In the modern economic environment performance management systems (PMSs), as means of information support of corporate governance and strategic management, become more and more important both for commercial companies and non-for-profit organizations. At present many organizations try to develop and use different types of analytical methods, business processes and applied information systems. However, up to now any holistic, strategy oriented methodology for design, implementation and utilization of PMSs is not available.
One of the first steps towards a comprehensive methodology of PMSs development is an approach to conceptual modeling of such systems. In turn, this approach may be applied for developing of a generic conceptual PMS model, representing general (i.e. common for different entities and industries) features of performance management systems. Such model may be considered as a reference model and may be useful for developing of specific PMSs of individual organizations.
Performance Management Process
Performance management process is a systematic process of managing and monitoring the employee’s performance against their key performance parameters or goals. It is regarded as a process for driving the individual and organizational performance management.
Preliminary, the process involved six steps which followed one after the. In short, it is termed as continuous process in organization.
Stage 1: Pre- Requisitesal , then organization loose its objectivity . Therefore, it is necessitate defining the purpose Cleary for existing and new employees/ staff, departments in order to make integrate all teams to meet company’s target. There are three primary stages where the company defines their long term and short term goals. The first stage is at the organization level, where the management describes the holistic view and defines overall objective of formulation of the company, what are their long term vision, what are the values on which they stands for, and what is the mission the company is chasing. The second stage perquisites at department level, where the management assign targets to each department to achieve overall organization objective. At this stage, the management strategizes the processes and allocate targets to each department.
Stage 2: Performance Planning
There are three important attributes of performance planning:
- Behaviours, &
- Development Plan
Results: the yardstick of performance management is used to measure employees and department performance. It provides the information about the performance gaps and achievements. Hence, it evaluates how well the individual employee has performance against his assign targets
Behaviour: measuring the employees behaviours are one of the most challenging and difficult task basis on performance standards. The human behaviour can only be measured through observation and close monitoring by his supervisors or human resources department.
It is difficult to qualify the behaviour against his performance standards. There are lot of subjectivity involved in this category. However, there are lot of phycomateric tools which supports to define and indicate individual behaviour and attitude, but research has proven that they are only indicators and not provide absolute answer and authenticate results. Hence, we can define the expected behaviour in employee’s performance standards during the performance planning and its measurement but cannot quantify it with data.
Development plan: development plan is the third stage of performance planning. At this stage, we develop the plans to improve employees knowledge, skill and attitude (K, S, A). It allows employee to take his professional standards to next level which the support of development tools and plans
Stage 3: Performance Execution
Performance execution is considered as most important stage because the whole exercise of creating performance management systems and building up standards would rely on it. The primary responsibility and ownership of performance execution is with employee, which is followed by department and then organization. Hence, it is considered as a chain or process, in which the performance of individual employees would result department performance.
Therefore, the role and responsibility of supervisor or manager also increases which comprises with following focus areas: Provide resources , tools and equipment’s to employees to make out better results Provide regular feedback to subordinate about their performances and improvement areas Motivate team members through different channels and tools Integrate individual development plans with department’s goal Remain focus on development activities to enhance individual knowledge and skills.
Stage 4: Performance Assessment
Performance assessment is the next stage followed by performance execution. In this phase, the employee and manager both are responsible to measure and assess the performance of employee against his targets. The process should comprise to the extent of individual targets, behaviours or attitude and special achievements during the performance appraisal cycle.
Stage 5: Performance Review
The performance review stage is a platform where the subordinate and superior exchange performance feedbacks and review performances against given targets or goals to individual. To make the performance review successful, the involvement and exchange of dialogue are equally essential between employee and his manager. Apart from performance review, they also discuss about the development plans, trainings to improve skills and knowledge, next year goals and targets and expectations of employee and manager both. Hence, this stage is considered the base of next year performance appraisal cycle as well.
Stage 6: Performance Renewal and Reconstructing
The performance management process is an ongoing continuous process. Once the performance has been reviewed and end, then the cycle starts for the next performance appraisal. It should be again align with next year organization mission, goals and objective and integrated with departments goals In facts, it is a process which starts all over again which needs to be discuss, design, develop , executed and review again. This is necessitate because the external environment of company like market, customers , competitors , suppliers etc. also revolved and all subsequent changes has to prerequisites for performance planning and setting with strategic objectives of organization.
Conceptual design of PMS should be based on a functional modeling approach. The approach has some similarity with a well known IDEF methodology, but as opposite to IDEF it represents a ‘high-level’ framework, taking into consideration only general principles and characteristics of PMSs. The main elements of the conceptual model are:
- Functional blocks – sets of functions that are related with generic stages of strategic management process;
- Functional modules – more detailed objects within functional blocks, which provide one or several similar functions;
- Information flows – connectors (arrows) representing data movements between different PMS functional modules (internal flows) and between PMS and external sources and recipients of information (external flows).
Conceptual model of typical performance management system consists of four functional blocks, which represent major stages of strategic management process.
The four blocks are associated with the following functional areas:
- Strategic analysis and strategic choice;
- Management by key performance indicators;
- Corporate planning and budgeting;
- Consolidated financial reporting.