Abstract
Performance management is considered to be a most significant HR process and has gained significant attention from both researchers and practitioners owing to its complexities and perceived problems. This research focuses on the satisfaction of employees with their employer’s performance management system in the context of the IT industry of India. IT companies represent a challenge for managers and employees, as knowledge workers are often asked to address multiple goals and projects simultaneously. Since managing the performance of knowledge workers has unique complexities, this research work is intended to shed light on the satisfaction of IT professionals related to the major dimensions of the performance management process: performance planning, feedback and coaching, performance review and outcomes (or consequences). Also, the article aims to explore the challenges faced by employees during the implementation of a performance management system. The findings of this study have implications for the working of IT organizations to improve the effectiveness of efforts to manage knowledge workers.
Keywords
Introduction
The focus in the new economy is on performance with the slogan “perform or perish.” 1 The performance of employees has always been a key concern for organizations irrespective of their size and structure. According to Armstrong, “Performance management is a means of getting better results from the organization, teams and individuals by understanding and managing performance with an agreed framework of planned goals, standards and competence requirements.” 2
Corcoran 3 describes performance management as “a system that is made up of several interdependent internal processes. It begins when a job is initially defined and ends when an employee leaves the company.”
With the ever-increasing global competition and changing business landscape, managing the performance of employees is becoming increasingly critical with strategic implications. Armstrong and Baron 4 consider performance management (PM) as a strategic issue since it focuses on the achievement of longer term organizational goals and an effective organizational functioning in the context of the economy and business environment. Yadav and Sagar 5 also emphasizes the strategic role of PM in the changing business scenario and look at the timeframe for the evolution of this management process from a financial, controlling perspective to an integrative tool for managers (1991-2000) and subsequently from an operational perspective to a tool to help employees focus on strategic goals (2001-2011).
Changing organizational roles, the dynamic external environment, power of information technology and the availability of performance data have dramatically changed the way enterprise performance is measured and managed. In Neely’s study, 6 PM is considered to be one of the most significant processes having the potential to significantly contribute to organizational success and effectiveness. 7 Also in a knowledge-intensive industry like IT, the performance management system (PMS) has special significance since in this industry performance is not measured in terms of units produced or sales targets achieved but in terms of the achievement and skills of its employees. 8
The structure of IT organizations is quite complex; often employees are matrixed to multiple teams on different projects in various shifts. That makes it even more challenging to manage the performance of a multicultural and multigenerational global workforce. Since intellectual capital—the knowledge of employees—plays a highly significant role in organizational success, it was considered useful to study the satisfaction of employees with the way their performance is managed and with the several dimensions of their employers’ PMS (i.e., performance planning, feedback and coaching, performance review and outcome). Also it was considered relevant to understand the challenges faced by line managers in the implementation of the PMS process. Based on this feedback, we provide suggestions for its effective implementation and management also PMS has always been a crucial area of research both for academicians as well as practitioners. However, there has been dearth of research in this area in the context of the IT industry. Apparently no study has been done to understand the satisfaction of employees related to PM in the IT industry or the challenges faced by line managers in their use of the PMS. This study aims to fill this gap in research.
IT organizations use different mechanisms for the implementation of a PMS. However, based on the review of relevant literature on the subject9-11 and discussions with academic and industry experts, the following four dimensions have been identified that constitute the process of PMS, as shown in Figure 1.
Dimensions of performance management system.
Performance planning: This is an important component of PMS as it is during the process of performance planning that the goals are established, standards defined and requisite competencies identified in accordance with the goals of the organization.
Feedback and coaching: This is best understood as an ongoing and important process whereby an employee is informed about his/her strengths, the progress in meeting expectations and in accordance with the “gray spots” identified; training and skill development sessions are arranged for the employee.
Performance review: It is a process whereby an employee is evaluated against a set of preestablished standards and relevant inputs are provided to him/her for the preparation of development plans.
Outcome (or consequences): This includes rewarding employees with financial and nonfinancial rewards, promotions and career progress along with recognition of their contribution individually and as members of the group towards accomplishment of organizational goals.
Objectives
In light of the above, the following objectives were established for the study:
To study the employee’s satisfaction with respect to the core dimensions of PM (i.e., performance planning, feedback and coaching, performance review and outcomes) in five IT organizations.
To explore the challenges/problems faced by line managers in the use of the PMS.
To make suitable recommendations for the smooth implementation of PMS in the IT industry.
Review of Literature
Performance management systems have been one of the “most praised, criticized and debated management practice for decades.” 12 They have attracted the attention of researchers, academicians and practitioners since the PMS is instrumental in communicating what is important to the organization, steers employees toward goals and helps in the implementation of organizations’ strategies. Some significant research contributions relevant to the context of present study have been cited below.
Satisfaction with PM has always been a vital concern since it is a reflection of the effectiveness of the implementation and use of the system and in turn is a determinant of the employee’s motivation to use the evaluation information for improvement. Mohrman and Lawler 13 and Carroll and Schneier 14 suggest that appraisal satisfaction is a relevant concern in discussions of how technology interacts with PMS since the absence of user satisfaction will render the technological enhancements less successful. Ilgen et al 15 make the point that dissatisfied employees would be much less motivated to use the evaluation information to improve performance. Since this study is conducted in IT organizations that have a structured web-enabled PMS, studying employees’ satisfaction is a vital concern. Any IT advancement would be of no relevant use if it is not user friendly and is not accepted as a valuable tool.
Mount 16 contends there is a greater possibility that positive outcomes are more likely to occur if employees are satisfied with the appraisal process and perceive it to be fair. Since the true ownership of the PMS lies with line managers, the success of the PM process depends on their level of satisfaction with their role and with the system. Hence, it becomes significant to study their satisfaction and to explore the problems faced by them in the implementation of the process.
Bernardin and Beatty 17 and Dobbins et al 18 suggest that an important link exists between satisfaction with the appraisal processes and its potential as an effective force for change and improved performance. Since the objective of any PMS would be to improve the performance and behavior of employees, it is essential that they are satisfied with the mechanism so that the purpose of the process is achieved.
McDonald and Smith 19 found that companies having a well-established PMS program outperform those without such a system on a wide range of financial and productivity measures, such as higher profits, better cash flows, stronger share market performance and higher sales growth.
Summers 20 remarked that organizations have been interested in pay for performance over many few years. He contends successful performance pay policies are possible when compensation management and PM function well separately as well as operate together in an integrated way.
The current study also aimed at exploring the challenges faced by line managers in the implementation of PMS. HR managers have always been seen as responsible for the PMS. However, in reality, HR has little involvement in the day-to-day management of performance. That is the responsibility of line managers and especially in IT organizations where employees work on multiple projects, in 24/7 shifts, adhering to the demands of clients onsite, only line managers are in a position to pull relevant information together and assume the responsibility of managing and reviewing performance. Rao 21 suggests taking HR out of the work management paradigm and introducing a new role for line managers in managing employee performance.
Risher 22 emphasize that the experiences of both managers and employees affect their expectations regarding PMS and their beliefs would influence their efforts to improve the evaluation process. In his editorial, he also mentions that involving the employees in planning a PMS enhances its face validity. Also that engaging the star performers as “subject matter experts” adds content validity to the PMS process. This also supports the need for studying the perceived satisfaction of employees from the PMS process and exploring the challenges faced by line managers.
Our review of the literature has highlighted the paramount significance of a PMS as well as the relevance of studying the employee’s satisfaction with the dimensions of PMS. The literature also guides us to explore the challenges faced by line managers in the implementation and use of the PMS. The widely discussed problems with the PM process further underscore the value of understanding how managers and employees view the process.
Research Design and Methodology
The research is exploratory and descriptive in nature. To meet the-above mentioned objectives, we identified organizations that have an established PMS. Five IT organizations in Delhi and the National Capital Region agreed to participate in the research. The sample size comprised 250 employees. Purposive sampling was used since the study required collection of data from employees who had undergone at -least one appraisal cycle in their current organization. A purposive sampling technique allows for the selection of subjects who are more likely to provide the right information for the study. 23
The study is based on an employee survey (N = 250) and also semistructured in-depth interviews were conducted with line managers (n = 30). The questionnaire was adapted from the survey used by Development Dimensions International and Society for Human Resource Management in their study on Performance Management Practices. 24 Also relevant inputs were taken from academic experts and practitioners in the area of PM. A pilot survey of the survey instrument was completed. We also incorporated suggestions from IT professionals and HR managers in finalizing the instrument. The final questionnaire included 19 items.
Responses were obtained on a 5-point Likert-type scale ranging from strongly disagree to strongly agree. The content validity was affirmed by the experts and reliability was tested through Cronbach alpha (which was .934). Data were analyzed using SPSS 16. Also, the semistructured in-depth interviews were conducted with managers and a content analysis was completed to understand the information collected.
Results and Discussion
Descriptive statistics were used to understand the satisfaction of employees with the dimensions of the PMS. The results are discussed below.
Performance Planning
The statistics relevant to performance planning are shown in Table 1. The mean scores on all items ranged from 3.47 to 3.60. The mean score on the item regarding “clear idea of what is expected” from me as an employee was 3.47, suggesting that organizations and managers should clearly state at the beginning of the year their expectations for an employee’s performance. Organizations need to improve on this parameter. The mean score for reflection of organizational values in performance plan was also 3.47, suggesting that organizations need to improve here as well. Research 25 suggests that if organization values say something very strongly, then employee behavior will be driven by those values. It was found that organizations need to clearly align and communicate organizational values in performance plans.
Descriptive Statistics of Employee’s Perceived Satisfaction From Performance Planning.
The mean score on the item “I have strong ownership of plan” was also low, just 3.48, which suggests improvement is needed. Successful implementation of performance measurement and management requires that those who are affected by the system have to accept and internalize the system. 26 The mean score on jointly setting goals with the manager was 3.58. Research supports the fact that employees’ participation in setting goals is instrumental in their improved performance and positive behavioral outcomes.
Feedback and Coaching
The descriptive statistics for Feedback and Coaching are shown in Table 2. The mean scores suggest that employees were only moderately satisfied with this dimension and that organizations need to improve on providing feedback and coaching. The mean score of the items in this dimension ranged from 3.20 to 3.52. The question pertaining to receiving feedback from time to time had a mean score of only 3.20, the lowest of any item on this dimension. That shows clearly that they want ongoing feedback and were not satisfied with current practices.
Descriptive Statistics of Employee’s Perceived Satisfaction From Feedback and Coaching.
Researchers have documented that ongoing feedback plays a vital role in improving performance since it gives employees ample time to work on the areas needing improvement. The mean score on the item related to whether employees get feedback about their strengths was 3.32. In an industry that competes on the basis of the skill set of employees, it is important that their competencies and strengths are also highlighted and they get feedback recognizing their strengths. With respect to whether an employee gets required training during the year, the reflection of mean score was 3.37. The results of the PM process will be of no significant value unless employees are provided with the resources and adequate training programs to work at improving their capabilities.
The mean score on feedback received by an employee is incorporated in performance plan was s3.52. The feedback received by employees should be considered in consultation with the supervisor and with HR to improve performance and address weaknesses identified. Gebelein et al 27 suggest that employees should be assisted in constructing individual development plans to plot a course of action to best use their strengths and work on improving their weaknesses.
Performance Review
The descriptive statistics for the performance review or ratings are shown in Table 3. The mean score suggests that employees were only moderately satisfied with this dimension. The mean scores ranged from 3.32 to 3.64. The mean score on joint review of performance is 3.41. Since this study was conducted in IT organizations where employees work on various projects in different teams with excessive work pressures and 24/7 time schedules, it is important that an employee participates in the review process and both the supervisor and employee mutually agree on things and agree on individual development plans. Similarly the mean score on the item “My review focuses equally on strengths and weaknesses” was 3.32. Organizations need to understand that it is really important not just to focus on weaknesses during performance reviews but also to appreciate and acknowledge the strengths of their employees. “I review my performance prior to meeting with my manager” was 3.64, which indicates many employees did review their performance prior to meeting with their managers and that at least an informal self-assessment is part of the PM process.
Descriptive Statistics of Employee’s Perceived Satisfaction From Performance Review.
Outcomes (or Consequences of Reviews)
The descriptive statistics related to outcomes is shown in Table 4. The mean score suggests that employees were only moderately satisfied and that the organizations need to improve on this dimension. The scores on this dimension ranged from 3.11 to 3.31 showing a pattern that employees were comparatively less satisfied with outcomes than any other items. According to Helm and colleagues, 28 when organizations are confronted with employee turnover challenges, having a positively viewed pay-for-performance system can attract good potential candidates while fostering retention of top performers. The mean score on satisfaction of employees following their performance review was 3.24 and their motivation after their review was 3.31which is a strong evidence that managers need to improve the transparency of their decisions and that steps be taken to ensure employees trust the system and are satisfied with review outcomes. A new practice that is gaining acceptance is creating “calibration committees” where managers are expected to explain and defend ratings to their peers.
Descriptive Statistics of Employee’s Perceived Satisfaction From Outcome.
Also Pearson’s correlation coefficients were calculated to understand the relationship between the dimensions of PMS. The correlation matrix is presented in Table 5 showing the correlation between performance planning, feedback and coaching, performance review and outcomes. Significant positive correlation is found between the four dimensions of PMS. This confirms a significant positive relationship exists between the four dimensions of a PMS. Based on the results, it can be said that all the four dimensions cannot be treated in isolation. The success of the process will depend on the synchronization and alignment of PMS to have synergistic advantage.
Correlation Matrix of PMS Dimensions.
Note. PP = Performance Planning; FC = Feedback and Coaching; PR = Performance Review.
Correlation is significant at the .01 level (2-tailed).
Over the years organizations have readily and enthusiastically adopted PMSs without giving due consideration to the implementation issues or to the alignment of those practices with the culture of the organization. That is likely because the practice originated in a period when control was the primary purpose. This frequently leads to employee resistance and eventually to the failure of the PMS. A well-formulated and implemented PMS communicates the organization’s goals and expectations for employee performance, drives them towards common goals and helps in the effective implementation of organization’s strategy. On the other hand, ineffective PMS will deprive the organization of the possible benefits and also damage manager–employee relationships. Many reports of problems with PMS confirm its inherent difficulties. In a robust industry like IT industry where organizations have an established and automated PMS, the success of the interface between IT and PMS depends on how well the system is implemented and on its acceptance by managers and employees. The true ownership of PMS lies with line managers, which makes it important to explore the problems faced by them in the use of PMS.
The semistructured interviews and content analysis revealed the following challenges.
Lack of Institutionalization of PMS in the Organization
Performance management is a process that needs to be rooted within the culture of the organization. Often it is seen as a “flavor of the month” activity and is not given the attention it deserves. It needs to be properly initiated by the top management and its essence championed at all levels of the organization. It is only when the top management is seriously engaged in the planning and implementation that managers and employees are likely to take it seriously. In the interviews most of the line managers commented that the process lacks support from the top management.
Lack of Timely Feedback
Most of the line managers also commented that the organizations exhibit “feedback poor environments.” Managers believe that delays in communication about changes in timelines and the failure to give guidelines for achievement of goals contributes to PMS failures. Also, it was said that feedback is only provided on improvement areas and that employees are rarely told about their strengths. Work pressure and unrealistic project deadlines often increase the time gap between performance discussions between managers and employees.
Failure to Integrate Performance Management
The line managers of all the organizations believed that the PM process is not integrated with day-to-day activities. It is treated in isolation and is not linked to other relevant processes such as succession planning and talent management. Also, they said that PM is treated as steps in the administrative process and considered to be a one-time activity at year end. Timeline pressures, changing client requirements and technical interdependencies between both on-shore and off-shore teams all undermine the significance of the PMS.
Lack of Clarity
Often there is lack of clarity about the PM process. Managers and employees should have a common, shared understanding of the process. It was remarked by line managers that raters should be trained to understand their role in the process and also trained to understand the ratings and the appropriate conduct of review sessions. Since this industry depends on knowledgeable IT professionals, it is important to train them in the working of the entire PMS process. This would reduce the conflicts between managers and employees.
Too Many Performance Attributes Used in the PM Process
Managers believe the form used for the PM process includes too many attributes. Moreover, many are not relevant to all levels or all roles of employees. It is also overly time consuming. The form used in the PMS process should be concise and limited to performance parameters relevant to the employees it covers. Different parameters should be used at each career stage or salary band to make the process more relevant and less time consuming.
Lack of Transparency
It was found that often salary and promotions decisions were not satisfactory to employees and that performance is not seen as linked to pay. Employees should be clearly told at the beginning of the year the parameters against which they will be evaluated. That facilitates reviews and allows employees to track their performance throughout the year. Moreover, year-end performance review sessions too often and mistakenly have an employee rated on the basis of recent performance. In IT organizations, an employee is often matrixed to multiple teams and hence his/her performance should be viewed in the context of different projects and different teams and not on the basis of isolated, recent performance.
A significant part of the problem is that the PM process is splintered and seen as disconnected from the day-to-day operations. With consideration for the nature of the IT industry and the issues associated with managing the performance of knowledge workers, we make several suggestions to integrate the PMS so that there is a better strategic alignment between the work efforts of employees and organization success.
The suggestions related to the research findings are discussed below. Based on the employee responses and the authors’ own experience, the following suggestions are made for the smooth implementation and the enhanced effectiveness of the PMS.
Cascading Goals at All Levels
As can be seen from the low score on “clarity of roles” in Table 1, the organizations would benefit by cascading the organization goals to employee’s goals to help them understand and appreciate the importance of their role. Cascading goals from the top management will help employees understand how the efforts at each level are integrated with the achievement of organizational goals. 29 It clearly communicates the organization’s expectations of its employees, clarifies the role of employees in accomplishing organizational goals and gives a common road map to all. . Risher 30 says that role models at the senior level can play a significant role in making the PMS a shared priority. Lawler and colleagues 31 found that there was a significant decline in the involvement of senior leadership in their attention to PM in organizations from 2002 to 2012. He also emphasizes that the ownership and leadership of senior management is much more important and critical to the success of PMS than the ownership by HR.
The IT industry is characterized by dynamism and strong competition. It is an industry where goals need to be continuously revised in the wake of increasing complexities and pressure from clients/customers. Therefore, managers should provide individualized performance expectations and the evaluation criteria should be specific to the employee’s current job. The fluid and unpredictable nature of the jobs is likely to require frequent changes in role specifications. That means limiting the communication of goals to the beginning of the appraisal cycle will not suffice. Furthermore, employees working in IT often are required to work on special assignments and/or move to new tasks throughout the year. Also, since employees work in teams and often their goal accomplishment is dependent on the team, the evaluation process should not only consider goals but also the complexities associated with the goal attainment. There is a need for continuous effort on the part of managers to ensure that employees get the much needed support and resources for efficiently and smoothly carrying out the results expected of them. The difficulties, complexities and time pressures should also be assessed in formulating goals and in evaluations.
Ownership of the Process by Line Managers
There is sufficient evidence in research that PM as a process cannot be successful if it is not “owned” by the people who are responsible for its implementation and ongoing management. A fundamental change is needed in how PM is perceived and implemented in the organizations. It has to be understood that PM is not just an administrative tool to decide compensation increases but a vital process of adding value to the human capital and enhancing the performance of both employees and the organization. This can only happen when line managers and employees see value addition in using the PMS effectively rather than view it as a tool imposed by HR. In an industry backed by innovation, any technical advancement will be useless if it is not perceived to be valuable by its stakeholders. For that reason managers and employees should play a role in the planning and implementation of the PMS. Risher 32 also proposes that employees should participate in planning of the PM system which would enhance the face validity of the system. Lawler and colleagues 33 found that line management ownership correlated with the PM effectiveness while HR ownership did not.
Two-Way Communication
Two-way communication between managers and employees is the key to a productive relationship. Effective communication is the key to how managers and employees engage in the PM process and the outcomes they achieve. 34 Also, one of the most important determinants of the successful implementation of PMS is the quality of the manager–employee relationship.35,36 Effective communication in the context of PMS should include continuously and regularly discussing performance goals with employees, along with the problems and possible solutions to solve them. It has been well documented in research that effective communication and a sound relationship between managers and employees is associated with PM fairness and procedural justice. 37
Ongoing Feedback
The importance of feedback has always been a much debated issue when it comes to PM. The results reveal that mean scores on continuous feedback are low. In an industry where the quality of services provide to customers depends on the performance of the workforce, it is imperative that ongoing feedback is provided to employees. Employees in the surveys were dissatisfied with this parameter. The work pressure and unrealistic project deadlines often increase the gap between meaningful discussions of performance. Therefore, it is suggested that ongoing and continuous feedback should be provided to employees at regular intervals so that areas needing improvement are worked on in time and also employees know management is aware of what they are good at doing.
Risher 38 also emphasizes the significance of continuous feedback as it would reduce the scope of disappointment and surprise during year-end reviews. Lawler and colleagues 39 also suggest that development discussions should be separated from appraisal discussions as it is difficult for an employee to hear about the performance effectiveness and skill development at the same time.
Application of Signaling Theory
The theory was first propounded by Spence 40 and suggests that organizations should provide tangible information to employees to help them understand the organization’s interests and future prospects. Signaling occurs when organizations promote practices that are perceived by employees as signals that are intended to strengthen relevant behavior. Signaling theory is proposed here to highlight the formal practices that reinforce the expectations of organization and the values deemed significant. Recent studies on signaling theory41,42 indicate that such practices are likely to promote positive employee and organizational outcomes. Signals from top management emphasizing the alignment of the organization’s strategy at all levels and the role of PM would add value to the process. Also, formal training of raters would signal that the organization wants to make PM more structured and unbiased. Since the study was conducted in IT organizations where employees often are members of more than one team, recognizing team performance rather than just individual performance is important. To be successful, the PM process should be proactive focusing on the challenges that could crop up rather than reactive. All these formal practices can be seen as steps people can use to convey commitments and offer inducements for present and future behavior. 43
Application of P-CMM Approach
Curtis and his team 44 developed the approach of People Capability Maturity Model (P-CMM) for software organizations. The model provides guidance on improving the ability of software organizations to attract, develop, motivate and retain the talent needed to improve the software development capability of employees.
Rao and colleagues 45 emphasize the following strategic objectives and the purpose of P-CMM:
Improving the capacity of software organizations by increasing the capability of the workforce
Ensuring that software development capability is a trait of the organization and not just restricted to a few individuals
Aligning individual motivation with that of the organization
Retaining human assets, that is, people possessing critical skills within the organization
The P-CMM Model implies a pathbreaking approach to move from irregularly performed practices to continuous and disciplined practices aimed at continual improvement of the knowledge, skills and motivation of the workforce. The model includes practices such as work environment, communication, staffing, managing performance, career development, training and culture development. The model suggests improving workforce management practices to a higher stage by continual and phased improvement. It is suggested that application of the above-mentioned model can lead to the institutionalization of workforce practices inclusive of PM practices. One of the changes is the movement from an administrative appraisal of performance to the continual process that is Performance Management.
Job Sculpting
Job sculpting refers to the art of matching people with the jobs that make them truly happy. 46 In an industry where the most important asset is the knowledge and commitment of its people, it is important to ensure that people are satisfied with their work assignments. It is important for managers to discuss the interests of employees during performance review sessions and customize future work assignments of employees to ensure that they perform with zeal and accomplish their career goals along with the goals of the organization.
360-Degree Feedback
This is a well-established practice of securing feedback from multiple sources, namely, peers, direct reports, supervisors and customers. In flatter organizations with loose hierarchies where people work in project-based, cross-functional teams, bosses may not have all the information they need to appraise their subordinates. In that work environment many people have information useful to an employee’s development. Adopting 360-degree feedback has the potential of prompting valuable positive results if it is implemented as a developmental tool for improvement rather than a popularity contest.
Integration of ICT and PMS
With the increasing size and complexities of organizations, the integration of information and communication technology (ICT), knowledge management (KM) and PMS has become essential. Organizations should have a built-in mechanism to collect, process and provide the data related to employee performance.
Conclusions
This study aimed at understanding the satisfaction of employees with the several dimensions of the PM process. The results show that employees were more satisfied with the performance planning dimension as compared with other dimensions. The results also show these organizations need to improve on the aspect of role clarity. Employees are only moderately satisfied with feedback and coaching, performance review and outcomes related to ratings. Employees want their supervisors to provide ongoing feedback throughout the year. Moreover, they want the sessions when their performance is reviewed to focus equally on strengths and areas needing improvement. Organizations should also improve on the level of transparency and strengthen the linkage between pay and performance.
The major challenge to improve employee performance is increasing their satisfaction with the way their performance is managed and guiding them through feedback and recognition that helps them grow in their career path, while simultaneously augmenting the success of the organization. This requires management to provide a meaningful platform for employees to strengthen their commitment to achieving organization and individual goals. Relying on the PM processes to guide and reinforce their efforts should lead to improved performance.
It was also found that all the dimensions of PMS were positively correlated with each other. That is to say, the PMS dimensions cannot be treated in isolation; the effective, smooth functioning of the process is possible only when there is an alignment of all dimensions since the output of one dimension becomes the input for another. It is imperative that PMS is viewed as a strategic management process rather than a mere tactical tool.
Implications for Organization Performance
The above-mentioned findings have significant implications for the management of organizations specifically for human resource management for any organization. A PMS is one of the most significant processes in any organization both for the successful performance of the organization as well as the career development of employees. Since human capital is the primary asset in any knowledge intensive organization including those in the IT sector, a well-designed and implemented PMS both at the organizational and employee levels can contribute to significant positive results in terms of improved role clarity, effective team work and superior–subordinate relationships, increased intellectual capital and improved individual and organizational performance.
There are several implications of the present analyses as discussed below:
The employee survey on various aspects of PMS process reflected that employees in each organization were satisfied with the planning process as compared with other dimensions. However, significant improvement is needed on the dimensions of feedback and coaching, performance review and outcomes. That was supported by semistructured interviews. Project deadlines, 24/7 work schedules, rapidly changing client expectations, needed coordination with other teams and dynamic performance goals appear to contribute to a feedback-poor environment. The problems include the frequency of feedback and the nature of the feedback. Also, these professionals are very goal oriented and ambitious. They want feedback on not only their weaknesses and the areas of needed improvement but also to have their strengths acknowledged. They also wanted their review sessions to be more objective and transparent with a clear link between performance and outcomes.
The positive correlation between various PMS dimensions shows that they are interrelated. In order to create synergies, it is important to maintain a systematic view of the process in the design and implementation. For instance, if in the performance planning phase, performance standards are not clearly prescribed and communicated, it will create problems in the year-end review. Similarly, the lack of effective feedback will lead to improper planning and fail to contribute to expected performance. Therefore, PM should be considered as a process and the phases considered in a broader context. The process can be seen as a continuous loop wherein positive results would multiply to create synergies. Similarly, if any of the phases are neglected, the negativities would multiply and lead to less harmonious results. Hence, it is important to understand that each dimension of PMS interacts to affect the other dimensions.
One of the important aspects of this study was that it confirmed that line managers play a central role in the PM process. They are responsible for the effective implementation of the process, from the initial performance planning and goal setting to appraisal discussions. It is important that they accept ownership of the process and that both HR and line managers collaborate to design the process. Line managers identified a number of problems they experienced in the implementation of the process; therefore, it is imperative to consider their experience to successfully implement the process. Real-time communication, frequent project review meetings and tailoring the PMS according to the team covered by the PMS should help in aligning performance at individual and organizational levels.
Needed Future Research
The findings of the study can be seen in light of some limitations, which offer various research opportunities also. The study was conducted in five IT organizations and since purposive sampling could not be ruled out and probabilistic sampling could not be used, the validity of results should be carefully considered. Also, since very few researchers have explored PM in the IT Industry in India, there is a need for further research.
It would also be interesting to explore how PM practices differ across the IT industry. Also an interindustry comparison would be useful to confirm how practices vary across industries and occupation and to understand if the requirements differ in other industries.
The present study focused on the organizations that had an established PMS. It would be useful to undertake a study that compares the organizational performance of companies with an established PMS with those that have few or no elements of performance management.
Footnotes
Declaration of Conflicting Interests
The authors declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The authors received no financial support for the research, authorship, and/or publication of this article.