Performance Management System: A Review of Literature

By
Dr. Reena Shah, Assistant Professor, Institute of Management, Nirma University; S.G. Road; Ahmedabad.
Ph. 9327075570; reena@nirmauni.ac.in

Ms. Anshula Vaid, MBA-FT Student, Institute of Management, Nirma University; S.G. Road; Ahmedabad.
Ph. 9979069392; anshulavaid.imnu@gmail.com

Mr. Jijo George, MBA - FT Student, Institute of Management, Nirma University; S.G. Road; Ahmedabad.
Ph. 9427492916; jijojoseph.imnu@gmail.com
PERFORMANCE MANAGEMENT SYSTEM: A REVIEW OF LITERATURE

ABSTRACT:
The formal use of the concept of Performance Appraisal i.e. appraising the performance of the
employees in the organization can be traced to the early 90s. In the initial phase, a sound and strong
performance appraisal system was advocated as a tool to help HR managers to develop successful
career development strategies of employees. Subsequently, it was realized that the role of
performance appraisal was not limited to merely assessing the performance, but it was also about
critiquing performance to lead to better management of performance. As the scope of the concept
broadened from appraisal to management, the terminology to describe it also evolved to Performance
Management System (PMS). In contemporary times, the performance management system is no more
restricted within the internal HR framework but it is aligned to the strategic goal of the organization.
By means of gaining a competitive edge in the market place it has thus gained external interface too.
In view of this evolving role of performance management system, the purpose of this paper is to trace
the timeline of research in the area of Performance Management specifically within the Indian
context. This conceptual paper reviews the literature published by the National HRD Network from
the 1990s to the present contemporary form. The review suggests a theoretical framework of
performance management systems based on the evolution of this concept in different phases along
this period.

Key Words: Performance Appraisal, Performance Management, Role of HRD, Literature Review,
India
Sub Theme II: Innovative Processes for Managing Human Performance.

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INTRODUCTION

The economy of the world is driven by trade between nations, carried out through numerous small
and large organizations. Organizations are intangible in nature. What one sees of the organizations
are merely the physical contours the building, facilities and the people working inside. The existence
of these organizations themselves depend on how favourably they are able to continuously keep the
relationship with their customers. Therefore, it may be safely stated that organizations have to keep
performing to remain in existence. This is especially true in todays highly competitive era. To keep
performing implies that the goals of the organization should be met successfully.

The dictionary definition of performance is The accomplishment of a given task measured against
present known standards of accuracy, completeness, cost and speed. Within a contract, performance
is deemed to be the fulfilment of an obligation, in a manner that releases the performer from all
liabilities from the contract (Business Dictionary - Performance, 2014).

The performance of an organization may be considered as more than the sum total of the performances
of individual employees of the organizations. This leads us to the aspect of managing performance of
employees such that they result in organizational growth. Performance Management may be thought
of as a holistic framework which helps organization in achieving its goals by means of a closed loop
feedback system that enables a cycle of performance and associated feedback, thus ensuring that
performance of employees is in sync with the objectives and strategy at the organizational level.
(Bagchi, 2013). Performance Management System or PMS, is thus, a system to achieve an effective
dialogue with people in the organizations with regards to expectations from the management, their
own progress within a pre-determined period of time and the capacity and ability of the organization
to enhance the attained level of progress, within the context of the determined organizational goals
and strategy (Trivedi, 2000).

What is measured, improves- Peter F Drucker

The most important things cannot be measured- W Edwards Deming

PMS tries to improve upon the efforts of the employees and gives them a means to understand the
extent of their contributions to the organization. Hence, as Drucker points out in the above mentioned
quote, the main objective of establishing a PMS is to improve an employees contribution thereby
resulting in higher organizational performance. Yet, it is well known that performance is a function
of various physical, emotional and psychological factors. Indeed, if one were to look beyond the
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contours of professional life, what defines performance of an individual at the end of the day is
basically the attitude towards the work, the need to challenge oneself and external factors coming in
from the personal life of the employee. And, these factors, as rightly pointed put by Deming, cannot
be measured. Thus, it can then be concluded that understanding of, and thereby implementation of,
PMS within an organization happens within the contexts of the above quotes with these signifying
the upper and lower limits, as it were.

Concerns over performance management have been a focus of researchers and practitioners for over
four decades now. Interest in PMS has augmented on account of the competitive world of
globalisation and as a result, performance management has become a distinct area of research in its
own right. Review of past research reveals that the holistic idea of Performance Management that is
being discussed currently is not how this concept was viewed earlier. The concept has gone through
the process of evolution wherein new shades and dimensions were added and old shades deleted from
the original idea. For quite some time, performance management was viewed through the narrow lens
of performance appraisal. Moreover, the related processes were seen in isolation to other sub systems
within the HR departments (earlier known as Personnel department) with few linkages to
organizational objectives. Performance appraisal, simply put, is a systematic and periodic process
that assesses an individuals performance on the job in relation to certain pre-established criteria and
achievement of organizational objectives (Abu-Doleh & Weir, 2007). These systems were
confidential in nature, held as an annual exercise and were limited to a one-time evaluation of the
performance of the employee.

With the advent of the 21st century, increasing competition and need to maintain consistently high
performance has led organizations to look at ways to improve performance of their employees. Hence,
there has been a realization that it is more important to ensure performance rather than simply
appraise performance. Whereas, formerly, the process was owned by the Personnel or HR
department, now there is a realization that all employees are part and parcel, and therefore, owners of
this process. Thus, the focus has shifted from administration of the process to managing the process,
encompassing a series of steps, from appraising the performance to identifying remedial measures
(or, enhancement measures, as the case may be) to ensuring that the employee performs. (Pande &
Basak, 2013).

In the western context, over the years there have been shifts in performance appraisal system in terms
of moving away from the composite appraisals with multiple objectives to separate systems for
different clusters of objectives, moving away from isolated appraisal system to the business-linked
ones, shift away from closed to open dialogue and discussion-based systems, movement from

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quantitative to qualitative systems and movement from boss-asserted feedback to 360-degrees
feedback involving customers. With the advent of unified world order, a similar shift may also exist
in India. However, in our search of existing literature in the Indian context, we could not come across
any literature which has traced the evolution of PMS in India. This paper is an effort to understand
the treatment of performance management within the Indian context by tracing the time-line of
performance management research in India. Tracing a time-line is not an easy venture since much of
the research and practice of performance management has taken place simultaneously within the
narrow silos of organisations. While reviewing literature, it became apparent that there were
overlapping areas between academics and practice. Consequently, while tracing the timeline the focus
was on identifying underlying themes in papers published in a particular year. Thereafter, an attempt
was made to consolidate these themes and categorise the literature across phases, viz. pre-1990, the
decade of the 90s and post-2000. The paper identifies these phases in the evolution of PMS in the
Indian context.

METHODOLOGY
This conceptual paper studies several literature concerning PMS, both conceptually as well as the
practical aspects of such systems in different organizations. With the aim to have access to both the
academic and the practical world, in the present study the focus is on papers published in various
conferences held by the National HRD Network and Academy of HRD, Ahmedabad. The National
HRD Network is an association of professionals committed to promoting the HRD movement in the
country. It is a non-profit organization dedicated to developing human resources through education,
training, research and sharing of experiences. (Varkkey, Parasher & Brahma, 2001). The Academy
of Human Resources Development (AHRD) with support from National HRD Network, is Indias
premier institution specializing in human resources development for all organizational forms. The
activities of the Academy constitute of running high quality HRD related academic and management
development programs, conferences, seminars and conclaves. Two of the authors of this paper
worked on a project of creating a Knowledge Management Systems for National HRD Network as
part of their summer internship. It is through this project, that the researchers could have access to
the vast research with the right blend of academic and practice inputs in the Indian context.

The literature search was made from a database of 1200 articles, research papers and case studies
related to the field of HRD and HRM. All these papers were found to be written within the Indian
context. Based on the key words and their abstracts, 89 papers related to performance management
and PMS were shortlisted. While papers that looked exclusively at performance management were
shortlisted, various case studies of different organizations were also considered which mentioned or

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described the implementation or use of PMS. Thereafter, the conclusions of the selected papers were
studied and an attempt made to create a timeline to trace the evolution of PMS in India. The term
conclusions is to be seen within the context of the contours of this paper. Hence, where PMS is a
part of the larger narrative for a given paper or case study, the conclusion for that part/parts is/are
taken as the conclusion for the entire paper.

LITERATURE REVIEW
Since the setting up of the first HRD Department in the 1970s, Indian companies have implemented
performance appraisal and management systems and have continually reviewed them. Many
companies have restructured their Performance Appraisal Systems in the past. For example, NDDB
restructured its Performance Appraisal system to a Performance Planning and Review system. In
Larsen & Toubro (L&T), the Performance Appraisal system was integrated with the HRD functions
in 1975. Many public sector companies started a Work Planning and Review system inclusive of
Work Planning and Performance Review (WPPR), potential appraisal, career planning, and rewards
and did away with the inadequacies of the traditional Performance Appraisal system. At ABB, which
is renowned for its professional management, an indigenously developed appraisal system was
followed that treated every employee as a competent individual and was focused on furthering the
development of individual competencies through the use of groups of teams. It was unlinked from
rewards, thus taking out competition from ratings. Eicher is one organization that was found to
periodically review its appraisal system in response to the changing needs and environment. The
emphasis in the recent years has been on quality, teamwork and the process of development.

Varghese (1988), in a case study of in-basket exercises, looked at the PMS in Crompton Greaves
specifically within the context of introduction of in-basket exercises. Earlier, the PMS emphasised on
reward administration with no linkages to goals or review or feedback. This led the company to start
an intervention for the top management. Based on the recommendations of an outside consultant, the
company redesigned the PMS with a developmental orientation instead of the former reward
orientation. The new system started with goal setting, followed by self-appraisal at the end of the
appraisal period, followed by a personal interview with the superior and concluded by counselling
(Varghese, 1988). In Transpek Industry Ltd, when the need of a PMS was felt, it was introduced, after
due diligence, in a phased manner, starting from the top management and finally to the middle
management. The appraisal forms for the system were also used for the purpose of training needs
analysis. In this system, the appraisal form was first filled by the employee and then this was discussed
with the superior with the focus on development rather than results. For directors, the appraisal forms
of every director was discussed in a separate board meeting (Shroff, 1988). A similar theme is

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repeated in the case study on BHEL which attempted to open up the confidential system by including
the assesse as part of the dialogue on the performance and giving the employee valuable inputs on
the results of the exercises. The new system led to the conclusion that any PMS should feature
opportunity for the employee to express himself, a dialogue between the boss and subordinate,
assessment of potential for higher responsibilities and consultation with employee regarding
placement and development (Sarthi & Rao, 1988). Thus, these papers demonstrate a need to shift
from the confidential system to an inclusive system, which involves the employees in the process.

Around the same time, in case of Larsen and Toubro Ltd., Srivastava (1988) added multiple
dimensions to the PMS. Firstly, he found that it was essential for the PMS to shift and become a line
responsibility rather than a personnel function; secondly, he called for joint goal setting by the
appraisee and the appraiser and finally, he suggested that performance interviews needed to be held
with openness coupled with counselling and feedback. In the case study, the line managers, who were
given the responsibility of administering the PMS, felt that the rating system was too complicated as
a result, quantitative ratings were replaced by qualitative ratings (Srivastava, 1988). Consequently, a
gradual shift to a mixed process with due importance to qualitative ratings was witnessed.

Another theme that emerged at around the same time was the realization that communication about
the process is just as important as the process itself. In a case study on State Bank of India, Raman
(1988) pointed out that implementation of a PMS needs to take care of communication between
different levels to avoid miscommunication. In line with the previous studies, he too suggested that
data based objective system was better than the traditional confidential rating system with the
involvement of the appraisee in setting the KPAs and KRAs (Raman, 1988).

The literature also suggests that the practitioners were feeling the need to link the PMS with the other
sub-systems in the organizational ecosystem. In an article on Future Possibilities in HRD for Banks,
Kulkarni (1988) predicted that with the changing service environment, performance systems will be
used for getting information about the employee and also for the purpose of providing feedback apart
from using it as a source of data for promotions. He also stated that, there was a need for performance
appraisals to include the views of peers, colleagues and subordinates as well. He identified a need for
using PMS as a tool for development rather than as a tool for ranking (Kulkarni, 1988). In a study of
the relevance of Japanese HRD practices in Sundaram-Clayton, Murthy and Gregory (1988)
compared the Japanese system with the then existing system of performance appraisal in the
company. They found out that the Japanese had an informal system of performance appraisal, unlike
the companys structured appraisal system, that had evolved over time. The authors also noted that
there appeared to be a major change in the appraisal system with the objective being, the development

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of employees. HR managers were advised to maintain a critical incident diary in which they
maintained a log of all the information related to performance and to use the same for counselling
during appraisal (Murthy & Gregory, 1988).

The theme of employee participation is repeated in papers published in the year 1989. Dixit (1989),
in a case study on BILT, pointed out that there is a need for delinking performance appraisal from
potential appraisal. He also suggested that it was high time that objectivity was brought into the PMS
by way of objective ratings and objective targets. He concluded that, for the successful
implementation of any PMS, the company required to embark on a communication drive and take
feedback based on a trial run to assuage the concerns of its employees (Dixit, 1989). Kapse and Arora
(1989) looked at the performance management interventions for workers at Eicher Motors. Here, the
company set departmental performance targets for six months and these were then broken down to
set individual targets. The immediate supervisor of the worker was to fill up an appraisal form which
would then be handed over to the supervisor, which was lastly reviewed by the line managers. The
authors found that these interventions brought about a feeling of ownership in the workers and
improved their morale (Kapse & Arora, 1989).

Almost half a decade later, Pareek and Rao (1994) in their study, established that over the years, there
was a major shift in PMS in terms of moving away from the composite appraisals with multiple
objectives to different clusters of objectives, moving away from isolated appraisal systems to the
business linked ones and shifting away from closed systems to ones with open dialogue. The authors
indicated that, in the future, appraisal systems may integrate components of TQM and the need for
introductory sessions for assuaging the concerns of the employees when PMS is introduced in an
organization (Pareek & Rao, 1994). This paper envisioned the complete integration of the PMS with
all sub systems in the organization, shifting the locus of the PMS beyond the HRM/HRD department.
In one of his recent interviews, Dr Rao said that the vision envisioned in this paper is yet to be
achieved.

As the mid-90s approach, there was a subtle shift towards decentralization of PMS administration.
While attempting HRD interventions in Gujarat Gas Ltd, a need was felt to change the system
orientation towards customer satisfaction. The existing PMS, with its focus on confidential reports,
did not serve this purpose. Hence, the company shifted the focus and gave training to reporting
officers to give appropriate feedback and counselling to their subordinates in matters of performance.
These interventions were taken as part of larger company level HRD interventions (Virani, 1994).

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Decentralization also meant that employees outside the HR department need to understand the
essentials of the PMS and what they are expected to do. In a case study of the appraisal system at
MSEB, Dandekar, Karnik and Sathya (1994) concluded that for an effective PMS, goals should be
fixed at the beginning of the year in consultation with the employees and reviewed periodically. These
reviews then become the basis of the appraisal. The way people are managed in the organization
influences the way they perform and provide service. Performance appraisals should include factors
such as social awareness, group behaviour, sportsmanship and artistic qualities. The authors also
recommended that all efforts should be made to simplify the process as much as possible. Ambiguous
terms should be simplified and clarified to avoid confusion. Along with the emphasis on PMS, proper
attention must be paid to the man management practices and these should be linked to the system and
revamped periodically (Dandekar, Karnik, & Sathya, 1994).

The theme of decentralization receives more and more emphasis as the years pass by. From stating
that employees should have a say, a stage is reached where it is felt that superiors should be given
active assistance in doing their bit in the performance management cycle. Jain and Jomon (1996), in
their article on HRD for workers and support staff, pointed out that companies often give the workers
a miss in the implementation of PMS. They give more priority to training of workers rather than
sensitizing them on their performance and improvements thereof. One of the reasons for this is the
lack of expertise at the supervisor level in administering the appraisal system and doing the required
counselling. The authors suggested that more expertise may be developed in design of sub systems
of performance appraisal and counselling and adequate training on managers and supervisors in the
effective implementation of these systems (Jain & Jomon, HRD for Workers and Support Staff: An
Overview of the Current Status in Indian Organizations, 1996).

For the first time, a niche topic within performance management is addressed by Iyer, Kaza and
Narasimhan (1996), in their article on executive appraisal. They pointed out that the appraisal of
women executives is coloured with socio-cultural bias operating across organizations. The authors
recommended that organizations should look at increasing the presence of women in appraisal
committees at the executive level. Otherwise, women employees will continue to be unfairly treated
at the time of performance appraisals with the male employees believing mistakenly that they are
treating them fairly (Iyer, Kaza, & Narasimhan, 1996). This paper is the beginning of the trend of
recognition of gender issues.

It is not just the participation of employees, but the very intent of PMS is seen to be changed. Padaki
et al (1996) noted that for an effective PMS, it has to move away from isolated tools and techniques
and instead look at having an inclusive and holistic approach. The authors identified six stages of

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development of a PMS within an organization starting from ad hoc and informal systems which look
towards simple measures to record incidents to complex systems with multiple levels of integration
across HR functions and across departments. They also noted that while numerous companies seemed
to have initial levels of PMS, as the levels increased, the number of companies decreased dramatically
(Padaki, Padaki, & Srinivasan, 1996). The sixth level that this paper talks about is equivalent to the
type of integration envisioned by Rao and Pareek in 1994. Jain (1996) noted that performance
feedback should be centered on the development of the individual rather than the tasks that are being
performed by the incumbent. Feedback that looks at only at the tasks does not help in motivating and
improvement of performance as it may be construed as a blame-game exercise. Negative feedback,
unaccompanied by any kind of counselling, only served as a morale dampener (Jain, Experiences,
Aspirations and Expectations of Support Staff: Implications for HRD Action, 1996).

From 2000, companies seem to have accepted the previous recommendations of using qualitative and
quantitative aspects in performance appraisals and involving employees in the process. At this point,
employee involvement gives way to employee empowerment and use of new concepts such as
Balanced Scorecard. Kumar and Venkatesan (2000) looked at the integration of the PMS with the
organization in CK Birla Group. They were of the opinion that a bottoms-up approach with
comprehensive detailing, role clarity and mechanisms for cross functional integration was required.
In this context, they developed an X format for linkages of the PMS with the organizational objectives
specifically for the purpose of performance appraisal of the senior management. This format looks at
the contributions made in the areas of KRAs, focus areas, objectives and responsibility through an
integrative framework (Kumar & Venkatesan, 2000). Shivsankar (2000) found that the PMS was a
strategic business process that had the capability to propel the HR function to the strategic level and
it was high time that companies paid heed to their PMS. HR, on their part, should work with the line
managers so that the PMS is properly integrated with the business management practices of the
organization. At the same time, the involvement of employees in the strategic change process is one
of the parameters which is crucial for implementation of the strategy. There is a need to realize that
PMS is just beyond managing performance and more to do with facilitating the performance of
employees. The PMS must be so designed that it helps HR Managers to focus on business level
outcomes without losing sight of individual excellence (Shivsankar, 2000).

In a case study of the HR systems at Satyam, Joseph and Ghosh (2000) stated that Satyam uses an
online PMS that used the concept of numeric management in successfully measuring various HR
processes. In this, various business decisions were reduced to a set of numeric. Nominal, ordinal,
interval and ratio scales of measurement to capture and measure performance objectively. This system
measured performance at all levels i.e. at the levels of business unit, team and individual employees
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and provided a framework for enabling an objective communication in the organization (Joseph &
Ghosh, 2000). In a case study of managing performance at NIIT, Gupta et al (2000) found that, at
NIIT, there was extensive usage of online PMS and all the data required for analysis was loaded onto
a network. This information was available to the appropriate authority all the time and could be
accessed from anywhere. Also, for the purpose of PMS, the process of goal setting was done from
top to down with strategic direction coming from the top management and these getting broken down
into KRAs at the individual level (Gupta, Kuruvilla, Maheshwari, Ramasubramanium, & Pulapaka,
2001). In a conceptual paper on competence building, Singh (2000) observed that PMS in an
organization should give due importance to the concept of competence. Competence is an
independent variable for both organizational and individual performance. Aptitude, skills,
understanding of the task and enabling or disabling work conditions are also important in actual
performance. The PMS must incorporate objective variables that can measure these (Singh S. , 2000).

Reddy (2000) commented that the focus of performance appraisal needs to shift from managing
people to managing processes with the involvement of employees and improving them. The purpose
of the PMS must be to guide and motivate people to move from mediocrity to excellence. In this way,
an effective PMS moves the organization to excellence and quality and thereby to global
competitiveness (Reddy, 2000). Jacob and Shankar (2001) looked at redesigning the PMS using the
Balanced Scorecard Approach. The approach entails that the HR should have a strategic vision of the
business and understand its own role in aiding the business goals of the company. In this approach,
the targets were defined at the group level, which were then translated into operational plans to define
the goals for the organization. Special care was taken for forging a clear link between individual and
group performance. The performance of the person will be evaluated and personality dimensions
taken into account for potential appraisal and for promotion decisions (Jacob & Shankar, 2001).

Academy of HRD organized a conference specifically on PMS in the Asian context in 2002. One of
the primary conclusions from this conference was the linking of PMS, and thereby the HRM
ecosystem, to the strategy of the organization. Rama (2002) commented that traditional PMS was
often unsuccessful in aligning individual goals to the goals of the organization. A strategy-linked
PMS provided the managers a clear measure of strategic performance measures as well as the
developmental needs of all employees helping them in charting a plan that is aligned to the company
strategy (Rao D. , 2002). Bandopadhyay (2002) commented that performance appraisal is merely a
sub-part of the overall PMS. Thus, only PMS can address inter-related issues of individual motivation
and processes. At the same time, it is necessary to amend western concepts to suit them to the Indian
socio-cultural context to ensure an efficient and sound design of the PMS (Bandopadhyay, 2002).

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In spite of the importance of HR systems in organizations, it would however seem that Indian
organizations refused to learn. Ironically, it would seem that the progress as seen in the previous
papers, is limited to a small number of companies. Singh (2005)s paper echoes the categorisation of
PMS done by Padaki et al. In an empirical study, Singh (2005) lamented that Indian organizations
refused to recognize that investments in HR systems can lead to tangible improvements in firm
performance. Many of the firms do have systems in place however, the spirit of HR seems to be
missing leading to misfit systems. While Singh (2000) looked at the credibility of PMS within the
context of communication, Goenka and Nambiar took it further in their analysis of PMS ratings. They
observed that strength of the PMS becomes important if the outcome acted as a qualifier for
development programmes for employees. If a candidate is getting consistently high performance
through annual appraisals, then it is important to ensure that the PMS and the quality of the appraisal
process is competent to identify the right candidate for development (Goenka & Nambiar, 2005).

Emphasising on the process in a PMS, in a case study of Covansys, Surthi and Poornima (2007) noted
that the cycle of plan-perform-measure-review is continuous and is done constantly to achieve
business targets with the active participation of employees. The process was found to help in keeping
the line managers in the loop within the system and minimized the probability of employee grievance
(Poornima & Surthi, 2007). In a similar study conducted at NTPC (Agarwal, 2007), found that NTPC
had a formalized and standardised PMS called PACE (Performance and Competence for Excellence)
that was designed for enhancing the performance oriented culture through objectivity, transparency
and openness for all executives and has linkages with other HR subsystems like career development,
job rotation and organizational development. Looking at the PMS from the employees point of view
rather than organisations view, Childerly (2007) noted that individuals can transform their emotional
state from bad to good and thereby increase performance and productivity by harnessing the power
of Emotional Freedom Techniques. The author noted that employees felt good when they released
negative emotions and as a result, performed better at work. The key to performance management is
teaching staff to understand how to work on emotions (Childerly, 2007).

Rao continued the theme of his visionary paper in 1994 with a follow-up paper in 2007. Rao (2007)
opined that it is high time that organizations and the HR fraternity dropped the term appraisal and
use the term Management and promote the same spirit. An effective PMS is also linked with a good
rewards and recognition program that gives small rewards and recognitions to employees for good
performance. It becomes the responsibility of the HR team to make the employees understand the
definition of good performance (Rao T. , 2007). Shantaram (2007) seemed to agree with Rao when
he insisted in his article that the goal of creating a performance oriented culture in an organization
would be better served by appropriate linkage between measurement and reward of good
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performance (Shantaram, 2007). Furthermore, Balakrishna (2007) opined that key result areas and
the required competencies for a role should be defined unambiguously to ensure more objectivity in
the appraisal process. This would lead to the process contributing to the development of the individual
(Balakrishna, 2007). On similar lines, Dharmaraj (2007) noted that the performance management
process should be conducted on an ongoing basis and regular feedback must be taken from the
employees and the top management. The aim of the PMS must be to assist the process of the growth
and development of the individual through a proper assessment and analysis of performance of the
individual. This, then, is to be linked with other sub-systems creating an ecosystem of performance
(Dharmaraj, 2007).

CONCLUSION
In the period till 1990, there seems to be a realization that the confidential system of performance
appraisal based on annual reviews is not enough. Some kind of soul searching can be seen in
organizations, who were toying with different ideas to involve their employees in the system and
create incentives for better performance. This is also to be seen in the context of organizations looking
at integrating qualitative data (such as attitude and behaviour) with quantitative performance. At the
same time, we also see that there was a realization about the need to link performance appraisal with
other sub systems in HR.

In the decade of the 90s, the feeling that, HR subsystems have to be linked with the PMS, became a
conviction. We see a refreshing tendency in many of the case studies, where organizations have
chosen to break away from the tried and tested and move towards incorporating new tools in the
framework. At the same time, there is a concern that despite the progress, significant problems
remained especially with the nature of appraisal (as duly pointed out in the article on women
executives appraisal) and organizational focus when it comes to PMS. PMS seems to have found a
strategic voice, with it being part of most HRD interventions. Yet, it does not seem to enjoy the level
of importance that it deserves (as duly pointed out in an article by Jain)

The years after 2000 see real and substantial progress when it comes to companies realizing the
importance of PMS. Issues of credibility, strategic importance and linkage with sub-systems are
addressed with renewed vigour. We also see an impetus of introducing information technology to HR
and making the processes employee friendly. Clearly, it signals the coming of age of PMS when
Reddy (2000) comments that PMS should be about managing processes rather than managing people.
This period also sees use of concepts such as numeric management and balanced scorecard by
organizations.

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