CHALLENGES FACED WHILE IMPLEMENTING

PMS
Human Resource Management - Project

UNDER THE GUIDANCE OF

PROF. DR. SUMI JHA

MARCH 1, 2020

GROUP-3
N VINAY KUMAR REDDY – 1902143
NEMANA PRAVEEN – 1902147
OGIRALA VENKAT ROHITH – 1902153
PASILA PRAVEEN KUMAR – 1902160
PINAPALA CHANDRA KIRAN BHUSHAN - 1902163
Challenges faced while Implementing Performance Management System (PMS)

INTRODUCTION:
Performance management is a system that deals with the identification of ways to achieve
organizational goals through constant assessment and feedback, leading to the improvement
of employee performance. Performance management, unlike the performance appraisal, is a
continuous process of evaluation in a way to help employees match their goals to
organizational goals. Various types of metrics are used to identify strengths and weaknesses
and to find areas of improvement.
Appraisals can be traced back to World War, where the US military used a merit rating system
to identify poor performers for discharge or transfer. And then, companies started using
appraisals as a tool to identify and promote employees. By the 1960s, tracking past
performance was side-tracked, and organizations began focusing on future talent
development. By the early 2000s, the performance appraisals were being used to hold the
employees accountable and to pay rewards. To mitigate internal competition and improve
collaboration, organizations started moving away from the ranking system. The view of
performance management changed in 2011 when Adobe started following constant feedback
and assessment cycle where annual appraisals were replaced with frequent check-ins. Some
of the organizations had dropped annual reviews altogether, and the majority of the
companies are planning to change their performance review systems.

Many organizations started to rethink their approach towards performance management,

and it is on the executive team's top agenda. Many factors lead to this; one of them is that
organizations started realizing that both managers and employees despise the appraisal
process. However, the main reason is that organizations emphasize financial rewards and
hold people accountable for their past performance, which is at the expense of improving
current performance. Also, there are severe challenges that organizations face during the
implementation of the performance management system.
In this paper, we present various challenges faced by organizations while implementing PMS.
We have collected the data from various HR professionals across a diverse set of industries.
While the overall challenges faced by each organization varied, the major challenges faced by
these organizations were similar. After a thorough analysis of the obtained data, we have
identified thatawareness of the PMS software being used, infrequent feedbacks, and closing
the loop of feedback as the major challenges faced by various organizations. Finally, we have
concluded by suggesting the areas of improvement in the PMS used by these organizations.

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LITERATURE REVIEW:
The team members had searched various journal databases like Sagepub, Scopus, Elsevier,
and Proquest, and the following 10 relevant articles on the topic had been summarized.
Article 1 –
Title – “Performance management effectiveness: lessons from world-leading firms.”

Authors - Michal Biron, Elaine Farndale and Jaap Paauwe (2011)

The authors attempted to understand the factors likely to enhance the effectiveness of
performance management systems (PMS) by investigating the PMS in 16 world-leading firms.
The authors proposed a framework having four performance management system facilitators
– (1) Taking a broad view of performance management, including both strategic and tactical
elements. (2) Involving senior managers in the process. (3) Communicating performance
expectations (4) Formally training raters. The framework was based on the Signalling theory,
where when firms promote certain facilitating practices, employees interpret that
management is concerned with performance management issues, which might have a trickle-
down effect with regards to the effectiveness of the firm’s PMS. The study was carried out in
collaboration with several researchers across the globe on 16 multinational companies based
in 19 countries. In 2004-05, around 153 HR professionals and 95 non-HR staff( senior
executives, line managers, and employee representatives) were interviewed face-to-face for
around one and a half hours. The interviews were semi-structured that included questions on
the business context, HRM practices, and HR function. The authors found that organizations
can send unambiguous signals in the form of organizational practices related to performance
management that facilitate employees to appropriately interpret and respond to the
information conveyed in the practices.
Article 2 –
Title – “Performance appraisals and job satisfaction.”
Authors - Patrick Kampkötter (2017)

The author analysed the effect of performance appraisals on the employee’s overall job
satisfaction. The author attempted to differentiate the relationship of job satisfaction with
appraisals that linked to monetary outcomes and those that are not. The study was conducted
using the representative and longitudinal sample of around 10,500 German employees (full-
time and part-time across industries and occupations) from the German Socio-Economic
Panel (SOEP, v28) database. The measures used for the research were performance appraisal,
job satisfaction (dependent variable), personality traits. The control variables included
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. The author found a significantly positive effect of Performance Appraisal on
job satisfaction, which is primarily linked to monetary outcomes. This linkage demonstrates
that employees’ welcome monetary outcomes for good performance. The results also show
that if tangible benefits such as a bonus, a promotion or a pay raise are not linked to

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assessment, then it would be detrimental to self-determined and openminded employees. It

was also found that the individual employee personality type would not impact the
relationship between performance appraisal and job satisfaction.
Article 3 –
Title – “Feedback frequency and appraisal reactions: A meta-analytic test of moderators.”
Authors - Pichler, Shaun, Gerard Beenen, and Stephen Wood (2018)

The paper focuses mainly on the effect of knowledge of performance standards and
frequent feedback as the aspects of an adequate notice on Appraisal Reactions. The author
used the due process model for the research. Researches to date have been inconsistent
with the effect of frequency of feedbacks on appraisal reactions. Hence, this paper focuses
on this relation and any possible moderator effects. The factors like employee age,
supervisor-subordinate relation, and employee participation are some of the factors that
contribute to the variance in the relationship between feedback frequency and appraisal
reactions. Performance management is a cyclical process of identifying, measuring, and
developing the performance of employees and teams. It starts with performance planning
and ends with a performance review. The paper quotes that it’s very important to have
either formal or informal performance feedbacks to the employees more frequently in order
to generate trust in the whole process. Additionally, a couple of supporting activities like
training, task analyses, etc. are more effective in improving job performance rather than just
feedback alone. The author finally proposed that frequent feedback is more likely to be
effective when the employees are well informed about the performance standards to which
they are held accountable. It’s also not fair to make them accountable for the expectations
they are not informed of initially.

Article 4 –
Title – “Linking Belgian employee performance management system characteristics with
performance management system effectiveness: exploring the mediating role of fairness.”
Authors - Dewettinck, Koen, and Hans van Dijk (2013)
The paper dwells deep into examining the relationship between Performance management
system characteristics and its effectiveness and by testing to what extent this relationship is
mediated by the perceived fairness of the performance appraisal. The study is guided by
three theories of motivation:
a. Expectancy theory
b. Goal setting theory (GST)
c. Control theory
PM system characteristics are the number frequency and duration of formal and informal
performance reviews, their focus, and the degree of participation of the employees in the
decision making. The frequency and duration of formal & informal performance reviews are
positively related to PM system effectiveness. The paper also states that PM systems that
focus more on employee development are more effective than those that focus on

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performance outcomes. The level of employee participation in the PM system is another

factor that positively affects its effectiveness, as they feel more involved and hence works
more responsibly. Appraisal fairness is also an important factor that shows a positive impact
on PM effectiveness, as the employees are more motivated to improve their performance,
and their perceived level of involvement in the PM process is increased if they find the
process fairer.

Article 5 –
Title – “Performance management practices within emerging market multinational
enterprises: The case of Brazilian multinationals.”
Authors - Mellahi, Kamel, Jedrzej George Frynas, and David G. Collings (2016)
The extent to which ME MNE’s standardize or localize HR and PM practices is extensively
researched. Companies that indulge in both forward and reverse diffusion of practices are
better in utilizing economies of scale and scope. The environmental factors under which a
company has evolved, the nature of policies adopted, approach of management style, global
integration, and strategic orientation drive the standardization of company policies. Similarly,
localization brings in elements like subjective or objective tools for performance evaluation,
direct or subtle way of communicating performance, the proximity of HQ and subsidiaries for
adaption of practices. Based on the 14 interviews conducted across 3 companies and their
subsidiaries in different countries, we determined that all companies started their PM
systems with the goal of universal applicability. In all three cases, the authors found no
evidence at all of the ‘reverse diffusion’ of Performance Management systems from host
countries and its subsidiaries to the HQ. Based on the systematic analysis of interviewee
statements related to standardisation and adaptation, a high level of standardisation of
practices emerges. Companies have different operating styles - a unique entrepreneurial
approach, emphasis on productivity, and benchmarking against industry practices. Several
interviewees referred to ‘cosmetic’ adaptation whereby the wording of policies was adapted
to account for local contexts. Consideration of age in performance evaluation is something
interviewees felt is significant. While standardization can be achieved across subsidiaries,
Small subsidiaries reflecting all HQ policies are difficult, so contingencies should exist. PM
norms are accepted not because of local cultural affiliations or satisfaction but on the belief
that the norms are globally accepted. In all 3 cases, there was almost no adaptation of the
corporate culture and values in the subsidiaries. There are high expatriates when the firm is
started to present when the firm is established. All had common training practices but
generally outsourced to educational or consultancy firms for common value stream across
the company.
Article 6 –
Title – “Implementing performance appraisal: Exploring the employee experience.”
Authors - Farndale, Elaine, and Clare Kelliher (2013)
HR functions can be viewed in 3 lenses – Intended functionalities of HR policies, Application
of these HR policies, employee experience of the practice. Employee outcome is determined
by the experience they gain in HR policy implementation, and according to social exchange
theory, they reciprocate it back. The perception of signals from senior management will

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determine employee behavioural outcomes, so understanding the organisational climate is

of prominence. Line manager’s role has evolved over the years where HR practices have
become part of their job, but lack of interest, inadequate training, and disinclination to
conflicting scenarios has created a gap between intended and experienced resulting in a
different outcome from an employee. Experience of performance appraisal can be examined
through the concept of organizational justice – Procedural fairness and Interactional Justice
(Interpersonal treatment). Employee experiences of justice in performance appraisal are
positively related to their level of organizational commitment. Thus, a climate of employee
trust in senior management at the group level moderates the relationship between individual
employee experiences of justice in performance appraisal and their level of organizational
commitment. 5 organisations in the UK with 22 BU’s were studied with an average size of 185.
Questionnaires focusing on content, the process of interaction, employee dignity are given to
employees. Senior management trust (SM trust) was measured using sincerity, equity, and
integrity of senior management. Control variables also included for just interpretations. The
findings gave support to hypotheses, providing evidence of the importance of the
commitment of employee perceptions of how line managers enact performance appraisal
practices, and how these perceptions are affected by the level of trust placed in senior
management. On a positive note, the findings underline the added value of line managers in
the implementation of HRM practices or performance related outcomes. Yet perhaps of more
concern is that the assignment of HRM practices to line managers increases the potential for
variation in what is enacted.

Article 7 –
Title – “Measuring employee perception of performance management system effectiveness
– Conceptualization and scale development.”
Authors - Sharma, Neha Paliwal, Tanuja Sharma, and Madhushree Nanda Agarwal (2016)
This research article emphasizes that organizations should understand how their employees
perceive the effectiveness of PMS for enhancing employee performance. Literature suggests
that PMS faces the risk of failure in case employees doubt its credibility. Earlier researches
were focussed on how to improve the effectiveness of PMS (PMSE) and fell short of suggesting
ways to measure PMSE. Earlier, PMS focused majorly on evaluating performance rather than
improving performance, which is the actual agenda behind PMS. This study considered
performance planning, feedback-coaching, review, and outcomes as the four main stages of
PMS. However, for organizations, the focal point of PMS is the appraisal. The significant factor
for the success of PMS is its acceptance by employees and is considered as being fair and
accurate. The literature review done by the authors suggests that “accuracy” and “fairness”
are the two dimensions on which the effectiveness of PMS can be measured. Authors used
exploratory and confirmatory factor analyses to develop a valid measure of employee
perception of “PMS accuracy” and “PMS fairness.” This measure can be used by organizations
to understand the relationship between PMS and Organizational performance. Also,
shortcomings in the existing PMS can be identified and corrected using the measure of PMSE.

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Article 8 –
Title – “Effectiveness of performance management systems: an empirical study in Indian
companies.”
Authors - Srinivasa Rao, Dr. A (2007)

This paper deals with the study of the effectiveness of performance management systems in
Indian companies. Due to heavy global competition, Indian companies are required to
benchmark the practices, performance standards, and efficiency. The focus is on
understanding the factors influencing the effectiveness of PMS. The main objective of PMS is
not only to measure current performance accurately but to provide feedback, which is
necessary to improve future performance. Various socioeconomic forces shaped
organizations in India. The authors have conducted an empirical study that deals with content,
process, outcome, and organizational characteristics. Primary data was collected using a
purposive random sampling method. The effectiveness of PMS was tested using T-tests.
Findings suggest that the performance planning process is not a necessary step to improve
the effectiveness of PMS; also, there seems to be a gap between what managers know about
PMS and what they implement. Most of the managers focus on rating, instead of
concentrating on feedback for analysis and improving the performance. PMS is still being
considered as an annual exercise rather than using it as a tool for diagnosis. The study also
showed that Managers with high qualification and good academic background and system
discipline are more likely to implement PMS effectively.
Article 9 –
Title – “Exploring performance management in four UK trade unions.”
Authors - Thursfield, Denise, and Katy Grayley (2016)
The authors aimed at exploring performance management in four UK trade unions. The
research digs into understanding the managers’ approach to whether to accept or not the
characteristics, such as unitarist, disciplinary, and performative values, of the performance
management practices. A qualitative approach was chosen to delve into the trade union
managers’ interpretation of performance management. The idea of focusing managers was
because of their ability and possibility to structure performance management practices in
their areas of operation. The research followed qualitative semi-structured interviews with
13 managers from four trade unions. The belief was that concentrating on a small number
of powerful people gives better insights than focussing on a large number. In this context,
the senior trade union managers’ decisions, concepts, and implementation have greater
influence at the organizational level.
The interviews were conducted in the managers’ room and were recorded. Qualitative
interviews gave the managers enough room to speak freely about the process.
The researchers found out that often the performance management is not focussed on the
individual but aimed at the organization. Managers reported that many times they need to

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remind the employees the reason why they came in and make sure they try to achieve the
targets.
Article 10 –
Title – “Performance appraisal: dimensions and determinants.”
Authors – Alberto Bayo-Moriones, Jose E. Galdon-Sanchez & Sara Martinez-deMorentin
(2019)

The authors explored the determinants of the dimensions of performance appraisal. The
dimensions used were performance measures, evaluator of performance, and frequency of
appraisal. The test was carried out using a sample of Spanish establishments in the
manufacturing sector. The variables used as explanatory factors were autonomy, teamwork,
job rotation, training, individual pay for performance, promotions, percentage of casuals,
turnover, size, supervisors per worker, union influence, age, number of white collar workers.
While the dimensions of performance appraisal used were performance appraisal,
subjective measures, immediate supervisor, manager at a higher level, a person from the
HRM department or not, high frequency of appraisals. The authors also found that
performance appraisal is carried out by the manager in the presence of their teams. In the
case of frequency explanation, teams affect negatively this dimension of performance
appraisal. The authors also found that other organizational features have a bearing on
performance appraisal design.

INTERVIEW:
In order to understand the challenges faced while implementing the performance
management system in the organizations, 10 employees from the HR skill team from
different organizations have been interviewed. Semi structured telephonic interviews were
taken.

Interview – 1
Sivaram A V, HR Manager, Ford Motors
Praveen - What are the challenges faced while implementing the performance
management system (PMS)?
Sivaram – The asked question sounds simple, but we must first understand the history. Until
5-6 years back, our organization followed legacy PMS where the objectives are locked at the
start of the year, and then an appraisal is done at the year-end. When businesses are
transforming at a rapid pace, the organization started changing PMS every year to keep up
with developments.
Praveen – What are the fundamental changes that you could identify between the legacy
system and the latest PMS?

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Sivaram – In the legacy system, the mission of the company will be translated into
quantifiable objectives, which are then cascaded to different functions. For example, let’s
say a company has got a mission of safety, quality, and other metrics; the marketing team
would translate to increases volumes. Similarly, the production department will focus on the
number of throughputs. The quality team can focus on minimal wastage and rework.
Similarly, support functions like HR can focus on tangibles such as reducing attrition
percentage, absenteeism, and so on.
Praveen – Ideally, all of them are leading to reducing costs or increasing sales, isn’t it?

Sivaram – That’s correct. All these quantifiable objectives will have costs attached to them.
Each functional unit is given targets of reducing costs and so on. These are then cascaded to
individual teams. Latest PMS that’s followed has one major difference in keeping the
objectives fluid, where the manager and associate can have conversations on a regular basis
and keep adapting to the fast-paced world. Also, ‘How you did it’ is emphasized more than
‘what you did.’
Praveen – Are there any other changes that you can think of?
Sivaram – Yes. Here’s another interesting change. Organizations are slowly moving away
from the forced distribution method; instead, they are giving the whole responsibility to the
supervisor to decide on how the distribution has to be, how the rewards are to be split
based on the allocated budget. Even 360 degree feedback is emphasized a lot in
understanding the employee and then evaluate accordingly. Also, related work groups have
been done away with as there are chances of lots of biases.
Praveen – You had a chance to implement atleast 2 or 3 PMS. Have you faced any
challenges?
Sivaram - The most important challenge would be to increase awareness. We take lots of
sessions to both employees and managers and clarify if there are any issues as such.
Generally, the global team comes with the changes, and then the change is embraced across
all the teams. My organization has the latest PMS. Process and policies are emphasized a lot
ensure quality.

Praveen – Thanks for your time. Have a great day!

Interview -2
Kavitha Iyer, HR Business partner, TCS
Praveen- What are the challenges faced in implementing a performance management
system?
Kavitha- In our organization, the project managers(PM) are supposed to fill the rating at the
end of the project or when they are leaving the project. Though most of the project
managers don’t fill it on time, all of them would pile up at the end of the year. There is a

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high chance of giving incorrect ratings either because the project managers do it in a hurry
or forget about employee performance as such.
Praveen - What are some other issues that are faced frequently?
Kavitha- When employees go on long leaves, for example, maternity leave or sabattical,
there is no procedure to rate the employee as they are not in any project. To overcome this,
we try to assign a project as soon as possible to obtain a rating. We also inform them of how
the appraisal would work and what should be ensured once they are back.
Praveen - Are there any other issues experienced while doing performance appraisal?
Kavitha - There are changes of partiality or bias during the appraisal. Sometimes PM gives a
better rating to those employees who maintain rapport. Also, the given hike doesn’t match
with the rating. This would affect other employee ratings. Therefore, HR would play a key
role in addressing those issues. Employees can report to HR managers in case they are not
satisfied with the rating. HR would then discuss separately with PM and employee
understanding the expectations, performance metrics, and rating in each metric. After that,
another discussion would take place with HR participating in the conversation, and rating
would be changed accordingly.

Praveen – Thanks for your time. Have a great day!

Interview -3
Kishore, Verinon
Kiran: Hello Sir, I am a student at NITIE, Mumbai. As a part of my academic curriculum, I am
doing a project on various PMS methods used in companies. It would be of great help if you
could share some insights from your organization.
Kishore: Sure.
Kiran: Which method do you follow in your organization to carry out the PMS cycle?

Kishore: Actually, companies use various methods that would fit their requirements. We are
currently following the Bell Curve method.
Kiran: How does the PMS work in your organization?
Kishore: The rating is given by the manager to the employees to fit in the Bell-Curve
method. Employees are rated on a scale of 1 to 5 based on their performance. After the
formal appraisal discussion with the employees is done, HR approves and closes the
process.
Kiran: What are the major challenges faced during the PMS?
Kishore: There are 2 major challenges that we face,

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1. Since the rating is given by the manager, he mostly considers just his performance in
the organization and doesn’t consider other factors like the attitude of the
employee, his cultural fitness, psychological factors, etc. This ideally shouldn’t be this
way, and an employee should be given a 360-degree evaluation.
2. Since all the employees should be fitted into the bell curve, some employees are
forcefully fitted at the bottom end of the curve due to various factors like the budget
allocation, etc. This leads to dissatisfaction among the employees, and they will be
demotivated.
Kiran: So, is there any way to improvise the current system?
Kishore: Yes, the attrition rate in the organization has increased to a huge extent recently,
and we are suspecting it to be because of the current appraisal system. So the company is
taking measures to revamp the PMS process.
Kiran: What are the changes that you are going to make?

Kishore: We are actually thinking of changing the PMS system but didn’t take a particular
decision till now.

Kiran: You said that the current attrition rate in the organization is very high. Can you please
elaborate on the numbers?

Kishore: Sorry, that would be against the policies of the organization. I cannot disclose such
information.
Kiran: What is the frequency of appraisal? Do you follow in Verinon?
Kishore: Like most of the IT companies in India, we follow an annual appraisal system.
Kiran: Is there any issue faced due to this annual appraisal system in particular?
Kishore: Yes. Some particular employees generally seem to slog at work some months
before the annual appraisal system begins. But this seriousness in work doesn’t continue
once the appraisal process is completed. And this cycle continues every year. Hence it
becomes very difficult for the HR or Manager to figure out the real attitude of the
employees in the beginning. So, I personally feel the appraisal system should be continuous
rather than just being conducted annually.
Kiran: Thank you.

Interview -4
Snehal, labs

Kiran: Hello Sir, I am a student at NITIE, Mumbai. As a part of my academic curriculum, I am

doing a project on various PMS methods used in companies. It would be of great help if you
could share some insights from your organization.
Snehal: Sure. What exactly do you want to know?

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Kiran: I want to know about the appraisal system followed by your organisation and the
challenges faced during the PMS cycle.
Snehal: We currently have around just 50 employees in the organisation. Hence, we don’t
follow any appraisal method in particular. There is an annual appraisal method, in which the
manager awards rating to the employees based on their performance and client review, and
pay hike is decided on the rating given.
Kiran: So, what are the complications you face due to this system?
Snehal: Yes, there are multiple problems due to this system:
1. There is no particular architecture to follow; hence there will always be a difference
of opinion between the manager and the employees. Employees always argues that
the rating given is less compared to their efforts, and the managers argue the other
way round.
2. Moreover, the lack of or a particular architecture becomes more evident because
the ratings allotted to the employees is purely based on the perception of the
managers. Hence there will always be biases towards some employees, and hence
they are rewarded more compared to others. At least this is what the employees feel
in the organization.
3. Being a start-up, HR doesn’t have a much say in the PMS process, and we have to
abide by whatever ratings the manager gives. This is majorly due to the funding
issues as we don’t have much freedom in terms of budget.
Kiran: Do you follow the same process for employees of all hierarchies?
Snehal: Yes, we follow the same procedure irrespective of the hierarchy.
Kiran: What is the appraisal cycle that you follow.
Snehal: We follow a bi-annual appraisal system, as the employees should be continuously
evaluated based upon the performance. Again, this is because we are a start-up and cannot
afford low performers in the organisation.
Kiran: Okay. Thank You.

Interview - 5
Ajay, HR, Gordim International School
Vinay: Hello, Ajay, this is regarding my HRM course. I would like to understand what are the
challenges faced by organizations while implementing the PMS. So, in your experience, what
are the challenges faced by your current organization or by the previous organization while
implementing PMS?

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Ajay: Performance management system is used by most of the organizations, and it helps
organizations to achieve their goals. While implementing the PMS, we will be setting goals
at the start of the year, and we will also be having mid term reviews. During this process, we
face a lot of problems due to various factors, for example, from the lack of experience or the
due to lack of monitoring their subordinates. We also face problems of alignment of
employee goals with the organization's goals. Employees will not be aware of the fact that
their goals are derived from organization goals and how it helps the organization in
achieving their targets. Lack of learning and development centre to support the aftermath
of PMS will lead to stagnated growth of their careers.
Vinay: Can you state some examples of challenges faced by your current or previous
organizations and steps taken by the organizations to mitigate those challenges?
Ajay: We are taking mid-term reviews, but the increments are given only on an annual basis.
This leads to a situation where employees are not motivated to participate in mid term
reviews. We need to identify such problems and motivate employees. Another major
challenge is when employees feel that the targets assigned to them are not relevant to their
expertise and might not feel interested in such kind of jobs. So in such cases, we try to elicit
feedback from employees and understand what they are interested in, and based on their
capabilities, we will try to change their area of work within the internal department.

Vinay: What are the challenges faced while implementing a new PMS?
Ajay: Challenges include awareness of the implemented PMS across the organization. For
this, we identify experts who are well versed in the new PMS and organize training for all
the employees by these identified experts. We also prepare standard instructions to
document to help managers while training them of the new rating system.

Interview - 6
Saran, HR, One-Plus Hyderabad
Vinay: What are the challenges faced by your organization while implementing PMS?
Saran: Normalization, we call it as bell-curve fitment. Usually, there will be a discussion
between manager and the employee regarding the performance, and the manager will be
committing some rating to that employee, but because of budgeting and bell curve fitment
and normalization, we will not be able to accommodate the majority of the population.
Then there will be many concerns and queries regarding the ratings from employees. These
are the major challenges.
Vinay: What is the effect of biases while managers give a rating to employees?
Saran: During the performance assessment, there will be two kinds of assessments. The first
part is related to the core work, technical aspects which basically deals with targets,
productivity, etc. The second part is the behavioral assessment. This the major area where
the manager can make a decision based on the employee’s characteristics like punctuality,
collaboration with other team members, behavior. Usually, if there is any kind of
miscommunication between manager and employee, the impact is seen in the behavioral

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assessment of that employee. The rest of the things are system driven. Most of the
companies derive these performance evaluations based on the reports that are available on
the system like meeting project deadlines, etc. But behavioral assessment can be biased
based on the relationship between the manager and the employee.
Vinay: How is rating done for the people who are involved in long term projects?
Saran: Even if it is a long term project, there will be key milestones for are project, which is
measured quarterly, semi-annually, or annually. So by looking at the achievements made
against the set milestones, the employee is assessed for performance.
Vinay: Have you faced any queries from employees before? And how did you resolve those
issues?
Saran: This is where the major challenge comes. If any employee is having any concern or
grievance, their first point of contact is the Head of the Department. Even after that, it
doesn’t get resolved, the HR manager will have a joint discussion with HOD, manager, and
employee. Then we will try to understand whether the manager is really trying to do some
unethical thing or employee has misunderstood the process. We cannot move beyond the
bell curve fitment and normalization; of course, there will be some exceptions around 5-
10%, which can be taken care of. The manager or the HOD themselves manage the
grievance even before complaining to HR. Because we don’t encourage such kind of issues,
because it might have an impact on the career of the manager.
Vinay: When a manager is being apprised, do you consider feedback from the manager’s
subordinates while assessing the performance?
Saran: Not exactly; it depends on the company’s policy. Performance management has
multiple facets in assessing. Few companies follow MBO – management by objective, where
in the subordinate's feedback is not at all required. But if a company is following 360 degree
feedback, it will require feedback from colleagues, peer groups, subordinates, and few big
companies, also consider the feedback from families. It all depends on how the company
wants to assess.
Vinay: What is the major objective of PMS in your organization? Is it only used for
evaluating performance for deciding the final compensation? Or do you also use it to
identify improvements to be done in the organization as such?

Saran: It will mainly focus on two things, first is assessing the performance. It will also look
at the objectives at the organization level. It is used to identify the learning and training
needs, improvement areas, strengths weaknesses. It is also used for identifying the steps to
be taken to improve the internal talent and also to match the cost of living index as per the
market.
Vinay: There might some cases where some of the employees might not get the chance to
play their strengths. In such cases, how is the normalization done during performance
assessment?

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Saran: Usually, the performance assessment is done based on targets assigned to the
employee. So we will not be considering the area of expertise. Suppose, if an employee is an
expert at the development and he has been assigned the duties of maintenance, then he
will be assessed based on the duties assigned to him.
Vinay: Does the normalization policy change as per the business requirements of the
organization?
Saran: It changes based on the business requirements. Usually, it is based on factors like
budget, revenue generation, etc. It involves a lot of analysis in the back-end. It also takes
care of the company’s P&L, liabilities, stock price, etc.
Vinay: In your experience, have you seen your organization or any organization taking
initiatives to improve the performance management system?
Saran: Seriously, they lead a change in every organization mostly because there might be
some issues, or there might be no retention strategy, which might lead to high attrition. So
when all these problems are being faced, the PMS can be changed from rating focused tool
to improvement focused tool.

Interview – 7
Salima, IMS Learning Resources PVT ltd
Praveen: What are the problems faced while implementing a performance management
system?
Salima: - lack of awareness about the importance of this exercise which leads to wastage of
time in repeated explanation
- young managers - the absence of timely feedback to the subordinates leads to a situation
where the PMS exercise is used as an opportunity to inform the areas of development
- Managers rating subordinates due to the recency effect, which leads to the skewed output
of ratings.
-procrastinating the process of consensus rating (discussion/ dialogue) with the
subordinates

Praveen: What are the effects of biases on PMS and how to improve the situation?
Salima: effects:
- inequality within the team
- demoralizes the employees which affect productivity & making the environment toxic
- lack of faith in the company
- eventually, exit leading to the attrition rate move upwards

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measures to improve:
- regular & multiple instances of clear & concise communication between the manager &
the team/employee
- regular follow-up/quick standing meetings/ weekly calls to update the progress
- equal opportunity to the team members & respecting everyone

- healthy discussions & outings to bond well with the team

Praveen: In what frequency should PMS be implemented, and what are the improvements
which are to be incorporated for a better assessment?
Salima: -minimum half-yearly assessments are recommended. It helps to measure the
progress towards the achievement of short term goals.
improvements -
- joint KRA setting gives employees a fair chance to understand the requirement &
accordingly agree to the deadlines set.
-regular review of the progress made on the set KRAs.
Interview – 8

Subhasis, Airtel
When we do it for different functions like sales, network, corporate functions, HR, and
finance. The way we reach out to the target audience varies. For example, when we reach
out to salespeople, who mostly spend time on the field who can hardly come and sit for a
performance appraisal process. So the resistance comes from several quarters of sales as it
comes from the zonal sales manager, business manager. The ownership and the
convenience are tied up at their end.
It’s necessary to keep all the audience involved during the performance review cycle. We
need to keep on sending reminders to the employees so that they’ll fill their mandatory
ratings. The reviews happen over a period of time, and it’s difficult to keep the people in
track, and that is when the recency bias comes into the picture. The actions of the recent
quarter shadow the performance in the rest of the year. This is one common error involved
during a performance review.
Another problem when dealing with people working in different regions like Jammu and
Kashmir as compared to people working in metros, for these people, the appraisal process
involves some additional factors. We multiply certain factors as their market is not similar as
compared to big markets. How do we compare people working in two different areas? As
the factor is not decided based on some established research as there is not enough data.
We may not be able to properly decide whether the market is complex or not based on just
perception.

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Many big organizations have recently implemented something called a continuous review
system where the employees and the managers will have conversations monthly instead of
quarterly discussions, which tries to ensure feedback to the employees soon instead of six
months. Though other organizations also have the capability to implement the same, they
feel that this seems like micro monitoring.

The performance is measured based on the KRAs set at the beginning of the year;
sometimes, the bias comes into the picture, which is because the HR needs to
accommodate everyone under the bell curve and maintain the 70-20-10 proportion.

Improvements:
The people managers need to understand the importance of the PMS and must be
performed diligently and have to take ownership of the employee and his ratings.
Sometimes blame is put on the HRs that the manager has given a good rating, yet HR has
degraded it. The manager needs to stand for what he had done in the Performance review
and keep the system robust.

Interview – 9
Shubda, CultFit

Rohith: What is the process of the performance management cycle?

Shubda: Performance management cycle asses an individual throughout the four quarters in
a year based on MBO, already set goals after discussion with the supervisor, key
performance indicators, and deliverables at the end of each quarter. The feedback is
submitted at the end of each quarter, and the average of all quarters is taken as the final
rating. The entire process is tracked through an application called Go Perform.
Rohith: What are the challenges you face during the performance management cycle?

Shubda: The company has a policy of putting employee’s performance in a bell curve, which
at times makes the assessment hard as equally performing employees have to be degraded
based on the minute details and other dynamics, which will bring employee morale down.

Rohith: How do you deal with personnel who are not satisfied with the rating offered
Shubda: The company has a matrix that compares peer to peer performance and as an
employee is always in the loop when feedback is provided it helps them understand the
reasons for lower grading, and since it is carried in a short intervals there is always scope for
performance improvement and change in grade.

Rohith: What changes do you think will help improve the process of the performance
management cycle
Shubda: The company offers the best practices, and it's difficult to change or modify any of
the existing policies.

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Interview – 9
Raju, RINL

Rohith: What is the process of the performance management cycle?

Raju: There is an available online performance management platform where all employees
register themselves. This platform provides an opportunity to set goals and deliverables for
a certain period of time. The stakeholders are employee, reporting manager, and reviewing
manager. As the time set is close by employee rates themselves on how they performed
while this is verified and modified by reporting manager according to employee’s
performance, then it is forwarded to the reporting manager who again reviews the score
and finally awards a rating. In case of levels above senior manager, the score is reviewed by
the performance management committee and sometimes a director.

Rohith: What are the challenges you face during the performance management cycle
Raju: The organisation is a fast entity which employs thousands of personnel. This creates a
problem because the control and maintaining the timelines of appraisal is never accurate.
Employees delay rating themselves, which in turn will let them continue with the previous
grading system. Also, on the manager's part, sometimes they do not receive employee
forms on the platform, or they claim to have not received. The system in itself is not
followed properly. This is a major challenge to align everyone to the set system.

ANALYSIS:
The companies with a positive influence of senior management and fairness in
compensation awarding would help in productive outcomes from employees. The influence
of host countries and country of origin will have an impact on the HR systems and practices.
Good companies will indulge in forwarding diffusion and reverse diffusion for better
organizational output. From the interviews and the insights gathered from the HRs, it is
clear that the recency bias is prevalent in almost all the places of work. The performance
review isn’t considered a serious practice by a lot of employees, and they have to be
educated about the importance of the same. Smaller cycles for review is essential for
managers who are new to an organization. The PMS and review process should be simple so
that everyone may do it with full interest and understanding.

CONCLUSION:
Based on our analysis through literature review and interviews, we understand that
organizations need to constantly innovate and redesign the performance management
system. Benchmarking and best practices can be adopted in this area as PMS has a crucial

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link with overall job satisfaction. We understood that in most of the organizations, people
get carried over with the performance evaluation and ratings and get side tracked from the
main objective of the PMS, which is feedback and subsequent development of the
employee. We suggest that organizations should shift to periodic reviews and frequent
check-ins to get a more comprehensive review of the employee. In fact, these frequent
check ins should be integrated with PMS itself so that employee rating has a more solid
backup and reasoning behind it.

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