Challenges Faced While Implementing PMS

Human Resource Management – Project

Under Guidance of

Prof. Sumi Jha

March 1, 2020

Group 11
Akash Mundra -1902142
Paridhi Jain – 1902156
Rutam Udgata - 1902196
Mohit Srivastava - 1902137
Mohit Tyagi - 1902138
Introduction
“Performance management is the continuous process of improving performance by
setting individual and team goals which are aligned to the strategic goals of the
organisation, planning performance to achieve the goals, reviewing and assessing
progress, and developing the knowledge, skills and abilities of people.” by Michael
Armstrong

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1. Literature Review
1.1 Performance management systems: A comparative analysis

Author - Jawaria Andleeb Qureshi, Asad Shahjehan*, Zia-ur-Rehman and Bilal Afsar

Literature Review by Akash Mundra

The above research paper describes the comparative study of Standard Performance Management
System(PMS) proposed by Armstrong(2001) and the PMS implemented in the Local Development
Organization(LDO) with the help of Statistical Hypothesis Testing. The Standard PMS Model consists
of five main components, i.e. Role Definition, Performance Agreement Plan (Plan), Personal
Development Planning (Act), Performance Measurement (Monitor) and Performance Review. To
evaluate whether Standard PMS is being implemented in LDO, a questionnaire was developed,
which led Managers(22) and Non-Managers(28) of the Organization rate the six dimensions of the
Standard PMS. This rating by employees led to the conclusion that there is a gap between PMS
followed in the organization as compared to Standard PMS and helped to identify the barriers in the
successful implementation of effective PMS. The major barriers identified were commitment from
top management of the organization in implementation of PMS, lack of training of managers with
regards to effective PMS, defining roles of each employees, missing link between organization and
unit’s objectives, lack of recognition & incentives given to employee’s performance. The findings of
the above studies along with recommendations & viable solutions were communicated to the LDO
for successful implementation of efficient PMS.

1.2 Performance management: An empirical study of selected manufacturing

organizations in Pune, India

Author - Mohammad Amiri and Alireza Nobakht

Literature Review by Akash Mundra

The above research study focuses on understanding different Performance Management System
followed in different manufacturing organisations as well as understanding what HR people
perceptions are towards Performance Management System which helps to identify challenges and
psychological barriers occurring in Performance Management System. For conducting above study,
sample of 43 manufacturing organizations situated near Pune were selected and survey from various
members of organizations were taken. The study from survey revealed that out of various functions
of PMS, Training and Development is the utmost important function of PMS by 81% of the
organizations under survey. Almost 53% of organisations believed that PMS helps them in identifying
Training and Development needs of employees whereas 27% organizations feel that PMS helps for
promotion, appraisal as well as termination of employees. One of the major aspects that
organizations(70%) identifies while implementing PMS is aligning the company’s corporate
objectives & goals with the employee’s goals. The study also highlights some of the challenges in
PMS like evaluating & appraising distant subordinates, appraising highly experienced subordinates,
dealing with unreliable expectations and coping with employee defensiveness with the latter two
being more significant with 33% and 37% respectively. The psychological barriers that study revealed
were sceptical behaviour of appraiser while evaluating the employee’s performance as well as
resentment of employees towards appraisals. In the end to overcome above barriers, the study
suggests different ways like participative approach, rewards and incentives as well as put an
emphasis on teamwork.

1.3 Major Elements and Issues in Performance Management System

Author: Eul-Kyoo Bae, Inha University

Literature Review by Paridhi Jain

With the nature of jobs constantly changing, the jobs are becoming more flexible than ones in
traditional organizations. The VUCA scenario of business environment poses a lot of challenges in
designing and implementation of a well-rounded and effective Performance Management system.
The three key elements that a Performance Management System is comprised of are: Defining
Employee Performance, Evaluating Employee Performance and Providing Feedback on Employee
Performance. For successful implementation of any Performance Management System, identifying
the issues in these elements and addressing them by incorporating changes in the system is
necessary.
The First thing is to clearly define what performance is. This involves identifying measures and levels
of performance. The outcome-oriented approach and person-oriented approach, both have their
deficiencies. Assessment of an individual's competencies is not a measure of his performance and
that a performance management system should focus on a record of outcomes. Results-oriented
measures may be deficient as workers may develop a results-at-any-cost mentality and strive to
obtain outcomes in ways that are dysfunctional for the organization. To tackle these, A performance
management system must be driven by competencies and outcomes in-line with business goals.

The Second thing is to build in place, a fair and accurate performance evaluation process. The
organisations should also realise that purpose of the evaluation influences the employee’s attitude
towards performance evaluation. The evaluation process must ensure that raters and ratees are not
dissatisfied with it. . Furthermore, employees should also be given an opportunity to help set their
performance objectives and voice their concerns, so that they can perceive the performance
evaluation as fair. In addition, performance information can be collected from multiple sources and
can be reviewed by others, such as higher-level management. It will lead to fair and accurate results.

Finally, feedback is a way to improve job performance as well as to initiate further career
development of employees. In particular, with regard to career development, some organizations
require that employees take responsibility for their development. The organization may provide the
enabling resources but does not take charge of the individual’s career. Supportive and effective
feedback can create conditions that encourage employees to find their own direction and guide their
own activities.

1.4 Managing multi-dimensional performance for man and machine:

Author: Rhucha Kulkarni

Literature Review by Paridhi Jain

With constantly changing skill requirements, success factors for jobs are also changing. With
technology in the mix, the performance management systems must also manage multi-dimensional
performance for man and machine. Apart from technology, other major evolution is a shift towards
a more collaborative, team-based and agile work ethos, and performance management must evolve
accordingly. The system must shift from individual based performance and reviews that encourage
individual contributions because it does not align with business needs. The reality of tomorrow lies
in more team-based and cognitive performance parameters. With automation looming large and
mundane tasks being taken over by machines, new skills such as problem solving, critical reasoning,
collaboration, negotiation, creativity and innovation will be in demand.

A well-rounded PMS has clearly stated goals which helps an employee to know how he fits in overall
scheme of things and how he contributes to the company’s success. The system should also focus on
ongoing feedback. The greatest value comes when performance feedback is connected to the
employee and personalized to the learning experiences that will accelerate their contribution and
acquisition of new skills. The system in place should be fair and transparent as Perceived inequity
can lower employee morale and thereby, low productivity or turnover. There is also a need for
linking of PMS with other HR functions such as total rewards, learning and development, career
pathing and growth, succession planning, leadership development, etc., for better performance.
Using technology to make PMS more data driven, evidence based and unambiguous can help build
trust.

1.5 Effectiveness of performance management systems: an empirical study in Indian

companies

Author – Srinivasa Rao, Dr. A (2007)

Literature Review by Rutam Udgata

This paper talks about the effectiveness of Performance Management Systems in Indian companies.
The increasing competition at a global level calls for benchmarking the practices, performance
standards, and efficiency. The idea is to understand the factors influencing the effectiveness of PMS.
The primary objective of PMS is not only to assess current performance accurately but to provide
feedback, which is crucial to improve future performance. Numerous socioeconomic forces shaped
organizations in India. An empirical study was conducted that deals with content, process, outcome,
and organizational characteristics. Primary data was collected using random sampling method. The
effectiveness of PMS was tested using T-tests. Findings suggest that the performance planning
process is not considered a necessary step to improve the effectiveness of PMS. Apart from that,
there seems to be a gap between what managers know about PMS and what they implement. More
emphasis is laid on rating instead of feedback for analysis and improving the performance. PMS is
still being considered as an annual exercise rather than a tool that can be used for diagnosis

1.6 Performance appraisals and job satisfaction.

Author – Patrick Kampkötter (2017)

Literature Review by Rutam Udgata

In this paper, the author analyses the effect of performance appraisals on the employee’s overall job
satisfaction. The author tried to differentiate the relationship of job satisfaction with appraisals that
linked to monetary outcomes and those that are not. The study was conducted with a sample space
of around 10,500 German employees from the German Socio-Economic Panel database. The
parameters used for this research were performance appraisal, job satisfaction and personality
traits. The control variables comprised of job-specific controls and individual-specific controls. Fixed
effects panel data regression has been applied to identify the relationship between performance
appraisal and job satisfaction. It was concluded that there is a positive effect of Performance
Appraisal on job satisfaction, which is primarily linked to monetary outcomes. Studies show that
employees welcome monetary outcomes for good performance. It also shows that if tangible
benefits such as a bonus, a promotion or a pay raise are not linked to assessment, it could act as a
hindrance for ambitious employees. It was also found that the individual employee personality type
would not impact the relationship between performance appraisal and job satisfaction.
1.7 Determinants of Performance Appraisal

Author - Dr. A. K. Das Mohapatra

Literature Review by Mohit Srivastava

This study was conducted in OISL, Odisha where over 100 employees were part of the survey out of
which 95 employees’ data was taken up for analysis.

The result of the study stated that Performance Appraisal must be the top priority for encountering
competition.

Now, the employees were asked to check, discuss and rate 20 variables of performance appraisal
which were divided into 6 basic factors which were again derived from the commonalities between
these variables.

The 6 Basic Factors were:

1. Scope and Strategy

2. Appraiser Appraisee coordination

3. Approaches to Performance Appraisal

4. Performance-Based Incentives

5. Attributes Evaluated in Performance Appraisal

6. Perception of Employees Regarding Performance Appraisal

Now, as was expected, different factors depending upon their attributes had different impact levels
on the employees. Also, it was observed that the factors with the highest impact were salary and
promotion policy.

Self-Review and opportunity for expression of developments needs have positive impact on
appraisal system and monetary and non-monetary benefits linked with performance motivated
employees to cooperate in appraisal system.

Through the paper one thing was formalised that PAS has a diverse set of purpose which it serves
and hence it should be something which is customisable and should be altered based on the various
grades of employees.

1.8 Individual Performance Management: A Review of Current Practices

Author – Ian O’ Boyle

Literature Review by Mohit Srivastava

This paper provides a review of current practice in relation to individual performance

management systems and processes within the traditional business environment. There is a
consensus that the role of the individual is central to the overall performance of any
organization and how individual performances are managed and evaluated can have
significant impacts on overall organizational success. Many organizations employ the
traditional performance appraisal in order to monitor and assess individual employee
performances. However, new approaches, such as 360-degree feedback have also become
commonplace within the business environment. An analysis of each approach including
benefits and challenges associated with each process is presented which are:

1. Improved Communication

2. Establishment of Trust between Employees and their Managers

3. Linking Individual Performance with Strategy

4. Identification of Training and Professional Development Needs

5. Important tool in facilitating performance improvement of employees.

1.9 Reinventing Performance Management

Author- Marcus Buckingham and Ashley Goodall

Literature Review by Mohit Tyagi

How one company is rethinking peer feedback and the annual review, and trying to design a
system to fuel improvement by Marcus Buckingham and Ashley Goodall

At Deloitte they wanted to redesign Performance Management System. In a public survey

Deloitte conducted recently, more than half the executives questioned (58%) believe that
their current performance management approach drives neither employee engagement nor
high performance. Hence something nimbler, real-time, and more individualized—
something squarely focused on fuelling performance in the future rather than assessing it in
the past is needed.

They tallied the number of hours the organization was spending on performance
management and found that creating the ratings consumed close to 2 million hours a year.

They arrived at a very different and much simpler design for managing people’s
performance. Its hallmarks are speed, agility, one-size-fits-one, and constant learning, and
it’s underpinned by a new way of collecting reliable performance data. It will have no
cascading objectives, no once-a-year reviews, and no 360-degree-feedback tools.

They had three major objectives:

1. Recognise the performance

2. See performance clearly
3. Fuel performance

Deloitte’s new approach separates compensation decisions from day-to-day performance

management, produces better insight through quarterly or per-project “performance
snapshots,” and relies on weekly check-ins with managers to keep performance on course.

1.10 Harnessing the power of performance management

Author- Sabrin Chowdhury, Elizabeth Hioe, and Bill Schaninger

Literature Review by Mohit Tyagi

It has been identified three practices that correlate most closely with the key factor of
performance management’s effectiveness: 

1. The perceived fairness of the system.

2. These practices are linking performance goals to business priorities,
3. Effective coaching by managers, and differentiating compensation across levels of performance 

More than half of respondents believe performance management has not had a positive effect on employee or
organizational performance. Performance management, when done well, boosts overall performance

Changes organizations have made to PMS in past 18 months:

1. Simplified ratings

2. Simplified formal performance-review processes

3. Separated performance and compensation conversations

4. Changed goal setting process

5. Increased frequency of coaching and development conversations

6. Removed forced ranking of employees against one another

7. Reset manager expectations on coaching / development conversations

8. Removed ratings

9. Launched mobile technologies to support PMS

. 2. Interview Analysis
2.1 Interview Analysis by Akash Mundra

Design of PMS depends on many factors like scale of organisation, core business activity, nature and
objectives of organisations, lifecycle stage of employees, etc. Each organizations set PMS with the
objective of efficient use of their Human Resources. Each PMS can be broadly broken down into
components i.e. Role Definition, Performance Measurement & Review, Feedback mechanism,
Identifying training & development needs of employees and Performance Appraisal. Above
components of PMS are same across different organizations but ways of implementing each
components differ at different organizations. Balance scorecard method(based on KRAs & KPIs) is
easier to implement as compared to Continuous Feedback System(Daily PMS at Karvy) & Relative
Rating System (Implemented at EY People Advisory). The major challenges while implementing PMS
are difficulty in identifying goals of each individual employees as well as quantifying outcomes
expected from employees. The other challenges faced by organizations are removing the biasness
like recency, halo effect, etc. while evaluating employees as well as providing timely feedback and
course corrective actions before final yearly assessment. After getting employees overall
performance rating, compensation parts is bit easier whereas promotion of employees is subjective
process which takes into account employee’s potential to perform next level work which is judged by
top level management of the company.

3. Annexure
3.1 Transcript of 1st Interview by Akash Mundra:

Name: Raghuraman S

Company: RPG Enterprises

Designation: Program Lead – HR Digitization

Time of Interview: 29th Feb 2020 at 3:00 pm

Question: How the performance of the employee is measured i.e. on what parameters or criteria
employee performance is evaluated?

Answer:

1. Along with corporate’s core objectives & principles, CEO also identifies additional goals to be
achieved within a year which are split into goals of different functional heads which further
gets split into team member goals leading to identification of goal of each employee. But for
service functionals like HR, Legal, goals setting is difficult as they are not quantitative
whereas for functions like Sales goal setting is easier as goals are quantifiable in nature.
2. As per the goals identified, Key Results area and Key Performance Indications are identified
upon which employees are given rating for his performance.
3. While measuring the performance of employees, employee is given rating against each set
of goals and with the help of weighted average employee goal scorecard is generated out of
5. The score is generated on scores given by both employee himself as well as manager
which is validated by the HR and fit in normalized curve i.e. normalized distribution.

Question: After evaluating the performance of employee, comes the next part i.e. compensation and
promotion. What are the challenges that you face while compensating as well as promoting the
employee?

Answer:

1. Compensation part as per employee performance is quite easier after generating his score.
As per his rating out of 5, each rating has a incremental bracket i.e. if employee gets a rating
of 5, his hike in salary will be 12-15%, for rating of 4 increment in salary will be 10-12%. Such
brackets are created for giving performance-based salary hike as well as performance bonus
on the yearly basis.
 2. Regarding promotion decision, for each employee grid of 3*3 is maintained. On X-axis, the
grid comprises of performance score and Y-axis has potential score. The promotion decision
is majorly based on potential to perform next level work. All the employees were
categorised into 4 levels in the organization. Level 1 is Officers and freshers, Level 2 is
Assistant Managers and DGM, Level 3 is GM and Middle Management and Level 4 are VP’s
and above. So, promotion from any one level to next level, the potential of employee to do
next level work is assessed and scored and 3*3 matrix of his past performance and potential
score is created, and, on that basis, employee is promoted. But promotion also depends on
function you are working in i.e. in sales the promotion is streamlined whereas in service
functions the path is unclear which leads to difficulties while promoting an employee.

Question: Major Challenges in PMS you have observed?

Answer:

1. Setting goals and objectives of employee for service functions like HR, Legal and Finance.
2. Fitting employees under the normalization curve and justifying it.
3. Biases while evaluating performance
4. Recency effect because of only 2 reviews in a year.

Question: Is there any retention problem that is because of employee not trusting the current PMS,
due to which an employee left the job?

Answer: Employees leaving job are for many different reason. I haven’t seen anyone leaving job
because of low performance rating but majorly employees leave+ job now a days in search of
meaningful work. So, it has become very crucial to map employees career path in such a way that
employee should feel he his doing meaningful job for the company which motivates him to work
further and do not leave the job even if higher compensation is offered.

3.2 Transcript of 2nd Interview by Akash Mundra

Name: Dolly Rohira

Company: EY People Advisory Services

Designation: HR Consultant

Time of Interview: 01th March 2020 at 11:45 pm

Note: Interviewer provided Detail information on implementing PMS at EY & other

organizations(clients) as well as problems of PMS at other organization and at EY

Question: What are the parameters/deciding factors considered while designing a PMS for a
company?

Answer: Many parameters affect the designing of PMS. Some of the factors which affects designing
of PMS are:

1. Scale of the company – Small companies do not need complex performance management
system where one to one interactions are feasible and takes less time whereas for MNCs as
 well as companies having large number of employees one on one interaction every time is
not possible so they opt for different performance based systems like MBO (i.e. setting goals
and evaluating employees on basis of goals set), relative performance rating, continuous
feedback system, etc.
2. Lifecycle Stage of the company: Start-ups would like to have simple PMS so they mostly go
with bi-yearly performance review system whereas as the company grows it can implement
continuous feedback system and more complex technology enabled performance
management system like relative monthly performance rating(e.g. EY).
3. Industry Benchmark
4. Nature & business of company

Question: What is the current PMS system followed in your organisation and at other organisations?

Answer:

At EY People Advisory Services do not follow standard rating PMS model. The goals set by top
management cascades into the departmental goals, team leaders’ goals and individual employee
goals. After this there is no rating system based on goal setting is used for performance
evaluation. In place of that, each quarter employee must answer set of questions i.e. assessment
test floated by HR department, which is also filled by employee’s manager, subordinates as well
as manager’s head. The answers from all levels are collated for an employee and his overall
relative position is shown on the dashboard compared to his/her peers. S per relative
positioning, quarterly feedbacks are provided to employees and at the end of year appraisal is
given which are not directly related to their ratings but also related to managers decision.

At many other organisations, goal setting step is same where Top management creates balance
scorecard focusing on different organization goals like increase in customer centricity, internal
process cost reduction, new ideas to work upon etc. which cascades into individual employees’
goals for a year. This leads to creation of balance scorecard of employees consisting of core KRAs
with KPIs as well as new additional KRAs along with their KPIs. The weightage of core vs new
KRAs on which his performance will be measured are decided during goal setting period so that
employees have clear idea about his work on which his performance will be reviewed. Then mid
and final performance measurement and performance review of employee is performed over a
year in some organisation whereas in companies like Karvy, daily performance feedback is
provided under initiative of daily PMS. Based on the performance reviews, employees are given
performance appraisal i.e. compensation based on their scores i.e. ratings. Whereas during
promotion, HOD recommends a name for promotion which goes to HR where they check his
eligibility criteria, his relevant skill sets and after ensuring above things and discussion with HOD,
promotion of employees takes place.

Question 3: Major problems and challenges faced while implementing PMS?

Answer:

1. At EY transparency is one of the problem as employees are given overall relative rating with
respect to their peers on basis of certain set of Questions but not on basis of KRAs.
2. Biases like recency, halo effect are one of the major problems in PMS.
3. Quantifying Goals
 4. Mid-review & quarterly review conversation gets very subjective in nature as well as many
times they are ignored resulting to no course correction and incorrect performance review.

3.3 Transcript of 1st Interview by Paridhi Jain:

Name: Sahil Jain

Company: GEP

Designation: Manager HR, HR Business Partner

Time of Interview: 29th Feb 2020 at 8:00 pm

Sahil Jain:

Why do we need PMS in the first place?

When you hire an employee, they are work for some organizational goal. Depending on what
function they are working for, the organizational goal will be customized and curated for that
particular function and for that particular individual.

While the employee would be working towards the goal, as an organization you will have to make
sure that you are providing ample enablers like training and development, some career growth path
etc, because when a person is working for you, they also expect some kind of compensation as well
as learning and something in terms of rising up the hierarchy.

You cannot handout these perks randomly, you have to have a mechanism where you can compare
and evaluate the employees against their goals, their targets and what they are expected to do. PMS
basically helps you with this. It is the mechanism which helps you evaluate the employee so that you
can first of all understand and analyze the gap, you can appreciate the accomplishments, you can
identify the training needs and you can also gauge what stage of the career an individual is in and
figure out the promotion or the growth path.

What are the elements that constitute a PMS?

In terms of process and input how it goes is, 1 st you need data points, it starts with employee’s self-
appraisal. After that, Multi rater form, which includes senior multi raters, junior multi raters and
peers who give data points. This is not limited to numbers like ratings, it also includes some
subjective and qualitative comments.

Now you have inputs in terms of how you are performing. Now alongside your senior multi raters
and junior multi raters, your peers, and yourself, your reviewer will separately rate you.

Next, if the reviewer thinks that you are already up for promotion, there is a different promotion
panel and depending on the panel’s decision either you get promoted or you don’t get promoted.

Another outcome of PMS can be increment you will be getting in that particular year or what
percentage of variable pay you should be getting etc.
Talking about bell curve, large population, around 80% lies in the temple of the bell, and there are
certain outliers on both the ends. If you are following the bell curve then you try to post the entire
population in that curve. Now the problem with that bell curve is, for example in consulting, people
are hired from the best b-schools of the country, they all are good performers, so if you try to post
them on the curve, you will be doing injustice to them. You will be titling some of them as poor
performers, titling a large population as average performers and only a miniscule population as
good performers. Realistically all of them are above average. Irrespective of how much you are
working you might end up in the bucket which is not mapped to you performance. This is not
appreciated but if we talk about India, if not more, 75-80% of the firms follow this because nobody
invest a lot of time in evaluating their performance practices and they don’t know better, maybe lack
of knowledge.

If however, we talk about bigger firms, If we talk about big 3s of the world, big 4s, all these firms are
more agile, they are early adopters of better practices, and even the FMCG firms, startups are
adopting continuous evaluations. It is different philosophy, instead of reviewing once or twice a year,
the reviewers are supposed to meet on a regular basis, once a month or something like that.

When I talk like a reviewer, the growth of my mentee doesn’t really depend on business as per or on
work. It varies from firm to firm. Depends on vision and mission of the firm. What is the
management perspective?

If we talk about Trident, it worked on business drivers and on the business output because it was a
manufacturing firm. Where as in my current organization which is service based organization, people
are main focus. In my organization, the indicators are around three buckets, one is your people
goals, one is business goals and one is your firm building goals. Business goals are basically catering
to clients and their deliverables, their timelines and making the client happy.

People goals are more around behavioral aspects, how you are dealing with people, how polite you
are with them, how approachable you are for them, how good a mentor you are etc.

In the firm building, we capture that what are the initiatives we are taking towards building the firm.
Firm building can be as simple as market intelligence projects, something that is not directly billable
but it helps the firm to grow.

These are larger buckets, so we measure people on things like their mentoring skills, their
technicality, their contribution. All depends on what they are trying to achieve.

What are the major Implementation challenges?

Planning the entire event is a big challenge. Some firms have once a year some firms have it twice a
year. Challenges could be, since this requires a lot of time and energy and people don’t have that
kind of bandwidth. In absence of this bandwidth, people think that nobody have the time and
energy, people tend to leave. You also need a lot of infrastructure around it. By infrastructure we
mean, good HRM tools that capture and give right input to the employee. 2 nd, and organizations are
detaching promotions from performance evaluation. PMS is shifting more towards telling the
employee how you can be better what are the gaps. You have the potential but how to get there.
In PMS they tell you there are the areas where you can fair better and what changes you need to
make to fair better. Whereas promotion readiness is a different thing. Performance evaluation can
feed into promotion discussion but not necessarily need to be aligned with it. I as a reviewer can say
that my mentee is up for promotion so irrespective of whether or not a performance cycle is
happening, I will put her up for a promotion and will talk to respective people to organize a call for
panel. Forward looking firms are detaching these 2.

Good HRMS tool: Which connects compensation, Promotions and other HR functions. We don’t have
single dashboard.

Making people understand that PMS is not only about certain number but is for helping you to
become a better professional.

3.4 Transcript of 2st Interview by Paridhi Jain:

Name: Sudeshna Rath

Company: Reliance Retail

Time of Interview: 29th Feb 2020 at 1:00 pm

There are multiple theories and philosophies around PMS like 360 degree feedback, critical incident
method etc. If we talk about theory, there are some new age methods and some old age methods.

In critical incident method, the evaluator who is basically the reviewer or the reporting manager
basically talks about the major accomplishments or any critical incidents that might have happened
in the professional career.

In 360 not just your senior or reporting manager but everybody around you gives a feedback to you.

PMS varies from firm to firm and in some of the firms, PMS is not directly tethered to promotions.
They have a different cycle of promotion where performance management is not completely aligned
to that. It is more focused on gauging if you are on the right track or not.

In last one decade, more and more firms are now moving towards continuous evaluation rather than
having one or two cycles.

Whichever PMS system a firm decides to adopt, the major challenges are mostly people challenges.
People challenges play bigger role than the system challenges in overall implementation of PMS.

You have to accept that people have varied mind set. Some people are quite ambitious and they hop
jobs in every 2 years or 3 years. Some people look for stability, work life balance, they want to be in
the organization for long. So it is people specific and the purpose is not clear as in, those people who
are ambitious, they will take up every task as a challenge and they might give their 120%. Their
purpose of looking into PMS is much different from the ones who go for a long-term commitment.
PMS is perceived differently by different people and their attitude towards PMS is driven by their
perception.

Another challenge is Biases. There are biases as well because the person who is rating is a human at
the end of the day. People should get educated better to avoid these biases to keep a better track of
what they are doing. All the biases under the sky do apply and while we are educating these people,
some of the reviewers might follow these guidelines very stringently and hence maybe rating their
mentees as 3 on 5. While one team lead is giving 3 as average rating, and other is giving 4 as an
average rating. If you are working with somebody who is following the norm is at disadvantage.
There is need of normalization. Usually what happens is, the function lead, after cycle is complete,
will ensure that no such variances exist in the rating, if there is then you normalize it.

3.5 Transcript of 1st Interview by Rutam Udgata:

Interviewee 1 – Awani Priya, HR Business Partner, Quikr

Time of Interview – 1st March, 2 PM

Why do you think we need PMS?

1. Helps manager and employee in goal setting and track performance throughout the year.
2. Low performer employees can be identified, and performance improvement plan is be made
for them.
3. High performers can be rewarded based upon their achievements.
4. It indirectly helps in improving productivity of employee.
5. Collected data from PMS can bs used by leadership team to take certain decisions like
manpower planning, team resizing etc.
How is PMS currently being implemented at Quikr?

1. 360-degree feedback for managers and above.

2. Self-rating and self-goal setting.
3. Manager rating and feedback.
4. Department head rating.
5. Vertical head rating and merit increment.
6. Final calibration.
7. One to one discussion of employee with manager and goal setting for next year.
8. Final increment and pay-out.
What are the major elements involved in PMS?

1. 360 feedback.
2. Performance rating and feedback.
3. Increments and rewards based on rating.
4. Performance improvement plan for low performer.
5. Goal setting and execution.
What are the challenges that you face in the current implementation process?

1. Maintaining bell curve rating for each team.

2. Ensuring all employees take part in PMS by filling self-rating and achievements.
3. Maintaining huge sensitive data offline.
4. Handling employee queries post pay-out.

3.6 Transcript of 2st Interview by Rutam Udgata:

Interviewee 2 – Pankaj Kumar, Senior Manager HR, Muthoot Fincorp Ltd.

Time of Interview – 1st March, 6 PM

Why do you think we need PMS?

1. The ideology is to assess the performance of an individual and their contribution towards
the growth of an organisation.
2. It is not a means by which people are given increments as is generally confused, but a means
for planning for the future.
How is PMS currently being implemented at Muthoot?

1. At Muthoot, we follow a top-down approach.

2. The Corporate objectives are broken down into functional level goals, which is then further
broken down into individual goals.
3. At each step, it is ensured that all these individual targets add up for the corporate
objectives. This helps in assessing the extent to which an individual performance affects
company objectives.
4. Feedback on a half-yearly basis to monitor the progress and plan for the other half.
Performance rating is done annually.
5. Two parameters are used to decide the Annual Performance rating viz. Branch scorecard and
Reviews from Reporting Manager. Separate weights are assigned to these attributes and the
sum of these two values gives the final rating of an individual.
6. At the Branch level, the goal setting is done by higher management, while at the corporate
level, they are given a framework as to what is expected of them (a sample KRA, of sorts).
They are free to modify it if they wish to, after discussing with their reporting manager.
What are the major elements involved in PMS?

1. Branch Scorecard and Reviews from Reporting Manager. Feedback on a half-yearly basis.
2. The ratings are used to form a normal distribution curve to determine outliers.
3. Increments are based on the performance rating. An attempt is made to maintain internal
and external parity by rewarding high performers in case their current salary is less than the
market salary.
4. Performance Improvement Plan which is closely monitored by the centre HR and Reporting
Manager for the underperforming employees. For those who fall short of these targets by a
very narrow margin, they are given a second PIP. In case they fail to meet these targets, they
are asked to exit.
What are the challenges that you face in the current implementation process?

1. Adhering to timelines is a big challenge. Getting the ratings done within the stipulated time
is a big challenge.
2. Anomalies with Normal Distribution Curve.
3. Communicating ratings to employees at the ground level with complete transparency.

3.7 Transcript of 1st Interview by Mohit Srivastava:

Interviewee 1 – Karan Deep Singh, HR Manager, One Plus

Time of Interview – 3rd March, 11:30 PM

Why do you think PMS is important for Employees and employers?

Sometimes small things like Manager giving feedback matter much more than the Appraisal %.
Performance Management to employees means nothing because they are associated with
Performance Reviews and Feedback.

Coming back to the question, the reason it’s important to Employees, because it helps them to stay
connected to their manager, get feedback on their work and progress, plan their development and
also understand what they have to do, and how they are and can aligned to Company Objectives.

They see Performance Feedback and Reviews to validation of their work, proof, documentation and
the right ordeal of their tasks done, and be part of the invaluable system.

Unfortunately, people might be taking Performance Reviews, Feedback & management just as a one
time process for appraisal, but it’s important that we make it continuous and infectious in your life.

How is PMS currently being implemented at One Plus?

We take pride in the fact that unlike our competitors we follow a 360-degree feedback system
wherein there is a thorough process only after which do, we assign any rating to our employees. We
have a proper process wherein an employee sits down with its L1 and then sets his/her goal for the
next fiscal year. This is followed by multiple follow up meetings with their L1 throughout the year
where it is the responsibility of the L1 to make sure that they update the logs in our custom-made
PMS. After every such meeting the employee is asked to rate their performance in the previous slot,
and they are also rated by their L1. Then there are meetings with your L2 and vertical head every 6
and 12 months respectively. Now, using all the data collected, targets met, reviews achieved in our
PMS a common review/metric is ousted by the system which is used by us for allotting the final
review.

One thing that we do differently is we also score a Team Likability Score. Here after every deliverable
every member of the team is asked to anonymously review their teammates.

What are the challenges that you face in the current implementation process?

1. Getting a review from their peer as we have observed it be quite skewed and we want to
bring rational and a proper apathy in the process.
2. Ensuring all employees take part in PMS by filling self-rating and achievements.
3. Making sure that both the employee and L1 actively take part in the goal setting and
reviewing process.
4. Convincing employees that these processes which might seem long drawn and slightly
overboard are actually made so that the organisation can serve them well and also the fact
that these inputs have an impact on their appraisal percentage.

3.6 Transcript of 2nd Interview by Mohit Srivastava:

Interviewee 2 – Shailesh Verma, Senior Manager HR, Reliance Industries Limited

Time of Interview – 3rd March, 1 PM

Why do you think we need PMS?

Performance management (PM) is important to employees for many reasons. Here are some that
come to mind:

1. Work is social, and part of the social construct is to win/succeed, interact/compete,

and learn/grow. Those items also happen to be critical parts of the performance
management process.
2. PM helps track progress on individual and group levels. People know they're being
measured, and PM is a part of the scale. Do well - get more. Do less well - get less.
Do nothing or unacceptably - get replaced.
3. PM is where a lot (don't have an exact figure or %) of actual work discussion is
centred. The who can is as important as the what.
4. If it's done well, employees like the process. If it's not, employees dislike it and will
complain until something better takes place.
5. Rarely do people want no PM. Without PM, no one gets credit or recognition.

Hope that helps.

How is PMS currently being implemented at Muthoot?

1. We use the R-HR system on SAP using their HR package based on HABIT (leading HR
consulting System).
2. So, what happens if one gets to login to his/her R-HR portal and then add anything that they
have done apart from their day to day activities.
3. Now, these things that an employee can add should fall in a few broad categories which are
Safety of your Fellow Employee, Organisation and Society in general, Environmental Impact
that your work has had and your adherence to Company Policy which includes RIL’s Values,
Behaviour, GENDER EQUALITY , CODE OF CONDUCT AND living the R WAY.
4. At each step, it is ensured that all these individual targets add up for the corporate
objectives. This helps in assessing the extent to which an individual performance affects
company objectives.
5. Now, on a half-yearly basis employees are asked to review the additions that their
subordinate has added to the portal and approve for the same.
6. Now, based on their performance a final rating is added by the L1 which varies from
Excellent, Very Good, Good and Average. But the catch here is that the lead does not have to
follow the Bell Curve but the organisation in general does. So, once the Lead gives his/her
review of the employee the portal closes and then sends it to the L2 and L3 for approval and
once they approve it is sent to the HR.
7. Now, the HR who sits in isolation and does not know the employee goes through their
portal, reads the review added by its L1 , L2 and L3 and then they try and align it to the Bell
Curve that the organisation has to follow.

What are the challenges that you face in the current implementation process?

1. Goals are not in the Picture, as in not a lot of focus is laid upon describing and explaining the exact
goal which leads to a lot of anomalies
2. The planned meeting between the employee and their seniors do not always go as per planned
and hence considering their schedule and the pressure of other work they tend to miss the schedule
and hence hamper the planning.

3. One of the biggest challenges that we face is the abomination of Recency Bias. It has been
observed that often the seniors while adding their final review tend to have a recency bias and tend
to forget their previous achievements in the earlier quarters.

3.7 Transcript of 1st Interview by Mohit Tyagi:

Interviewee 1 – Dhanashree, L&T

Time of Interview – 3rd March, 1 PM

Question 1

Why do organizations need PMS?

1. Evaluate each employees individual performance. So, that everyone can be at the same
page.
2. They can get the proper feedback and employees can improve their performance.
3. Financial benefits to the organization.

Question 2

Elements of Project Management System ?

1. Actual criteria has been kept confidential

2. In general it begins with objective setting at the beginning of the year.
3. At the end of the year performance is evaluated against the objective set earlier and how
much percent of that objective has been achieved and based on that appraisal/
promotions/incentives are given.
4. Rating are given for the same.

Question 3

Are there any matrices for attitude, behaviour and ethics in PMS or just performance only?

1. Yes attitude, behaviour and ethics play important role too.

2. Micro View Groups (MVG) are set up, in this all the eligible employees, senior management
person and HRs come together.
3. For every employee; his/her boss, HR and senior management person sit together and
discuss about the employee, feedback is given and accordingly ratings is given.
4. MVGs discussion is kept confidential.
Question 5

What is the outcome of PMS?

1. Based on the rating given employees get incentives/appraisal/hikes .

2. On the scale on 1-10; below 5 are considered as low performers and will not get any hike, on
with 5 is considered as average and is given incentive as per the norms and above 5
employees get incentives based on the ratings they get.

Question 6

Do you face any challenges while implementing PMS in L&T?

1. Throughout the year: objective setting, mid review and final review.
2. Every time a follow ups need to be taken from everyone for filling up the objective setting in
their system, then midterm review. This goes to their boss(IS) and IS comments and this goes
back to the employee for the final review.
3. During the final review then again they fill the objective setting in their system and then this
goes to the IS and they comment again.
4. HR needs to keep all the things updated for all the processes and for each and every
employees. Lots of follow ups are there for an HR.

Question 7

Do you have any recommendations for the present PMS system?

1. Bell Curve should be removed; desired employees do not get as they deserved. Since
everyone needs to be fitted in Bell Curve.
2. To avoid follow ups from HRs; all the team member should ensure everyone should fill up
their objectives on time, HRs are always there to support but TLs and IS should take care of
this.

Analysis:

PMS is required to help everyone to be at the same page and align with the company missions and
visions. All the objectives are set by keeping all the aspects of company and employee in mind. MVGs
are setup for each employee and he/she is given feedback based on the amount of the target has
been achieved and motivated accordingly with promotions and incentives and if required trainings are
provide to below average performers.

Some cons are HRs have to take lots of follow ups since it’s a continuous process and synergy
between the teams and HRs is required to get things done smoothly. Bell curve on the other hand
seems to be unfair at times for the out performers, since everyone needs to be fitted in bell curve then
high performers don’t get what they deserved.

3.8 Transcript of 1st Interview by Mohit Tyagi:

Interviewee 1 – Kunal, Universal Hunt

Time of Interview – 3rd March, 1 PM

Question 1

Why do organizations need PMS?

I believe PMS helps in ensuring that goals are consistently being met in an effective manner. It helps
in focusing the performance of the employees which indirectly reflects the performance of any
company.

Question 2

Elements of Project Management System ?

Elements- Compensation and Rewards, Every employee deserves this. -Succession Planning- Very
Important. -Ongoing feedback-Continuous feedback makes it easy to track our employees and know if
there are any development needs necessary to enhance their performance. -360Degree feedback-
Getting the feedback from the employee's Reporting manager, Peers, Subordinates. Monitoring the
Performance- Self explanatory..

We use Power Hunt, which is our Internal PMS Software.

Question 3

Challenges faced in PMS

Challenges- I feel rapidly changing and challenging environment. Also I feel there is a desire for
development, there is a lack of ownership among managers. Also I feel the main challenge in PMS is
to communicate and set KRA's for employee's.

Question 4

Recommendation

Recommendation- I don't see any, but I feel the System should be updated every year just like
windows 2000, xp, vista, and so on..

My managers view on Matrix- Great performance and great attitude, great performance and bad
attitude, bad performance and great attitude and bad performance and bad attitude.

4. Conclusion
PMS plays very important role in efficient use of Human Resource Management and is part of each
organisation either directly or indirectly. There is no standard PMS available and each organisation is
trying to find the right fit of PMS for their organisation so that company can fulfil their corporate
objectives in most efficient way possible.

Nowadays, PMS has become much complicated as they need to account not only outcomes of task
given to employees but also need to focus on behavioural competencies of employees which is
difficult to quantify. Over the years to come this problem will be resolved as many organisations are
working in above direction.

5. References
1. Performance management systems: A comparative analysis. Author: Jawaria Andleeb Qureshi,
Asad Shahjehan, Zia-ur-Rehman and Bilal Afsar

2. Performance management: An empirical study of selected manufacturing organizations in Pune,

India. Author: Mohammad Amiri and Alireza Nobakht

3. Major Elements and Issues in Performance Management System: Author: Eul-Kyoo Bae, Inha
University-https://files.eric.ed.gov/fulltext/ED492860.pdf

4. Managing multi-dimensional performance for man and machine: Author Rhucha Kulkarni

https://www.peoplematters.in/article/strategic-hr/5-counter-intuitive-people-practices-from-the-
worlds-leading-innovators-24663

5. Effectiveness of performance management systems: an empirical study in Indian

companies. Author: Srinivasa Rao, Dr. A (2007)

6. Performance appraisals and job satisfaction. Author – Patrick Kampkötter (2017)