The aim of this business report is to critically analyse current performance management issues and challenges, current performance management practices and recommendation on performance management system for Country Public Limited ( CPL), which is based in India. Theoretical knowledge and methods will be used from the textbook, lectures and related research documents that will be provided as a reference of the research. Country Public Limited has faced a problem in Human Resource Management mainly in the Performance Management System, which resulted in dramatic loss of employees and deterioration of talent pool.
This section will critically analyse current Performance management practices that were conducted by CPL. It is a crucial role of HRM to provide good evaluation, feedback and enhancement in a company, that was not provided by CPL. According to the case study, HRM has failed on providing basic objective measures as employees did not receive a clear view on their performance management. Considering the performance standard of the Indian Government, the performance management system should be transparent to build trust between the employee and organisation(india). Moreover, the goal should be set in criteria and include improvements in a system, rewards (intrinsic and extrinsic) and appraisals(book). 2.6/5 is very low rate in evaluating PMS, recommendation is to consider the essential criteria of PM that are reliability, validity, fairness and adequate notice.
Key result areas(KRAs) and Key performance indicators(KPIs) are also important areas that HRM needs to manage. KRAs identifies the significant activities within a given job that helps to achieve objectives of the Department and KPIs is the channel through which an organization measures performance of KRAs (Tewari et al. 2018). As per the case study, KRAs and KPIs were not discussed in a proper manner and it was not allocated evenly in CPL. The goals and following KPIs were imposed upon employees by their managers and there were instances when managers were not clear about the techniques used in grading the performance of the employees against set standards.
Base pay is the initial or minimum salary paid to an employee and it doesn’t include any benefits, rewards or bonuses. According to the case study, CPL employees were not happy with the base pay levels, employee benefits and PRP system. The bonus pool was evenly distributed among all the employees before the introduction of the PRP system but since PRP was introduced manager level employees received more incentives than the workers and senior managers received much higher incentives than the managers. New recruits in 2008-09 who joined as managers were promised a PRP equal to 40% of the base pay but most of them didn’t receive the amount assured to them.
Given the relatively high employee dissatisfaction and turnover-rates, radical change to the current Performance Management (PM) system may be required (Shields et al. 2020, p.387). There is evidence of psychological contract breaching, both through a lack of honesty in likely pay outcomes and feelings of nepotism and personal relationships being the key factor in promotions (Xavier & Jepsen 2014). Fortin et al. (2016), adds that employees may not react to perceptions of “unfairness” until things have reached a critical point, which suggests that the situation may have reached a state. These facets must be addressed with frequent and honest communication on the part of management and the amount of time it will take to recover employee faith after the psychological contract breach is unknown (Xavier & Jepsen 2014).
In order to ensure a cohesive and sustainable PMS the company culture needs to be reevaluated. As there are complaints of nepotism, favouritism, and seniority over performance, the PMS must be reshaped in order to evaluate objectively. By training appraisers in bias and using objective standards some issues of discrimination may be lessened (Kronberg 2020) Beginning with the philosophy statement to outline the organisations key value proposition, this should be used to evolve the strategy statement. Careful consideration must be made this the strategy, whether to focus on cost, motivation, engagement, or all three. (Shields et al. 2020,p.381). There is a risk that attempting to serve too many purposes in PMS will result in serving no purpose well, so it may be better to focus on a specific strategy(Hanson & Pulakos 2015, p.5). In this instance a focus on motivation and reengagement of the staff should underline the strategy.
One major area of issue is communication is in KRAs. KRAs should be simplified, to reflect the job requirements and goals. KPIs must be aligned with the organisations strategic objectives (Schrage 2018). Managers and employees should communicate clearly on both job description and KRAs, laying them out and then following up on them in an appropriate time frame (Shields et al. 2020, p.79). Organisation in regards to the tracking of these goals must be improved, and the evaluation process should be followed through by the same manager for cohesion.
Maheshwari and Singh (2010) argue that in order for PRP to succeed, an open climate based on trust and information sharing must be established. If employees perceive a lack of reciprocity between the work efforts expended in relation to the measure of rewards received, feelings of distrust may ensue and lead to poor employer–employee relations (Siegrist et al., 2004). The relationship between rewards and work efforts must be concise, as a lack of perceived exchange between effort and reward may lead to a degradation of the employer-employee relationship(Ogbonaya & Daniels 2017, p.901). Therefore the grading process should be transparent and objective, and the company should consider removing self-appraisals and focusing on performance appraisal as more of a career conversation(Mueller-Hanson and Pulakos 2015) The KRAs and KPIs relationship to rewards should be clearly communicated. A merit based reward system should be considered, increasing in dollar amounts over years, based on rank, but with clear criteria and standards laid out.
From above discussion it can be concluded that HRM has failed on providing basic objective measures as employees were not provided clear view on performance management. Considering the performance standard of the Indian Government, the performance management system should be transparent to build trust between the employee and organisation. The case study describes the impact of PMS system on employee retention. Mr Raghav should implement a radical change in existing PMS to merit based system with consideration on clearly listed out criteria to create climate of transparency and reduce ambiguity in employee rating consideration. CPL board by applying cohesive and sustainable PMS and revaluation of culture can effectively reduce nepotism, favouritism, and seniority over performance. By training appraisers in bias and using objective standards some issues of discrimination and talent retention can be moderated.
Cancialosi, C 2016, ‘The Future of Performance Management is Not One-Size-Fits-All’, 22 February, viewed 2 October 2020, https://www.forbes.com/sites/chriscancialosi/2016/02/22/the-future-of-performancemanagement-is-not-one-size-fits-all/#526221d36d37.
Fortin, M, Cojuharenco, I patient, D & German, H 2016, ‘It is time for justice: How time changes what we know about justice judgement and justice effects’, Journal of Organizational Behavior, vol. 37, no. S1, pp.S30-S56.
Gray, R 2011, ‘Aligning performance management with business strategy,’ HRMagazine, 13 October, viewed 2 October 2020, https://www.hrmagazine.co.uk/article-details/aligning-performance-management-withbusiness-strategy.
Maheshwari, M & Singh, M 2010, ‘Organizational Readiness for Performance-Related Pay: Focus on Government of India Employees’, Vikalpa, Vol. 35, No. 3, pp. 63-73.
Mueller-Hanson, RA & Pulakos, ED 2015, ‘Putting the “performance” back in performance management’, Society for Human Resource Management and Society for Industiral Organizational Psychology, Virginia, USA.
Schrage, M & Kirin D 2018, ‘Leading with Next-Generation Key Performance Indicators’, MIT Sloan Management Review, vol 59, no.4(Summer), pp.3-19.
Tewari, AK, Kushwaha, AS and Bansal, AK 2018, ‘ Approach to Identify KPAs and KPIs for Higher Education Institutions’ In 2018 4th International Conference on Computing Sciences (ICCS), pp. 213-217, IEEE.
Xavier, IM & Jepsen, DM 2015, ‘The Impact of Specific Job Stressors non Psychological Contract Breach and Violation’, Human Factors and Ergonomics in Manufactuing and Servifce Industires, vol. 25, no.5, pp. 534-547.
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