A

PROJECT REPORT
ON

PERFORMANCE MANAGEMENT SYSTEM

BY
MR. SAURABH SHIRISHKAR

UNDER THE GUIDENCE OF

PROF.DIVYESH NAGARKAR

SUBMITTED TO
UNIVERSITY OF MUMBAI
In the partial fulfilment of the requirement for the award of the
Degree
Of
Master of Management Studies (MMS)
Through

MADANBHAI SURA INSTITUTE OF BUSINESS

MANAGEMENT, KHED
2018-2020

1
 ACKNOWLEDGEMENT

I express my gratitude to college for arranging the summer training in good schedule. I

also extend my gratitude to my project guide PROF. DIVYESH NAGARKAR, who assisted

me in compiling the project.

I would also like to thank all the faculty members of “MADANBHAI SURA

INSTITUTE OF BUSINESS MANAGEMENT, KHED” for their critical advice and

guidance without which this project would not have been possible.

Last but not the lease I place a deep sense of gratitude to my family members and my

friends who have been constant source of inspiration during the preparation of this project

work.

DATE- MR. SAURABH SHIRISHKAR

PLACE- KHED

2
 DECLARATION

I Am MR. SAURABH SHIRISHKAR hereby declare that the project report entitled

“Performance Management Process” is a genuine project prepared by me in partial

fulfilment of degree of Master of Business Administration of University of Mumbai.

The Project is original and the conclusions drawn herein are based on the data collected

and analysed by me.

Date:

Place:

MR. SAURABH SHIRISHKAR

3
 CERTIFICATE
This is to certify that “MR. MR. SAURABH SHIRISHKAR” has submitted
Summer Internship Report titled “PERFORMANCE MANAGEMENT SYSTEM”
completed as per requirement of the two years full time Master of Management studies
(MMS) course of Mumbai University for III Semester of the academic year 2018-2020.

Date : / /2020

Dr. PRASAD BHANAGE PROF.DIVYESH NAGARKAR

(Director-MSIBM) (Project Guide)

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 INDEX
____

SR.No. TITLE PAGE No.

1
1 Executive summary

2-17
2 Introduction

18
3 Objective of the study

19
4 Research Methodology

20-27
5 Project Work Undertaken

28-29
6 Recommendations and
Conclusions
30
7 Bibliography

5
 EXECUTIVE SUMMARY

My intension behind choosing this topic was to identify and understand

the process running in the company. For doing this, I preferred Questionnaire

method as a source for collecting primary data from the employees and at the

same time proper guidance from the HR Manager.

This Projects have helped me in studding how the Performance

Management System flows in an organization and how it is fruitful to the

organization as a whole.

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 INTRODUCTION

PERFORMANCE MANAGEMENT SYSTEM

Definition of Performance Management System

Performance Management is a process that provides feedback,

accountability, and documentation for performance outcomes. It helps employees

to channel their talents toward organizational goals.

The fundamental goal of performance management is to promote and

improve employee effectiveness. It is a continuous process where managers and

employees work together to plan, monitor and review an employee's work

objectives or goals and his or her overall contribution to the organization.

According to Armstrong and baron (1998), Performance Management

is a both a strategic and an integrated approach to delivering successful result in

organizations by improving the performance and developing the capabilities of

teams and individuals. The terms performance managements gained its popularity

in yearly 1980’s when total quality management programs received at most

importance for achievements of superior standards and quality performance.

Performance management is an ongoing communication process which is carried

between the supervisors and the employees throughout the year. The process is

very much cyclical and continuous in nature.

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 Performance management frameworks are designed with

the objective of improving both individual and organizational performance by

identifying performance requirements, providing regular feedback and assisting

the employees in their career development.

A Performance Management System includes the following actions:

❖ Developing Clear Job descriptions and employee performance plans which

includes the key result areas (KRA) and performance indicators.

❖ Selection of right set of people by implementing and appropriate selection

process.

❖ Negotiating requirements and performance standards for measuring the

outcome and overall productivity against the predefined benchmarks.

❖ Providing continues coaching and feedback during the period of delivery

of performance.

❖ Identifying the training and development need by measuring the outcomes

achieved against the set standards and implementing effective development

programs or improvement.

❖ Holding quarterly performance development discussion and evaluating

employee performance on the basis of performance plans.

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The major objectives of performance management:-

❖ To enable the employees towards achievement of superior standards of

work performance.

❖ To help the employees in identifying the knowledge and skills required for

performing the job efficiently as this would drive their focus towards

performing the right task in the right way.

❖ Boosting the performance of the employees by encouraging employee

empowerment, motivation and implementation of an effective reward

mechanism.

❖ Promoting a two way system of communication between the supervisors

and the employees for clarifying expectations about the roles and

accountabilities, communicating the functional and organizational goals,

providing a regular and a transparent feedback for improving employee

performance and continuous coaching.

❖ Identifying the barriers to effective performance and resolving those

barriers through constant monitoring, coaching and development

interventions.

❖ Creating a basis for several administrative decisions strategic planning,

succession planning, promotions and performance based payment.

❖ Promoting personal growth and advancement in the career of the

employees by helping them in acquiring the desired knowledge and skills.

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Some of the key concerns of a performance management system in an
organization are:-

❖ Concerned with the output (the results achieved), outcomes, processes

required for reaching the results and also the inputs (knowledge, skills and

attitudes).

❖ Concerned with measurement of results and review of progress in the

achievement of set targets.

❖ Concerned with defining business plans in advance for shaping a

successful future.

❖ Striving for continuous improvement and continuous development by

creating a learning culture and an open system.

❖ Concerned with establishing a culture of trust and mutual understanding

that fosters free flow of communication at all levels in matters such as

clarification of expectations and sharing of information on the core values

of an organization which binds the team together.

❖ Concerned with the provision of procedural fairness and transparency in

the process of decision making.

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PROCESS OF PERFORMANCE MANAGEMENT SYSTEM
The process of performance management starts with the joining of a new

incumbent in a system and ends when an employee quits the organization.

Performance management is an ongoing communication process which is

carried between the supervisors and the employees throughout the year.

Employee Performance Management usually contains several steps for

guiding and evaluating employees. These steps include:
1. Planning and Expectation Setting
2. Monitoring
3. Development and Improvement
4. Periodic Rating
5. Rewards and Compensation

Figure.1.Process of PMS

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1)Planning: -

The Planning phase starts with companies deciding on the necessary employee
jobs and task that need to be completed in the work place. Mangers will decide
on the specific task and wages for each job prior to hiring employees. Once a
suitable employee is hired, the employee performance management system
moves into the monitoring phase.

2)Monitoring: -
The Monitoring phase of employee management involves managers training
and watching how the employees perform his job.

3)Developing: -
The monitoring phase dovetails with the development phase of the employee
performance management system. As managers monitor each employee, they
will usually offer tips and advice for completing task more effectively and
efficiently. These two phases usually make up the bulk of employee
management, as they address the actual task and job performance of each
employee in the company. These two phase are followed the rating portion of
employee management.

4) Rating:-
The rating phase of the employee performance management system is created
by each company according to their management style and company culture.
Most companies will explain the rating system to employees while scoring the
employee appropriately based on his job performance and productivity. Rating
employee is completely on the periodic basis, depending on the company and its
employee performance management system.

5)Rewarding: -

After an employee is rated for his performance, the company will reward the
employee. Rewards can be monetary or incentive based. Common monitory
rewards include bonuses, merits pay increases for gift, cards; incentive style

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rewards include banquets with recognition plaques or trophies, extra vacation
days or physical gifts of goods or services. Companies may use a mix of
rewards on tiered basis; allowing employees to strive for the best rewards
available for their job performance.

BENEFITS OF A PERFORMANCE MANAGEMENT SYSTEM:-

An effective performance management system can play a very crucial role

in managing the performance in an organization by:

❖ Ensuring that the employees understand the importance of their

contributions to the organizational goals and objectives.

❖ Ensuring each employee understands what is expected from them and

equally ascertaining whether the employees possess the required skills and

support for fulfilling such expectations.

❖ Ensuring proper aligning or linking of objectives and facilitating effective

communication throughout the organization.

❖ Facilitating a cordial and a harmonious relationship between an individual

employee and the line manager based on trust and empowerment.

Performance management practices can have a positive influence on the job

satisfaction and employee loyalty by:

❖ Regularly providing open and transparent job feedbacks to the

employees.

❖ Establishing a clear linkage between performance and compensation

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❖ Providing ample learning and development opportunities by

representing the employees in leadership development programmes,

etc.

❖ Evaluating performance and distributing incentives and rewards on a

fair and equated basis.

❖ Establishing clear performance objectives by facilitating an open

communication and a joint dialogue.

❖ Recognizing and rewarding good performance in an organization

❖ Providing maximum opportunities for career growth.

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 WHAT CAN HR DO TO DRIVE HIGH
PERFORMANCE IN YOUR ORGANIZATION?

Set clear goals and expectations – Ensure personal goals in some way contribute

to the achievement of the organization’s high level goals. Give your managers

and employees (since they should participate in writing their own goals) annual

training on how to write effective goals. It’s not an easy skill to master, and we

easily forget how to do it well. And make it a priority in you organization to

regularly communicate the progress and status for high level organizational goals

In terms of setting expectations, make sure managers and employees review

goals set for the year. Use organizational and job-specific competencies to

clarify expectations and help describe what it takes to be successful in a role.

Provide regular feedback – Think of feedback and recognition as an

investment in future performance. Have managers provide both formal and

informal feedback and recognition. Managers should clearly tell employees

what they are doing well, and why the behavior is valued (impact on team,

organization, customer, etc.).

Feedback should clearly tell what behavior needs to change/improve

and why (impact on team, organization, customer, etc.). Feedback should

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include a specific example of when the behaviour in question was demonstrated

(no generalizations!).

Support employee development and success– Building organizational bench

strength is just good business. By investing in your employee’s development,

you ensure your organization has the built-in knowledge skills and experience it

needs to succeed, both today and tomorrow. It’s also a critical way to drive up

employee retention.

Remember, development can take many forms: mentoring, job shadowing,

volunteer work, lunch and learn sessions, reading books/journals/blogs,

coaching, cross-functional team assignments, webinars, podcasts, etc. Managers

(and HR) should engage employees to identify the learning activities most

appropriate to their needs.

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TRAIN YOUR MANAGERS TO BE BETTER LEADERS

To be successful at performance management, your organization needs people

managers who can coach. If the role of the manager is to accomplish or

facilitate work through others, then managers need to effectively direct and

develop their employees.

As an HR leader you should be ensuring managers are trained on basic

supervision skills and trained in coaching and giving performance feedback.

Your managers should also be trained on using your organization’s performance

management system well.

It can’t be stressed enough: the manager-employee relationship is critical to

employee engagement and retention of top performers. As a result, managers

should be working hard to build trusting relationships with each employee they

supervise.

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KEY RESULT AREA:-

Performance management practices can have a positive influence

on the job satisfaction and employee loyalty by:

▪ Regularly providing open and transparent job feedbacks to the

employees.

▪ Establishing a clear linkage between performance and compensation

▪ Providing ample learning and development opportunities by representing

the employees in leadership development programmes, etc.

▪ Evaluating performance and distributing incentives and rewards on a fair

and equated basis.

▪ Establishing clear performance objectives by facilitating an open

communication and a joint dialogue.

▪ Recognizing and rewarding good performance in an organization.

▪ Providing maximum opportunities for career growth.

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An effectively implemented performance management system can benefit the

organization, managers and employees in several ways as depicted in the table

given below:

Organization’s Improved organizational performance, employee

Benefits retention and loyalty, improved productivity,

overcoming the barriers to communication, clear

accountabilities, and cost advantages.

Manager’s Benefits Saves time and reduces conflicts, ensures efficiency

and consistency in performance.

Employee’s Benefits Clarifies expectations of the employees, self

assessment opportunities clarifies the job

accountabilities and contributes to improved

performance, clearly defines career paths and

promotes job satisfaction.

Clearly defined goals, regular assessments of individual performance and the

company wide requirements can be helpful in defining the corporate

competencies and the major skill gaps which may in turn serve as a useful input

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for designing the training and development plans for the employees. A sound

performance management system can serve two crucial objectives

Evaluation Objectives

▪ By evaluating the readiness of the employees for taking up higher

responsibilities.

▪ By providing a feedback to the employees on their current competencies

and the need for improvement.

▪ By linking the performance with scope of promotions, incentives,

rewards and career development.

Developmental Objectives

The developmental objective is fulfilled by defining the training requirements of

the employees based on the results of the reviews and diagnosis of the

individual and organizational competencies. Coaching and counseling helps in

winning the confidence of the employees and in improving their performance,

besides strengthening the relationship between the superior and the subordinate.

In a nutshell, performance management serves as an important tool for realizing

organizational goals by implementing competitive HRM strategies. It helps in

aligning and integrating the objectives with the KPI’s

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in an organization both vertically and horizontally across all job categories and

the levels and thus helps in driving all the activities right from the bottom level

towards one single goal.

Key Result area in simple terms may be defined as primary responsibilities

of an Individuals, the core area which each person is accountable.

SMART: A Smart Goal (KRA) is one which is:

1. Specific : Clearly stated what to do and how to do?

2. Measurable: States how the performance for this goal will be measured.

3. Achievable: It can be achieved by employees if they work really hard (You

can draw this conclusion by talking to employee, manager or someone who

has done this job successfully).

4. Relevant: The KRA (Goal) is relevant to the job and the performance on this

goal will improve productivity of the employee.

5. Time Frame: States a time frame to achieve the goals.

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How to WRITE SMART Goals (KRAs)?

Here are the steps how anyone can write Goals (KRAs) from Job Descriptions:

1. Go through employee’s Job Description. If Job Description is not updated talk to

employee and his/her Manager or many be manager’s manager also.

2. Try to find out exactly what the employee is supposed to achieve.

3. Based on your reading and discussions, make a list of the functions and responsibilities

which are critical to the employee’s job.

4. Categorize these critical functions and responsibilities in two categories:

o A: Which can be measured whether in numbers or percentages or yes/no.

o B: Which cannot be measured in numbers and cannot be calculated.

5. ‘A’s are the one which can be be converted to Goals (KRAs).

6. Make a list of all critical functions.

7. Write a self-explanatory (1 sentence) definition of each Goal (KRA).

8. If you plan to follow BSC (Balanced Score Card) Pattern, then categorize each goal into

one of the following categories: Customer, Financial, Internal Business Process, Learning

and Growth.

9. There after describe each Goal (KRA). Make sure you mention a measurable target to be

achieved and time frame for achievement of the Goal (KRA).

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 OBJECTIVES OF THE STUDY

❖ To Understands the Performance Management system in a company.

❖ To Understands the views of managers about the performance

management process.

❖ To identify the impacts of performance managements system on the the

employees performance level.

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 RESEARCH METHODOLOGY

NEED OF THE STUDY:

❖ To understand how performance management system flows in an

organisation.

❖ After getting clear picture of the system, we can suggest new

techniques which we find of worth.

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 PROJECT WORK UNDERTAKEN

Building A Successful Performance Management System:

1. The system must be accurate and fair:

A manager does not always see an employee’s performance accurately or

comprehensively. Only by obtaining multiple perspectives can the system

achieve fairness and accuracy. Individual performance is always a combination

of the skills and capabilities of an individual put in the context of a job. Some

jobs are easy and others are difficult.

2. The system must be efficient:

In some cases, systems can take an inordinate amount of time. They end

up detracting from performance instead of elevating it. The program must be

more than a “box checking “ process or a flurry of paperwork. Bottom line, it

should improve the way that people perform.

3. The system should elevate performance; not just measure against lower

limits:

Traditional performance management practices have focused on insuring

that subordinates were meeting minimal performance expectations, rather than

looking at the potential upper limits. An effective system should clearly link the

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individual’s performance to the organization’s strategic objectives and current

initiatives. It should emphasize a culture of taking responsibility, which goes

beyond making people merely feeling accountable.

4. Compensation decisions should be a by-product of performance

management:

Compensation decisions should not be the main reasons for its existence,

nor should compensation be in the driver’s seat. We would argue that only one

discussion each year should deal with compensation. Furthermore, the reality is

that the great bulk of salary increases are driven by the changes in cost of living.

The differences in increases for the great bulk of people in the middle of the

curve are miniscule. Yes, there are a few people at the extremes whose

compensation will be strongly influenced by the performance management

system. A few poorer performers will get minimal or no raises. At the other end,

a few top performers will get large raises. Organizations are beginning to realize

that many groups of people inside their firm are not neatly distributed on a

normal curve.

5.The system should use multiple data sources:

Every system should use some form of multi-rater feedback. Managers who

rely solely on their perceptions of a person’s performance will introduce a

certain amount of “rater bias.” The manager can informally collect multiple

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inputs. The manager can also use some instruments to collect this data. When

the manager’s view is augmented with two peers and two subordinates, ratter

bias is erased, allowing the system to evaluate performance accurately.

6.The process should include formal development on coaching skills:

The common element in the great majority of recently implemented

performance management systems is frequent coaching conversations.

However, coaching and providing feedback to others are skills that don’t come

naturally to everyone. The good news is that managers can acquire these skills

through formal learning methods that include:

• Clarifying the outcomes being sought from coaching conversations.

• Understanding the specific action steps required.

• Observing others coaching correctly (live or on video). Nothing compares to

watching someone do it right.

• Practicing and rehearsing those skills until you gain competence and

confidence in using them in real situations

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HOW TO TRIANGULATE FOR EFFECTIVE MANAGEMENT
SYSTEM?

Most managers know performance management is important, not only for

improving how employees perform and for aligning their performance
with the company’s goals, but also because the effectiveness of an
organization’s people management programs- including, compensation,
development and succession- depends on how well it is done. Yet making
performance management work is an ongoing challenge for many
organizations. Some even seem to wonder if there is such a thing as
effective performance management.
To help with this challenge, Sibson consulting and world at work

conducted the 2007 state of performance management study. The state of

Performance management study and sibson’s experience suggest that

effective performance management is achived through a balance focus on

leadership support, program design and exhibition by managers .

leadership
Support

optimal
Balance=Effective
performance
management

Execution by
Program Design
Managers

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Effective Performance Management Solution

Leadership Support:

Performance management can help drive company result, but it require a

commitment from leadership. Even a very ordinary system can work well

if it has strong leadersip support. More organization with highly rated

system report having senior management support and a line champion

that do those with less effective performance management.

Leaders in the top-performing companies:

1) Set the expectation that performance management will be done and

performance ratings will be differentiated,

2) Audit to make sure that performance management is tide to the

overall performance of the organization,

3) Act as a role model for effective performance management, and

4) Connect performance management to business goals and people

decision.

The most effective organization are those with champion at the line

leadership level. When line leaders champion the system, a larger

percentage of managers complete assesments thoroughly and on

time and give regular performance feedback, creating a system that

is more valuable to the employees.

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 Program Design:

Although some organizations put to much effort into tweaking the

design of their performance management approach and not enough into

leadership or execution, There are aspects of programs design that are

important. Organizations with effective performance management. Report that

their system have a clear collection between compensation and rewards.

Because those organization based their compensation actions on performance

management ratings, employees take the system seriously. Respondant in

orgnizations with effective performance management report better linkage

between departmental and corporate goals than do those in organization with

poorly rated systems. To be effective , A system must be simple and easily

accessable.

Execution by managers:

Although it is some times said that managerial fortitude is the week link in

performance management, some managers have more “guts” than others. They

coach and give feedback on a more regular basis and more regularly complete

assesments thoroughly and on time. Companies whose managers do this are

more likely to performance better than companies whose managers do no.

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 HR KRA FORMAT

Sr. Focus Area Category Definitions and Weigh- Self Managers Final Remark
No
Measures tage Rating Rating Rating
Out
Out of
Of 5
5
1 Policies & Human To set the policies & 20 %
Process Resource Process as per business
requirement. To review the
existing policies and process
& Clear overcome the
process gaps. To track HR
Polies of other companies
and target- to have HR
manual on cloud until 31st
July 2014, this is to be
shared with all employees
including interns

2 Recruitment Human To Manager the overall 20 %

Resource responsibility of recruitment
from sourcing to selection
issuing offer and follow
until joining
To Forward the current
recruitment tracker to BH’s
and CEO on 1st of every
month.
Target- To complete the
recruitment with in 30
days of getting the
requisition from the BH or
the reporting manager.

3 Salary Finance To collect attendance and 20 %

Processing & leaves from BU’s on 24th of
every month
Disbursal
Preparing salary statement
and forwarding to finance
on or before 27th of every
month
Target- Salaries for all to
be disbursed and to hit the
employees account on or
before last day of the
month

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Sr. Focus Area Category Definitions and Weigh- Self Managers Final Remark
Measures
tage Rating Rating Rating
No
Out
Out of
Of 5
5

4 Performance Human Performance evaluation to 20 %

Managemnet Resource happen twice in a year i.e. phase I
System from April - September & phase 2
from October to march, and the
process to be completed by 30th
October for phase 1 and by 30th
April for phase 2. Inprovement
action if anyto be communicated
to BH and need to be
implemented by giving dedline.
Target- No bill to be pending
until 5th of every month, in case
of no payment until 5, client
disconnection process to follow
and same needs to be closed
until 10th of the month.

5 General HR Human Leaves, Letters, confi 20 %

rmation, employee engagement,
Resourc employee grivances. Involving
e technical / product team in new
product development and
improvement in existing product.
Target- Leaves to be maintained
on monthaly basis, confirmation
letter to be issued to all
employees on completing 6
months, atleast o0ne employee
engagement activity happen in a
month.

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 Findings

❖ The company has clarity of the performance management system and

employees are doing well and following the instruction from the

manager.

❖ The company conducts performance management system twice in year.

❖ The performance management process is centralised in the company.

❖ The Performance management process is formalized in the company.

❖ The company has proper co-ordination between the manager and the

employees.

❖ All the activities are carried out as planned.

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 CONCLUSIONS

1) Instead of providing feedback to the employees in oral they can do the same
in hand written format.

2) The Company should also take feedback from the employee about how they
find the running performance management system.

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 BIBILOGRAPHY

1)Books:

❖ R.K.Shahu; (2007); Performance Management System;

Anurag Jain

2) Internet Sites:

❖ www.managementstudyguide.com

❖ www.opm.gov

❖ www.sibson.com

❖ www.goldfieldws.com

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