Article (April-2017)


Making PMS relevant

Dr. Bhupendra Kaushal

Designation : -   Vice President - Corporate HR

Organization : -  Ginni Filaments Limited, Noida


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Historically, it is needed to measure the performance of an individual in an organization for deciding his/her career growth for individual and organizational development. In the corporate world PMS system has been developed to understand the deviation arisen out of differences between Job descriptions and Job specifications, which are measured and improved through training and development initiatives for his/her career development.  In Govt./PSUs it is known as Annual Confidential Report(ACR)  which is done annually with almost no transparency unless and until the performance is extremely poor. Academically, there have been different theories as under:

a) Classification Method.

b) Ranking Method.

c) Point Rating Method.

d) Point-wise Rating Method.

In the corporate world, following tools were adopted as per the progression of time.

  • Point-wise appraisal.
  • Appraiser-Appraise interview appraisal.
  • Self/online appraisal.
  • 360 Degree appraisal.
  • OKRA/KRA based appraisal.

The above mentioned methods of appraisal systems were found fit at that particular time period but became obsolete in a phased manner as per the changing business scenario and changing skill sets. Each appraisal system did have some merits and de-merits but success depends upon its use in true sense. In most of the cases, appraisal system fails due to poor implementation from top to bottom or poor commitment from top, which leads to reluctance in appraisal system or loss of faith into a performance appraisal system resulting into favoritism leading to failure.

Point-wise Appraisal: Normally, employees are rated on 0-10 Scale comprising of functional and administrative criteria but fails because of no connectivity of the objective or no knowledge to appraise about his / her performance / development area. The appraisals are done by Supervisor single handedly. This system was in practice for more than 3 decades but replaced by other methods.

Appraiser-Appraisee Interview: This system bridges-up the gap, which was arisen out of point-wise appraisal system but could not sustain because of having no linkage with objective/ organizational goal linkage. Therefore, this system also did not gain confidence and almost collapsed about 2 decades ago.

Self/Online Appraisal: This system was started for appraising the work of executive and above wherein number of man-power is large, which has lead to online appraisal system. Since the supervisor and appraisee are not able to meet each other due to distance barrier and appraisals are done ONLINE. This system is still prevalent mostly in software industries or industries of a large manpower. The success of the system depends upon how much the employee is computer/IT savvy.

360 Degree Appraisal: This system is mainly prevalent in knowledge based industry or existing at the senior levels wherein an employee is appraised by seniors, juniors, peers, customers and vendors towards the performance of an individual. This system is not adopted at all the levels of hierarchy due to lack of maturity level of people involved prevalent in the industry.

Objective based KRA (OKRA) or KRA based Appraisal: Business leader unleash his long term goal i.e. 5 years target and share annual operative plan (AOP) review meeting with unit heads and functional heads (UH/FH) annually. The unit heads/functional heads KRAs are designed and appraised. KRAs of unit heads /functional heads are further cascaded from their KRAs into departmental KRAs and departmental KRAs are cascaded into individual KRAs, based upon the targets set for the unit heads /functional heads. The appraisals are done annually but mid-term review is done six monthly / quarterly, to correct one's performance. In the normal course, 80% of weightage is given to the KRA and 20% are allowed for individual behavioral attributes etc. This Form of appraisal system is mostly successful in the current decade, provided KRAs are designed scientifically at each level of hierarchy and mid-term reviews are done. These OKRAs/KRAs are prevalent in Google, IL&FS, JK Group to name a few.

The success of the appraisal system in an organization will depend on the role played by HR in implementing and monitoring the system.

  • The HRD department should explain the concept, appraisal guidelines and implementation procedure and carry out the necessary training and counseling, wherever required.
  • It is very important that the appraisal forms are completed timely and objectively and each form is scrutinized by the HRD department for proper filling up of the forms as per the system and guidelines before its finalization and the appraisal discussions.
  • HRD department is not the "Appraiser" or "Evaluator" of the rating. Their role is to ensure "System & Guidelines" finalized by appraisal committee.


  • The department head should review the appraisal form filled by immediate superior on the basis of his personal knowledge of the appraise performance, strong points/weak points, potential for growth & training needs etc.
  • Encourage proper objective standards of evaluation in your department.
  • Conduct along with appraisal committee the appraisal discussion in a smooth and healthy manner and find objectives as planned versus additional.
  • Decide what 'Follow-up' actions' i.e. training, transfer, job rotation, job enrichment along with the HRD.
  • Assess the growth potential of the appraisee. The level & type of work in near future i.e. 1 to 2 years and in distant future i.e. more than 5 years.

Appraisee should take the appraisal discussion objectively and seriously. He should give his view point wherever he/she needed should end up with a positive plan of securing strengths and covering weaknesses including training etc. in the interest of appropriate career planning.

One of the most important aspects of a good appraisal system is conducting of the proper Appraisal discussion with the appraisee by appraisal committee along with the department head.

  • Department Head should spare sufficient time to make sure that appraisal discussion ends with a proper understanding between the appraiser and appraisee.

Conducting the discussion:

  • The appraisal discussion should convey the idea - "All of us have strengths and weakness".
  • The weak points should be addressed by training & development.
  • Training needs and growth potential in general should be discussed and made sure that it is taken positively by the appraisee.
  • Joint objective setting for the next year, joint action plans for improving weaknesses and building over strengths.
  • If the Appraisee does not accept a particular rating in spite of detailed discussion with data and examples etc. then the same may be referred to higher level.


  • The finalization of overall appraisal of an employee is to be done once reviewed by a reviewer/ apex committee.
  • The purpose of the appraisal system is not for deciding only the salary increase and promotion of that year but for helping in finalizing a long-term career plan.
  • On the basis of the overall appraisal, classification may be done for all employees under the following four categories for career planning:

1. High performance/high potential

2. High performance/moderate potential

3. Moderate performance/low potential

4. Low performance

  • The career planning will decide the job responsibilities, job rotation, training, promotion and salary increases etc. for the next few years. Each year considering the latest appraisal also the career plan is reviewed, and appropriate action for higher responsibility, salary increase, and promotion etc. for that year is taken.


  • In an open and competitive market situation, organization structures are getting leaner and flatter for effectiveness. Each organization for faster communication plans its structure as per organizational goal and concept. The designation system and salary ranges are fixed for these organizational levels. All the jobs are evaluated on the basis of responsibilities and complexity existing various organizational levels. The applicable designation and salary range for each job is thus clear from this system.
  • The Promotion is only considered if the individual is effectively performing the job and able to take-up higher level responsibility subject to availability of vacancy/position. The Promotion is an important part of career planning and not a one-time reward, while considering a promotion the current appraisal along with previous two appraisals should be reviewed.

Increments whether normal, special or high are decided on the basis of the individual's job level/Job responsibility, salary range applicable to the job level, his present Salary, internal comparison and his performance/potential level.


  • After the appraisal discussions with appraisee, the department head and HRD should separately decide and record the follow-up actions.
  • Training needs should clearly emerge from the appraisal system for covering weaknesses for developmental growth of the individual.
  • Follow-up action regarding job rotation, job enrichment, transfer and career pathing should be recorded on the appraisal form at the end and implemented jointly by the department head and HRD after approval of management.

It is desirable that HRD maintains a record for follow-up actions for the success of appraisal system. It may be concluded that OKRA based PMS system is suitable in present time at the time of cut throat competition and management should implement seriously for success of organization to arrest attrition.