Designing appropriate performance management system (PMS) for organization and its employees is a great challenge. Many companies find the PMS designed and deployed at fancy price and huge efforts have several limitations. Common reason why PMS do not deliver value is that they have too many measures, difficult to understand, have low relevance from corporate objectives and individual role perspectives, do not reflect actual behavior and sometimes inaccurately report the outcomes. Many well intended PMS fail to take off for reasons including: inability to instill right orientation, ineffective in fixing individual target responsibility, inability to forecast capabilities and its impact, and does not encourage the front line staff to take initiative and act appropriately. While there are several approaches available for PMS, we find some of the tools may require huge investment in terms of time and manpower, which many SME are not endowed with.
Based on our experience of working with SME companies we find a light weight PMS that does not require huge IT and manpower requirement can be designed following a simple PCCIO framework. Evaluate whether the proposed PMS has elements of Purpose (P), Comprehensiveness (C), Consistency (C ), Impact (I) and Outcome (O). Check whether the system captures the purpose why you are rolling out the PMS, whether it is to measure impact or direct change and promote a certain behaviour. Next check whether it is comprehensive enough, both in terms of levels, and depth and breadth of information required to make informed decisions. Evaluate whether the PMS can provide you consistent and reliable readings. If too much externalities influence the measures, then your measure is inaccurate. As many academicians and seasoned managers suggest a good PMS must be able to measure the impact (did we achieve what we intended to do) and what is the outcome.
Ensure the PMS has a good mix of both financial and non- financial indicators. PCCIO framework helps you to link KPIs with professional development and holistic development of the employees. This stimulates continuous improvement in all aspects of the business like Quality of output, Delivery time, finance, Customer satisfaction, cultural aspects of working environment and Employee Satisfaction.
S Indupriya. Junior Consultant (Strategy & HR)