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Management Research News
ISSN : 0140-9174
Article publication date: 11 September 2009
The functions of a performance management system in any organization encompass diverse activities, which include the performance appraisal process. In order to design appraisal systems and appraise employees appropriately, organizations may enter into partnerships with external consultants. In addition, organizations are required to allocate financial resources to support not only the performance management system itself but also incentives for employees with superior performance. The purpose of this paper, using a model, is to investigate the influence of partnering and financial support on the functions of a performance management system. The capacity of the system to align its functions to help achieve an organization's strategic goals is also examined.
Design/methodology/approach
A questionnaire survey elicited responses from middle‐level employees using a validated instrument. The variables included in the study were based on prevailing practices in performance management, which include partnering (or collaborating) with professionals external to the organization, the financial support made available to the system and the alignment of the functions of a performance management system with the strategic goals of the organization. The sample comprised 165 respondents selected from six organizations manufacturing automobile components in Coimbatore, India. Partial least squares, a structural equation modeling technique, was used to estimate the influence of the latent variables.
The results indicated that partnering has a negative significant impact on: the functions of the performance management system; and alignment. Financial support has a negative impact on alignment, whereas the performance management system's overall functions has a significant positive impact on alignment. Likewise, financial support has positive significant impact on the performance management system's functions.
Originality/value
Employees feel that appraisals are a continuous internal assessment process best conducted by those inside their organizations. External members can appraise employees at particular points in time but these appraisals do not reflect accurately an employee's overall performance across time. Hence, employees implicitly reject external appraisers and partnering in the performance appraisal process. The appraisal process was found to have financial support by way of incentives, pay increases and the allocation of bonuses based on performance. The paper usefully confirms that organizations must strive continually to design and implement HR practices that are organization specific and employee friendly.
- Partnership
- Human resource management
- Compensation
- Performance management systems
Sripirabaa, B. and Krishnaveni, R. (2009), "Performance management systems in an Indian manufacturing sector: Partnering, monetary incentives and the alignment of organizational goals", Management Research News , Vol. 32 No. 10, pp. 942-952. https://doi.org/10.1108/01409170910994150
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Copyright © 2009, Emerald Group Publishing Limited
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How 360-Degree Appraisals Are Being Used in India
When India’s navy announced last year that it would adopt a 360-degree appraisal process for deciding the promotion of its officers, it garnered a lot of attention.
Unlike its traditional appraisal system, in which naval officers’ performance was measured by their immediate managers, the Indian Navy said its new system will encompass surveys with officers’ peers and subordinates on various metrics that will be analyzed by a board of officers and then ultimately determine promotions.
While the navy’s move seems progressive, it isn’t a harbinger of widespread adoption of 360-degree appraisals in the country. If companies in India apply 360-degree appraisals, it’s common for the appraisals to be used solely for leadership development.
Many organizations in India have largely steered cleared of such appraisals, either because the organizations find them too costly or because amid the country’s deep-rooted hierarchical mindset, many senior managers aren’t open to taking feedback from subordinates.
“People feel threatened,” said Sushil Baveja, CHRO at Jindal Stainless, a steel manufacturer based in New Delhi. He said he encourages leaders to look at 360-degree appraisals as a development tool.
“It should be used primarily for a development purpose and not from an assessment point of view,” agreed Mehernosh Mehta, CHRO of Gati-KWE, a logistics provider headquartered in Hyderabad.
Pros and Cons of 360-Degree Appraisals
The 360-degree appraisal has been around for more than three decades and is used for performance management by large multinational companies such as Google, which uses the system in its India units.
Unlike the traditional performance review, which is determined by the manager, in the 360-degree system, an employee receives feedback from colleagues, subordinates and sometimes outside stakeholders such as clients.
Proponents said this is a fairer way to assess employees, but the system isn’t without flaws.
“At the end of the day, 360 feedback is nothing but my perceptions; perceptions at times may not be reality,” Mehta said.
Given the level of subjectivity involved, the method has the potential to impact relationships negatively among peers in a small team or between senior and junior employees. “It can tend to create a lot of issues,” Mehta said.
Also, its success depends on asking the right kind of questions in the feedback surveys and in training people adequately to give and receive feedback.
Leadership Development
Rather than using 360-degree appraisals for rating performance, some companies in India are using such feedback for a more limited purpose—leadership development.
“We do 360 predominantly for growth, succession and development,” said Aditya Kohli, Gurgaon-based CHRO at Orient Electric, a maker of fans and home appliances. Kohli said the company puts only the top 5 percent to 8 percent of its employees through the 360-degree feedback process.
“Companies need to balance the effort-to-benefit ratio,” Kohli said.
Mehta said it took the company two to three months to complete a 360-degree feedback process for the top 20 leaders in its parent company, Allcargo Logistics. One of the drawbacks of the 360 process is that it takes time, Mehta said.
HR experts said that if done right, 360-degree feedback can be valuable for leadership development.
“It democratizes the feedback beyond just one person,” Kohli said. Leaders get a much broader perspective on talent and learn how to work with different types of people. “Individual stars sometimes get scaled down, while team players who collaborate well get scaled up.”
Making 360-Degree Feedback Work
For a successful 360-degree feedback process, HR professionals recommended setting up the right context. The first step is communicating the intention of the process with company leaders and preparing them for what to expect.
“We advise people that feedback is like a gift,” Mehta said: It may not appear to be useful at the moment, but you store it in the attic, and at some point, it may come in handy.
It’s also important to counsel those giving feedback, experts said.
HR must create an atmosphere of trust so that junior employees feel comfortable giving feedback about leaders.
“People have to feel that it is safe to be open, and this is not going to be cast against me,” said Debi Prasad Das, CEO of leadership coaching firm Potential Infinity in Pune.
At the same time, they need to be counseled to give a fair assessment without letting personal biases get in the way.
At Orient Electric, Kohli said leaders ask reviewers to sign a pledge that they will be unbiased and will help develop teams beyond their own.
In recent years, a number of increasingly affordable products have become available that run 360-degree-feedback surveys and make it easier to collect inputs.
But it’s key to take this feedback to the next level, Das said, by holding a discussion with the individual and creating a development plan for them.
“Organizations need to be truthful and honest about their interest in employee development,” Das said. Otherwise, the value of 360-degree feedback won’t be realized.
Shefali Anand is a New Delhi-based journalist and former correspondent for The Wall Street Journal .
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