Managee’s potential is determined when a set of tasks are assigned to him. It is also related
to performance set.
Stakeholder’s Expectation
Group and Organizational Purpose
Group or Organization Capacities and Resources
Human Climate in the Group or Organization.
Quality of Up-stream or Vendor Inputs
Feedback on Performance
Role Design
Provide a vehicle for implementing performance plans and expectations
requisite competencies
knowledge and skills
task-related attributes
Managerial leadership
determinants of managee’s development
Group Climate
Collective outcome of the behavior and attitudes of all members.
Three abilities or forces in an individual are said to be essential for achievement:
desire or motivation
knowledge or know-how
action to actualize
Performance Management System (Integration)
Is a way of systematically managing people for:
Innovation
Goal-focus
Productivity
Satisfaction
All task teams who believe in its process, its approach and implementation do it with sincerity
and commitment.
Fours Types of Integration:
Vertical Integration
Functional Integration
Human Resource Integration
Goal Integration
Basic Principles of Effective PMS
Transparency
Employee Development and Empowerment
Values
Congenial Work Environment
External Environment
Features or Characteristics of Effective Performance Management
1. Clarity of Organizational Goals.
2. Evaluation
3. Cooperation but not Control
4. Self-Management Teams
5. Leadership Development
6. Honesty to Ensure Better and Effective Two-Way Communication
7. Feedback Mechanism
The Process of Performance Management
Special
features for PM to be effective and qualitative
Continuous Process
Flexible
Futuristic
Participatory
Controlling
Behavioral in Content
Win-Win Philosophy
Keys to High Performance
Trust
Oppurtunity
Competence
- measuring What is important
- knowledge and capability
High-Performance Group
- Achieve their goals
- Flow in alignment and intention
- Learn, adapt, and Improve quickly
Organizational Performance
Why is
Measuring Organization Performance Important?
Performance Improvement
Model
Step 1: Establish the Transformation Improvement Process Management and Cultural
Environment
Step 2: Define the Mission
Step 3: Set Improvement Goals
Step 4: Establish Improvement Projects and Action Plans
Step 5: Implement Projects with Performance Tools and Methodologies
Step 6: Evaluate
Step 7: Review and Recycle
Multi-Source Feedback in Performance Management
Employees/manages contribution and organizational results;
Recognition and Rewards received by the employee;
Career development opportunities of the employee.
Features of Multi-Source Feedback
Feedback Anonymity and Rater Confidentiality
More than One Rater and Different Sources
Raters Provide Feedback Based on the Extent of Interaction
Features of multi-source feedback graphics - Google Search
Merits of Multi-Source Feedback
Greater buy-in due to more transparency and objectivity;
Extensive employee involvement;
Comprehensive feedback;
Balancing and moderation of rater bias;
Difficult to ignore;
More insight for self, managers and HR to plan initiatives and take decisions;
Lower threat perception from negative feedback due to anonymous input;
Creates an alignment between an employee and organizational values and behaviors;
Increases team orientation and communication channels;
Focuses employees on self-development;
Can also be extended to recruitment and exit interviews.
What is Multi-Source Feedback Used for?
