Importance of Performance Management System in Organization

Importance of Performance Management System in Organization

The organization opted for different kinds of performance management systems to evaluate staff performance and produce approximate true indicators that can help the employer to distribute staff benefits according to employee performance.  There 3 common appraisal systems in place currently i.e. 360 performance management systems, Normal appraisal system and peer evaluation system to determine the employee's performance. In this article, we’ll discuss various points regarding systems in detail.

Importance of Performance Management System in Organization

The objective of Performance Management System (PMS) is to promote a performance culture, reward performers and provide opportunities to employees for their development and progression.

Setting Objectives/ Goals:
All staff shall have SMART objectives (specific, measurable, achievable, realistic and time-bound).
Goals should be set before the start of the year. These goals shall highlight Business, Personal targets & measures and the given time frame for each portion of the work to be completed.
Goals will be signed by the immediate supervisor/manager. In the event of transfer or promotion, new goals will be written and signed within one week of the transfer and/or promotion.
Performance shall be assessed on an annual basis at the end of the calendar year by the immediate managers/supervisors & reviewed/agreed by the next level supervisor.
All performance reviews must be signed by the concerned employee and the supervisor. In case of disagreement, the employee has the right to document his/her comment with his / her signatures.

Annual Performance Appraisal:
Each the year the HR Function will circulate the Performance Evaluation Process with relevant formats as agreed by the management.

All full-time and ABC COMPANY Contract employees shall be part of the performance evaluation process once every year.

All full-time employees having served the ABC COMPANY for a minimum of three (3) months in the assessment year, whereas all employees on ABC COMPANY contract with at least six (6) months service in the assessment year with the ABC COMPANY shall be eligible for the performance evaluation cycle. What is Employee Probationary Period Laws?

Employees who have been with the ABC COMPANY for three (4) months or under that period at the time of one Annual The appraisal shall be apprised in the next Annual Appraisal year.

Each employee shall be primarily appraised by his/her line manager/supervisor.

The Annual Appraisal shall be conducted according to pre-determined formats gauging the work performance, attitude and potential of each employee appraised.

The appraiser and the appraise shall both sign the Appraisal Form and the employee appraised has the right to add own comments on the Appraiser evaluation.

In case the Performance Appraisal is in dispute between the appraiser and appraise, a higher level manager than the appraiser shall also conduct an evaluation and put own comments on the Appraisal Form?

HR Function may use a variety of performance rating methods from time to time to ensure transparency and to avail new and improved methodology. How to Improve Administrative Skills?

Promotion exercise shall normally be conducted every year or at such interval of time as decided by the management considering the business and employees’ career progression needs and budgetary provisions.
All promotions shall be made on merit and based on (i) management’s review an individual’s annual appraisal, (ii) individual’s potential to function in the new/ higher level job, (iii) requisite skill set, knowledge and experience, and (iii) availability of positions.
No employee shall have a claim to be promoted to any particular post or grade by virtue of seniority alone.
Promotions to all categories and grades shall be approved in accordance with the Schedule of Administrative and Financial Powers. Where Board approvals are not required, promotions shall be approved by a Committee comprising of GM and Head HR.

Merit-Based Annual Salary Rise / Promotional Increase / Market Based Adjustments

Salary reviews, promotional increases and market-based adjustments will be made on the basis of performance, the complexity of the job and bench-marking with the market. This may be done as a result of annual performance appraisal.
The merit-based increase shall be given annually in line with employees’ performance ranking.
The individual salary reviews of high performers/critical staff shall be considered based on critical and retention needs.
The management shall every year decide the rate(s) of merit increase on the basis of the business outlook for the ABC COMPANY, budgetary allocations, and employees’ performance ranking.
An annual salary increase of an employee against whom disciplinary proceedings are pending/in offing shall not be released until the conclusion of the proceedings. Upon finalization of the disciplinary process, the decision regarding release shall also be made. Key HR Functions In Any Organization

Unsatisfactory Performance:
The ABC COMPANY expects employees to work and perform up to the required standards. In the case where an employee’s performance rating is 2 or below, his/her performance must be stringently monitored for 3 months. If at the end of the 3 month period, there is no significant improvement and the performance is still unsatisfactory, a further 3 months a probationary extension may be allowed based on the consent of Functional Head / Head HR OR the ABC COMPANY may initiate disciplinary proceedings.

To provide an opportunity to spontaneously reward achievements on a “one-off” basis, without having to wait for the annual “reward review” based on the performance.

All full-time confirmed employees are eligible to be nominated for this recognition scheme.

Grant of spot rewards will be based on some outstanding achievements, contribution or display of exemplary effort e.g. cost savings, revenue generation, meeting stringent deadlines, overcoming formidable obstacles, achieving a breakthrough in a problem which was difficult to resolve.

Not to be considered for “tasks” for “performance levels” normally expected for executing the regular job requirements in a satisfactory manner.

Recognition – as a symbol of recognition for staff, the recipient’s name will be publicized at least within the Function / Department. A simple Plan of Employee Counseling

Education Assistance Program:
To encourage employees to pursue professional qualifications while working at ABC COMPANY

All full-time confirmed employees of the ABC COMPANY:
One year of continuous service with a clean service record at ABC COMPANY and a performance rating not less then “3” in the last Annual Performance Appraisal.

Employees, taking part-time evening courses by approved local universities, business schools and other local institutes may, subject to the approval of the Functional Head and Head HR/Director HR can apply for course/examination fees reimbursed upon successful completion of the course (all parts) and production of receipts / degree / certificate. The following shall apply:

Reimbursement shall be allowed for those courses which have been completed during the service at ABC COMPANY.

In case an employee resigns within Two years of last payment received, all payments made in respect of the above will have to be refunded to the ABC COMPANY by the said employee.

If at any point during the association with the ABC COMPANY, an employee has been involved in disciplinary the issue, then he/she is not eligible for any reimbursement.

No reimbursement will be made to employees who are under notice of termination of employment.

Performance Bonus:
The objective of this policy is to recognize and reward good performers and to distribute bonuses in a transparent manner. To accomplish this, a link must be established between the performance of the ABC COMPANY as a whole and that of bonus distribution based on group and individual performance. For distribution and payment of performance bonus, HR Function with the approval of the President/Board may use different assessment/evaluation techniques from time to time. What Is The Full Form of RPM?

Eligibility for Performance Bonus:
All confirmed full-time employees having served the ABC COMPANY for a minimum of four (4) months in the assessment year.

All employees on ABC COMPANY contract with at least six (6) months service in the assessment year with the ABC COMPANY.

Employees on probation, based on performance ratings and target achievements will be eligible for Performance Bonus on a pro-rated basis from date of joining on the confirmation.

Employees, who have joined during the year and are fulfilling the above criteria shall be paid a bonus on a pro-rated basis.

The employee must be present on the Payroll of HR at the time/date of the bonus disbursement.

An employee on a notice period due to separation (resignation/termination) will not be entitled / eligible for payment of performance bonus.

Employees dedicated to a specific product/assignment are eligible to cash incentive / cash commission (under any cash incentive / cash commission scheme) and will not be entitled to annual performance bonus resulting as a part of the annual appraisal.

In cases where there may be a redundancy or death or retirement, the amount will be disbursed either to the individual or the legal representative(s).
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