Dear friends,
In the last couple of days, I found the article titled "From Performance Management to Feedback Culture" has been making rounds on WhatsApp groups. Instead of sharing the entire article, I am sharing the link. It is as below:
https://www.linkedin.com/pulse/from-...m_source=1-2-2
I provide training and consulting services on PMS. I have given my critical views on it. These are given in the next post.
Thanks,
Dinesh Divekar
From India, Bangalore
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8222In the last couple of days, I found the article titled "From Performance Management to Feedback Culture" has been making rounds on WhatsApp groups. Instead of sharing the entire article, I am sharing the link. It is as below:
https://www.linkedin.com/pulse/from-...m_source=1-2-2
I provide training and consulting services on PMS. I have given my critical views on it. These are given in the next post.
Thanks,
Dinesh Divekar
From India, Bangalore
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Dear xxxxxxx,
You have shared the article on Performance Management System (PMS). However, my major observation is that you have not written anything about the measurement of organizational performance. In the course of my consulting on PMS, I have found that people are rewarded even though certain organizational ratios were never measured. Following are a few examples:
a) A capital equipment had outlived its economic as well as technical life. However, huge funds were allocated to keep the equipment serviceable. Nobody thought that they were sinking their precious working capital into the depreciated asset. However, the Maintenance Head and Purchase Head took pride in keeping the equipment serviceable.
b) Another client who is into EPC projects never measured the Cost of Warranty Repairs. All that mattered to them was the completion of the project on time.
c) Several of my clients have not measured the Inventory Turnover Ratio (ITR) or the Account Receivable Turnover Ratio (ARTR). What is the logic of leaving out the measurement of these important ratios?
I can go on giving examples like this. The above flaws occur because the focus of PMS is on the individual and not on the organization. PMS is more for measuring organizational performance than individual performance. It should be remembered that it is the organization that pays us and not those who work in it!
To refer to my reply on PMS in another thread, you may click the following link:
https://www.citehr.com/563388-re-about-pms.html#post2306729
For further queries, feel free to contact me.
Thanks,
Dinesh Divekar
From India, Bangalore
Acknowledge(0)Amend(0)
You have shared the article on Performance Management System (PMS). However, my major observation is that you have not written anything about the measurement of organizational performance. In the course of my consulting on PMS, I have found that people are rewarded even though certain organizational ratios were never measured. Following are a few examples:
a) A capital equipment had outlived its economic as well as technical life. However, huge funds were allocated to keep the equipment serviceable. Nobody thought that they were sinking their precious working capital into the depreciated asset. However, the Maintenance Head and Purchase Head took pride in keeping the equipment serviceable.
b) Another client who is into EPC projects never measured the Cost of Warranty Repairs. All that mattered to them was the completion of the project on time.
c) Several of my clients have not measured the Inventory Turnover Ratio (ITR) or the Account Receivable Turnover Ratio (ARTR). What is the logic of leaving out the measurement of these important ratios?
I can go on giving examples like this. The above flaws occur because the focus of PMS is on the individual and not on the organization. PMS is more for measuring organizational performance than individual performance. It should be remembered that it is the organization that pays us and not those who work in it!
To refer to my reply on PMS in another thread, you may click the following link:
https://www.citehr.com/563388-re-about-pms.html#post2306729
For further queries, feel free to contact me.
Thanks,
Dinesh Divekar
From India, Bangalore
Acknowledge(0)Amend(0)
Dinesh,
Hi!
You said that: "PMS is more for measuring organizational performance than individual performance. Be it remembered that it is the organization that pays us and not those who work in it!"
All the while, I was thinking that the PMS you have been discussing and promoting on this site is about the system of appraising employee performance. So, it is now clear that your PMS is more of an organizational and financial audit - more than anything else. In your PMS, performance is NOT individual employee performance, BUT ORGANIZATIONAL AND FINANCIAL PERFORMANCE.
This sounds a little strange and can be confusing, but I could understand where you are coming from. Indeed, the use of terminologies can vary from place to place. Just like the use of the words "Salary Structure" on this site that denotes what is popularly called "SALARY COMPONENTS" in many HR textbooks.
Best regards.
From Philippines, Parañaque
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Hi!
You said that: "PMS is more for measuring organizational performance than individual performance. Be it remembered that it is the organization that pays us and not those who work in it!"
All the while, I was thinking that the PMS you have been discussing and promoting on this site is about the system of appraising employee performance. So, it is now clear that your PMS is more of an organizational and financial audit - more than anything else. In your PMS, performance is NOT individual employee performance, BUT ORGANIZATIONAL AND FINANCIAL PERFORMANCE.
This sounds a little strange and can be confusing, but I could understand where you are coming from. Indeed, the use of terminologies can vary from place to place. Just like the use of the words "Salary Structure" on this site that denotes what is popularly called "SALARY COMPONENTS" in many HR textbooks.
Best regards.
From Philippines, Parañaque
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Dear Ed Llarena, Jr,
You have written that "it is now clear that your PMS is more of an organizational and financial audit".
PMS is neither organizational nor financial audit. Audit is defined as a systematic and independent examination of books, accounts, statutory records, documents, and vouchers of an organization to ascertain how far the financial statements as well as non-financial disclosures present a true and fair view of the concern. It also attempts to ensure that the books of accounts are properly maintained by the concern as required by law.
In PMS, we do not check financial statements or books of accounts, but what we check is whether ratios or other measures of performance are measured or not. In an audit, the auditor will check whether the PO was issued to the supplier before the purchase of material or whether the laid-down procedure was followed or not while purchasing material. However, in PMS, the cost incurred per PO is measured and assigned as a Key Result Area to the Head of Purchase.
To help understand, I have provided three examples of how organizations did not measure some of the ratios. Despite these examples, I did not understand why there was doubt.
Take the example of a steel manufacturing unit. "Production in metric tonnes per employee" is a vital ratio that distinguishes one steel plant from another. Now, this is an organizational ratio. In PMS, this ratio needs to be assigned to the production head or some other head. However, if the performance of the production head is measured on some other ratios, leaving out this vital ratio, it would be a defeat of the Performance Management System.
While designing PMS, we need to identify organizational or department-specific ratios. This requires a lot of customization, and we need to go beyond the regular textbooks as well. I understand that famous computer manufacturing companies HP and Dell have identified a few costs that are unique to their supply chain and strive to manage these costs continually. The list of these costs is not mentioned in traditional books on finance, accounts, or cost management. Costs do not get managed by themselves, but they are managed because someone is given the responsibility to do so.
I hope I have explained what I wish to convey in this comment. However, no further comments will be given.
Thanks,
Dinesh Divekar
From India, Bangalore
Acknowledge(0)Amend(0)
You have written that "it is now clear that your PMS is more of an organizational and financial audit".
PMS is neither organizational nor financial audit. Audit is defined as a systematic and independent examination of books, accounts, statutory records, documents, and vouchers of an organization to ascertain how far the financial statements as well as non-financial disclosures present a true and fair view of the concern. It also attempts to ensure that the books of accounts are properly maintained by the concern as required by law.
In PMS, we do not check financial statements or books of accounts, but what we check is whether ratios or other measures of performance are measured or not. In an audit, the auditor will check whether the PO was issued to the supplier before the purchase of material or whether the laid-down procedure was followed or not while purchasing material. However, in PMS, the cost incurred per PO is measured and assigned as a Key Result Area to the Head of Purchase.
To help understand, I have provided three examples of how organizations did not measure some of the ratios. Despite these examples, I did not understand why there was doubt.
Take the example of a steel manufacturing unit. "Production in metric tonnes per employee" is a vital ratio that distinguishes one steel plant from another. Now, this is an organizational ratio. In PMS, this ratio needs to be assigned to the production head or some other head. However, if the performance of the production head is measured on some other ratios, leaving out this vital ratio, it would be a defeat of the Performance Management System.
While designing PMS, we need to identify organizational or department-specific ratios. This requires a lot of customization, and we need to go beyond the regular textbooks as well. I understand that famous computer manufacturing companies HP and Dell have identified a few costs that are unique to their supply chain and strive to manage these costs continually. The list of these costs is not mentioned in traditional books on finance, accounts, or cost management. Costs do not get managed by themselves, but they are managed because someone is given the responsibility to do so.
I hope I have explained what I wish to convey in this comment. However, no further comments will be given.
Thanks,
Dinesh Divekar
From India, Bangalore
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Perf.mgt.articl e.doc
Performance Management Vivid Facet Article.pdf