Choosing the Right PMS Technique: How Do Companies Decide Between 360 Degrees, MBO, and More?

Hi, I would like to know if there is any definite basis or deciding factor on which technique of PMS should be adopted by any company, or if a company may choose any PMS technique like 360 degrees, Supervisor Appraisal technique, MBO, etc. Also, if someone can help me with a brief on techniques of PMS.

Thanking you.

Factors Influencing the Deployment of a PMS System

The deployment of a PMS system depends on various aspects of a business, some of which are as follows:

1. Type of Industry
For example, in IT and other knowledge-based industries, PMS is more rigorous, and hence instruments like BSC or 360-degree feedback are used. Traditionally, such instruments are not practiced in the manufacturing sector.

2. Size of Organization
Instruments like 360-degree feedback or BSC are typically used in large organizations with more than 1,000 employees and established HR or people systems in place.

3. IT Savvy
360-degree feedback or BSC may require a strong IT backbone for better delivery compared to traditional approaches, which can be done in a paper-pencil mode.

4. Management Objective
This should be the prime factor in determining the kind of PMS instrument you choose. Is the PMS a periodic ritual in your organization? Is it used as an instrument to drive employee or process excellence? Is it used to identify the developmental needs of people and spot potential? Or is it simply used to camouflage pre-decided ratings or increments by management?

Objective of Performance Management Systems (PMS)

The objective of PMS is to provide rewards to employees as well as feedback. The choice of techniques depends upon the practices of the organization and the market situation. The market situation refers to the status of competitors in the same industry. PMS is highly connected with monetary and non-monetary benefits for employees; however, it also involves costs to the organization/management, ultimately affecting the cost of production and the profitability of the organization.

Remuneration and Benefits

In practice, remuneration, increments, and benefits should be fixed in accordance with the market situation. All techniques have their own advantages and disadvantages. HR professionals should focus on the advantages of the techniques so that employees feel motivated and management feels satisfied.

Regards