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The Maturity of Performance Management Practices – A Research Based Evaluation


  1. Background

 MindShare was commissioned by International Labour Organization and SCOPE to carry out a research based evaluation of the performance management practices in central public sector organizations. The study covered 12 organizations representing seven sectors and involved administration of a standardized questionnaire to a sample of 1268 executives in the junior, middle and senior management categories. The data was analyzed and interpreted through application of advanced statistical tools and methods.

  1. Key Findings

 The study led to a number of findings that confirm a measure of sophistication in performance management practices in CPSUs and at the same time point to several weaknesses and opportunities for improvement.

 It is interesting to note the CPSUs have, by and large, achieved a degree of sophistication in strategy alignment and role clarity, thanks to the institution of MOU. However, serious concerns in managing underlying processes, particularly of procedural and distributive justice, fairness and supportive performance feedback, have the potential of jeopardizing the advantages of the system sophistication.

 There are concerns reflected in lack of perceived connect between results on the one hand and performance ratings and promotions on the other. This disconnect exists partly because of perceived ambiguity in performance measures and subjectivity in appraisal. More serious, the perceived procedural and distributive justice in performance management practices is rather on the lower side.

 It is quite evident that there is substantial support and appreciation for strategy linked performance management system. The fact that performance management is not viewed as a routine transactional activity but as a tool for strategy execution, points to dramatic transformation in performance management systems and processes in CPSUs during the recent years.

 Further, on a positive side there is growing and substantial support for differentiation and rewards based on performance. Obviously, the performance differentiation in CPSUs is emerging as the new HR paradigm.

 The overall satisfaction of executives with performance management is reasonably good given the sophistication in the PMS design parameters such as strategy linked goal setting, competency frameworks, online PMS, structured systems for performance moderation, etc.  However, these advantages have been undermined, to a large measure, by manifest weaknesses in processes referred to above.

 Comparative analysis of data shows significant variations across the 12 respondent organizations.  The leaders amongst the sample organizations have done well, significantly and consistently, on all the seven factors of the performance management, indicating a level of sophistication both in design parameters and underlying processes.

 The 12 respondent organizations were clustered into 7 sectors namely: Mining, Petroleum, Power, Engineering, Financial services, Consultancy services and Joint Ventures.

 Variances across the seven sectors were assessed through the application of advanced statistical procedures. On an overall basis there are no major variances amongst the 6 sectors excluding the mining sector. In relative terms however, the petroleum, power and JV are better than others in terms of overall satisfaction with the performance management system.

 Statistical variances were also investigated and assessed according to the classification of the respondent organizations into Maharatna, Navratna and Miniratna categories. It is interesting to note that there are almost no variances across the three categories referred to above. This finding confirms our general impression that during the last 4-5 years, many CPSUs, irrespective of their size and status, have embarked on the transformation of the performance management system. Some have achieved a level of sophistication while others are gradually acquiring maturity and substance.  It however needs to be noted here that this finding needs further validation on a much larger sample of CPSUs.

 The sample of respondents was divided into 3 categories according to age. The first category consisted of respondents upto 35 years of age (young). The second category consisted of respondents between 36-50 years of age (middle age). The third category included respondents above 51 years of age (late middle age). Variance analysis was carried out across these three age categories. What is evident is that young executives in PSUs, in relative terms, are dissatisfied with almost all the 7 dimensions of the performance management as compared to others.

 The presence of significant variance as mentioned above does point to a worrying phenomenon of disconnect between the younger generation and others in CPSUs. This disconnect could be culture specific and needs resolution through change management initiatives and socialization processes that will help the middle and older generations connect with the emerging paradigm of PMS in CPSUs while at the same time bring a degree of realism in the expectations of the younger generation.

 Similar analysis for variance was carried out with reference to groups of respondents classified into 3 experience categories. Group 1 included respondents upto 5 years of experience (limited experience). Group 2 included respondents between 6-20 years of experience (considerable experience).  Group 3 included respondents with more than 21 years of experience (extensive experience). The results of variance analysis indicate, as in the case of age categories, relatively significant dissatisfaction amongst executives with lesser experience as compared to others.

 Variance analysis was also carried out in order to assess differences in perceptions across three levels of management namely: junior management level, middle management level and senior management level. The key finding from the variance analysis is that executives in the junior management categories in public sector show significantly less satisfaction with performance management. The middle level managers and senior managers are relatively more satisfied. This variance in perception points to the need for major initiatives towards managing the rising expectations of executives in the junior management categories by enabling them to play a more involved role in influencing key performance management processes and outcomes. This would lead to mitigation of sense of alienation and enhance commitment and satisfaction through genuine and effective participation of junior level executives in all facets of performance management.

 It was pointed out earlier that performance as a new paradigm is gaining currency in the perception of public sector executives. This view has been substantially confirmed by obtaining preferences for various criteria of promotion from the respondents.

 It is highly significant that all executives in the junior, middle and senior management categories are advocating criteria of promotion in which, on an overall basis, they have assigned a weight of only 22 percent to seniority. The combined weight for current performance and potential is as high as 50-55 percent.

 The data signals an opportune moment for central public organizations to alter their promotion policies in the executive cadre by emphasizing merit and potential as primary drivers of promotion.

About Ashok Bhat

Ashok Bhat
Ashok Bhat is a management consultant, trainer and teacher. He has more than three decades of experience in anchoring a large number of initiatives in HR systems and processes, change management, training and development, organizational diagnosis and redesign across private, public, government and non-government organizations. Ashok can be reached at: ashokbhat@mindsharehr.com

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