This document discusses performance management systems (PMS). It defines performance management as identifying, measuring, and evaluating employee performance to align it with organizational goals. A key part of PMS is continuous communication between managers and employees to set expectations, provide feedback, and evaluate results. The document contrasts performance management, which is an ongoing process to improve effectiveness, with performance appraisal, which is an annual formal review. It outlines why companies like Nestle consider PMS important for talent development, continuous learning, and building diverse high-performing teams. The document also discusses techniques Nestle uses in its PMS, including a balanced scorecard linked to compensation.

1. 1PMS

2. 2PMS

3. Performance
Management
Techniques
3PMS

4. Performance Management
System
• Performance management is the
continuous process of identifying,
measuring and evaluating the
performance of the individuals and
teams and aligning their performance
with the organizational goals.
• A process that significantly affects
organizational success by having
managers and employees work together
to set expectations, review results andPMS 4

5. PERFORMANCE MANAGEMENT
PROCESS
PMS 5
Communicate
ObserveEvaluate
Set Goals

6. Performance Management vs
Performance Appraisal
• Performance management:
– Dynamic, continuous process.
– Improves organizational
effectiveness.
– Strategic goals.
• Performance appraisal:
– Periodic (usually annual) event.
– Formal review.
– Last step in performance
management process. 6PMS

7. Performance Management
Continuo
us
Goal directed
Revaluatio
n
7PMS

8. Why Performance Management
?
Total Quality
Traditional performance appraisal are
often tense and counterproductive
Strategic planning
8PMS

9. Why Nestle considers PMS
important?
• Nestlé India
recognizes that people
make the difference
• encourages and supports
its people to inculcate the
clearly laid down Nestlé India Leadership Principles
• Nestlé India will push you to broaden your horizon,
both nationally & internationally
• Nestlé India believes in giving as much responsibility as
possible to the individual
9PMS

10. Nestle grows talent & teams
• passion for building and sustaining an
environment where people have a sense of
personal commitment to their work
• Understands the importance of continuous
learning and improvement
• committed to giving and receiving honest,
accurate and timely feedback
• Believes in the importance of building diverse
teams, and promotes the advantages of gender
balance
10PMS

11. Why PM is difficult ?
•Job/Outcomes not quantified
•Personal relationships with employees
•Unable to give criticism
•Personality biases
•Poor communication
•Conflicting Goals
11PMS

12. Techniques of PM
• Essay (open-ended)
• Management by Objective
• Ranking
• Behaviorally Anchored Ratings (BARS)
• Critical Incidents
• Forced Distribution
12PMS

13. Performance Management
Techniques used by Nestle
Balanced Scorecard Linked
System
13PMS
• a strategic planning and management system
•originated by Dr. Robert Kaplan (Harvard
Business School) and David Norton as a
performance measurement framework

14. Balance Scorecard design
process
PMS 14
•Translating the vision into operational
goals
•Communicating the vision and link it to
individual performance
•Business planning; index setting
•Feedback and learning, and adjusting the
strategy accordingly

15. Nestle Performance Scorecard
Measurements Below
Par
Par Abov
e Par
Standards Manager’s assessment
Leadership,
Ethics/Integrity
Customer Interaction
Community Involvement
Contribution to Overall
Business
People Manager’s assessment
Performance
Teamwork
Training & Development
Employee Satisfaction
Control Auditors’ standards
Audit

16. Nestle Performance Scorecard..
Measurements Below
Par
Par Abov
e Par
Customer Satisfaction External company
survey
Goal of 80%
Strategy Implementation Objective standards
Households
Cross-sell, splits, mergers
Retail asset balances
Market share
Financial Objective stadards
Revenue
Expense
Margin

17. Nestle Link to Compensation
Ratings Bonus
“Above Par” 30%
“Par” 15%
“Below Par” 0%

18. Essay Technique
• Describe in detail the quantity and
quality of the employee’s performance
during the past twelve months
• Describe the employee’s strength and
weakness
• How do you describe the employee’s
potential within the company?
• What leadership skills does the
employee bring to the job?
• What future development activities do
you recommend for the employee?
PMS 18

19. Challenges
• Lack of integration
• Design challenges
• Lack of leadership support
• Implementation failure
• Incompetence
• Communication challenges
• Lack of monitoring
• Lack of evaluation
PMS 19

20. Areas of Improvement
• Use practical tools to improve employee
performance
• Use a sound framework for performance
development
• Rely on multiple sources of information
• Identify key job performance dimensions
• Develop a structured process and reliable
measures
PMS 20