Academic journal article South Asian Journal of Management

Performance Management System Design, Implementation and Outcomes in Indian Software Organizations: A Perspective of HR Managers

Academic journal article South Asian Journal of Management

Performance Management System Design, Implementation and Outcomes in Indian Software Organizations: A Perspective of HR Managers

Article excerpt

Organizations' concern regarding contribution of HR systems to business level performance continues to grow. In such context, effective design, implementation and outcomes of performance management system may result in greater strategic alignment of HR processes with business goals and objectives. This may be especially true in context of software industry, given its dynamic team-based work structures and agility requirements. This research was conducted in four Indian software services organizations with the purpose of understanding the perceptions of HR managers regarding design, implementation and outcomes of their organizational performance management systems'. Results of this study present some interesting insights regarding the performance management process; present and future trends with respect to system design; implementation and its underlying challenges; and outcomes of the system as perceived by HR managers and has important implications for greater alignment between performance management system and business strategy.

Challenges of knowledge economy has catalyzed the search for relatively sustainable sources of competitive advantage. As a result, organizational leaders and strategists are ascribing greater importance to the role of human capital in driving business success. Moreover, organizations' concern for HR function's contribution and accountability has grown significantly over the recent years. In such a context, performance management is being considered as a critical HR sub-system which may substantially contribute to organizational growth and effectiveness (Nankervis and Compton, 2006).

Performance management has been seen as a complex system in which managers work with their employees to set expectations, measure and review results, and reward performance, to ultimately improve organizational success (Armstrong and Baron, 1998; Mondy et al., 2002) and has consequences for both individuals and organizations. As with any other organizational system, performance management system's effectiveness is heavily dependent upon the way it is designed and implemented and perhaps, the reason for it being one of the "most praised, criticized and debated management practices for decades" (Lawler, 1994) lies in this only.

Achieving the best organizational fit (in terms of design) and ensuring effective implementation of Performance Management System (PMS) are far from easy and need concerted effort by the HR managers. Identifying significant performance areas and developing key indices; developmental planning; devising performance measurement tools/methods; ascertaining periodicity of assessment; soliciting constructive involvement of employees and managers; ensuring fair implementation; improving individual, team and organizational performance are some of the intricate challenges encountered by the HR specialists with respect to a PMS. Moreover, in knowledge based industry like the software services, where performance outcomes are not essentially in terms of sales targets achieved or volume of goods produced, challenges seem to multiply. Software development work relates to transforming business information and knowledge into software products/services, requiring collaborative effort by cross-functional teams of knowledge workers and often involves high degree of experimentation with different analysis, strategy, prioritization, innovation and adaptability requirements for customization of software products/services (Moran, 2010) . Knowledge workers with their high level abstract reasoning and cognition to synthesize and communicate new perspectives for effective solutions/processes (Stamps, 1996) possess skills that are in high demand, prefer work autonomy and resist traditional command and control culture while dealing with work related problems/issues (Kinnear and Sutherland, 2000). Managing performance of knowledge workers, thus, has been said to involve various intricate challenges and practitioners (e. …

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