Unit-III:

Management System: objectives – Functions- Phases of Performance Management System-

Competency, Reward and Electronic Performance Management Systems-Performance
Monitoring and Counseling: Supervision- Objectives and Principles of Monitoring-
Monitoring Process- Periodic reviews- Problem solving- engendering trust-Role efficiency-
Coaching- Counseling and Monitoring- Concepts and Skills .

3.1 Introduction
Systems theory is an interdisciplinary field that studies systems as a whole. It sees the world in
terms of ‘systems’, where each system is not only a ‘whole’ that is more than the sum of its parts
but is itself a ‘part’ of larger systems.
Every organization needs a well-defined and well established system of business measurement,
comprehensible at all levels of the organization. However to ensure effective management,
every organization must plan and develop its business and integrate all its elements into one
system-Performance Management System(PMS) that enables realization of the organization’s
strategy, where its business is being managed through the planned objectives of individual
employees or work units as well as ensuring their required competence.
Performance Management is essentially about planning, measuring, monitoring and enhancing
the performance of employees, as a contributor to the overall organizational performance.
Effective performance management is always important, but in the current economic scenario, it
assumes greater importance.
Definition
Performance Management System refers to the set of organizational, managerial, team and
individual metrics used to attain the aims and objectives of performance management
3.2. Objectives of Performance Management System
The major objectives of PMS are enlisted below:
1. To leverage performance of organizations, given that goals are complex
2. To create role clarity and clarify performance objectives and measure at individual, team
and organizational level
3. To promote high-performance work culture in the organization
4. To encourage teamwork, a sense of belonging and ownership
5. To develop employees by systematically identifying training and development needs
6. To foster a positive relationship between managers and employees through a twoway
communication process
7. To bring out the hidden potential and capabilities of employees
8. To focus more on process rather than on format
9. Initiating, developing and implementing a follow-up action for developing performance
of employees
10. To recognize, reward and compensate employees for achievement of performance
objectives successfully in more objective, transparent and equitable way.
3.3 Functions of Performance Management System

Depending on the organizational context, the organizational culture, and managerial

intentions, PMSs can fulfill different functions. There are, however, five main functions,
which all performance management systems should address:

1. Assessing, managing and improving performance on all relevant factors: financial

and on financial that drive profitability
2. Strategy formulation and clarification to all employees and mangers
3. Enhancing strategic dialogue with employees
4. Improving decision making and prioritizing performance concerns
5. Stimulating motivation of all employees

3.4 Phases of Performance Management System

 3.5 competency-based performance management

Understanding the various types of performance management system applications is key to

making the most of the tools and techniques available. A competency-based performance
management system allows business leaders and HR professionals to understand how various
talents are distributed throughout the workforce so that decisions about hiring and promotions
can be made with confidence.

The Josh Bersin article, What is talent management, outlines the current need for performance
management systems to incorporate a variety of functions which can drive talent acquisition and
ensure the right people with the right competencies are in the correct roles:

“Today organizations are starting to buy, build, and stitch together performance management
systems, succession planning systems, and competency management systems. The HR function
is becoming integrated with the business in a real-time fashion.”

Bersin goes on to outline a matrix of processes that make up integrated talent management,
consisting of:

1. Workforce planning. Hiring plans and targets along with compensation budgets are all
integrated within the overall business plan.
2. Recruiting. Recruitment, assessment, evaluation, and hiring bring employees to the
organization through an integrated process.
3. Onboarding. Employees are integrated swiftly into the organization through training.
4. Performance management. The method used to measure and manage employees; a
comprehensive process involving multiple aspects of an employee’s roles and
responsibilities.
5. Training and performance support. Learning and development programs are provided
at all levels of the organization. This support is part of a continuous process.
6. Succession planning. Organizations have a continual need to move people into new roles
as and when required. Identifying the right individuals for the right roles is crucial, and
needs to be fully aligned with the company’s business plan.
7. Compensation and benefits. Compensation is typically tied to performance management
to ensure that these rewards are aligned with business goals and execution.
8. Critical skills gap analysis. Josh Bersin’s report identifies this as an important, often
overlooked, function in many organizations. Businesses need to be able to identify the
roles and individuals who are leaving, and the competencies they are taking with them.
Critical talent management is required to fulfil this need.
Characteristics associated with competencies – creating a competency framework

When evaluating the various skills and competencies of an employee, a wide range of attributes
can be considered. Physical and mental characteristics can be accompanied by a range of other
abilities related to different skill sets, working in various combinations depending on the
requirements of the role.

This matrix of skills and competencies can then be brought together to form a competency
framework. Since each role requires different skills, these competency frameworks can vary
greatly from one employee to another, with a member of staff working in sales likely to have a
distinct framework from a person working on a production line.

As HR leaders and managers build up a database of desired competencies and the frameworks
associated with different roles, performance management software can be used to track and
analyse existing human resources and future requirements.

Such frameworks allow leaders to understand the “perfect” hypothetical employee for a given
role. This helps make informed decisions about new hires, as well as development plans for
existing employees to improve existing competencies or introduce new ones.

Onboarding new employees

Competency-based performance management begins at the onboarding stage. Here, a complete

understanding of the skills they are bringing to the table is understood, together with a plan of
action for the competencies necessary for the role. This information helps determine goals and
can be pulled together in a competency roadmap.

Defining job roles

While the key elements of the job role are outlined in the position’s roles and responsibilities, the
day to day responsibilities need to be articulated in more depth during the onboarding process.
This may involve the new employee shadowing a colleague to bring them up to speed.

Any digital paperwork outlining the role in detail can be shared with the new employee via
performance management tools. HR leaders and managers can also make sure the new employee
is connected with the relevant peers who can help bring them up to speed on their
responsibilities.

Identifying skills gaps

A new hire’s core skills, competencies and qualifications will be covered in the resume. The on
boarding process gives HR leaders and managers the opportunity to dig deeper into their core
competencies and how these relate to their new roles.

A part of this process is identifying any skills gaps which need to be addressed moving forwards.
This could be in the form of learning specific systems or software used internally which they
might have no experience with, or other methods unique to the business. Any skills gaps can then
be integrated into their development plans to ensure the right training and resources are made
available.

Determining goals

New employees need to be clear on the goals and expectations the role comes with. These goals
can be set in stone via objectives and key results (OKRs) and key performance indicators (KPIs)
so that managers and the employee can track them in real-time.

Goals relating directly to their role, for instance, sales targets, can be understood more clearly
through the use of data analytics and reporting. Managers can use these reports to track
performance during the probation period to identify potential problems before they become
insurmountable.

Competency-based goals can also be tracked through these mechanisms. Abstract competencies
such as communication skills and collaborative working can also be understood through the use
of performance management tools.

Key performance indicators which help managers track events and actions related to soft skills
can drive decisions surrounding opportunities for training and learning.

A competency roadmap

Once goals are understood in the context of the new employee’s role and responsibilities, a
roadmap can be formed to build upon competencies. This roadmap acts as a plan of action for the
employee as they develop in their role, including any on the job training necessary to bring them
up to speed.

Consequently, businesses can make the best decisions about where resources are allocated and
the way this will impact their organizational strategy. This roadmap can cover both short- and
long-term training and development, from short online courses to help with university degree
programs.

HR administration tools for competency-based onboarding

A competency-based performance management system can be facilitated through the use of a

variety of HR administration tools that are integrated into the platform. These include:

Skills database

Understanding how individual skills fit into the broader skills distributed throughout the
company can be achieved with a skills database. Existing skills and skill gaps can be identified
so that resources are efficiently allocated.
Team members with stronger expertise related to the roles and responsibilities of the new hire
can connect and help bring them up to speed. Skills such as communication, flexibility,
leadership and time management can be tracked from the first day. These skills can be
customized for each individual, their job role and the teams they belong to.

Automated onboarding processes

HR tools can be used to streamline the onboarding process, with custom templates and
automation saving valuable time. These automated processes can help distribute the relevant
documentation to new employees such as organizational policies and culture and relevant direct
reports.

Setting development objectives via a Personal Development Plan (PDP)

Personal Development Plans allow HR leaders and managers to precisely articulate the course of
action expected from the new employee. These plans help align employees with department and
organizational objectives to make sure they are on the right track.

A PDP is a core aspect of an employee’s daily role and will help guide them through the
probation period and beyond. As well as on the job training and other courses, this plan can
include side projects and team-building tasks which the employee can participate in without
eating into their personal time.

Create supercharged training programs

The best teams I’ve encountered have one important thing in common: their team structure and
processes cover a full range of distinct competencies necessary for success.

Jesse James Garrett, co-founder of Adaptive Path strategy and design consulting firm

Ongoing learning and training allows employees to develop their core competencies and add new
skills to their talent stack. There are a wide variety of training programs and goals which can be
used to supercharge employee skills, including:

Leadership

Leadership competencies include strong future planning, effective strategic management and the
ability to persuade and influence staff. Potential candidates for leadership positions can develop
these competencies by learning how to better evaluate data to gain insights into the business and
work on their public speaking skills.

Team building

Encouraging active participation and cooperation within a team can help employees develop the
appropriate skills to strengthen relationships. Employees can further enhance their team building
ability by helping colleagues outside their immediate working group. Peer and 360-degree
feedback can then be used to assess the development of this core competency.

Communication

Communication skills are essential for any business. Strong communication skills can improve
customer satisfaction and make collaborative working more effective. Training programs can be
used to help individuals develop customer relationship management skills, structure their ideas
with clear and concise language, and better understand the emotions and perspectives of others.

Evaluating competencies to better measure performance

Understanding how an employee’s competencies are developing in relation to their goals

requires a system of data collection and analysis. Performance management tools allow
managers and HR leaders to gather this data and break it down to the metrics which matter the
most.

Using performance management software to gather and analyse competency-based data

In order for a competency-based performance management system to be effective, it needs to be

operated with a degree of transparency and openness. As with performance management in
general, feedback is crucial for ensuring that talent is nurtured along the right path. Data relating
to performance and behaviours need to be collected by leadership and easily understood.

To this end, performance management software is a must. These tools allow managers and their
direct reports to remain on the same page when it comes to understanding progress towards goals
and objectives. Likewise, progress towards completion of training programs and other courses
lets all parties involved know how competencies are developing.

Performance management tools that can help leaders identify, analyse and manage skills within
the workforce include:

 OKR and KPI tracking. Understand accomplishments and progress towards smart objectives
through tracking key metrics for measuring success. Tie this data to feedback so employees can
see where they need to correct course.
 Performance leaderboards. Visibly celebrate great performance and the right behaviours with
leaderboards. When linked to reward systems, these tools can help boost recognition and
further motivate high performance.
 Dashboards and reports. Customize performance dashboards to gain instant insight into the
data which drives competency based performance management. Dashboards also help
onboarding new hires as swiftly as possible, creating clarity around objectives and expectations.

Competencies and succession planning

To be a manager requires more than a title, a big office, and other outward symbols of rank. It
requires competence and performance of a high order.
Peter Drucker, management consultant

The Harvard Business Review article, The High Cost of Poor Succession Planning, outlines the
high costs of turnover paid by companies who fail to pay enough attention to their leadership
pipelines and succession practices. In order to address these costs, the authors suggest that:

“Firms need to start succession planning well before they think they need to; make sure they
identify and develop rising stars; appoint the most-promising executives to the board to help
prepare them to take on the top job; and look at both internal and external candidates.”

Competency-based performance management provides business leaders, executives and HR

managers the birds’ eye overview of the organization necessary to spot potential leaders and
focus efforts on their development.