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AN EVALUATION OF PERFORMANCE MANAGEMENT SYSTEM IN HEALTH CARE
ORGANIZATION- A CASE STUDY
A. P ACHAR
1
& DEEPA NAYAK
2
1
Director, Department of Business Administration, Sahyadri College of Engineering and Management,
Mangalore, Karnataka, India
2
Lecturer, SDM PG Centre for Management Studies and Research, Mangalore, Karnataka, India

ABSTRACT
The main aim of this paper is to measure and assess the effectiveness of Performance Management System (PMS)
in the health care organization, based on the perceptual data/information gathered trough quantitative empirical survey.
In the light of the results and discussion of the study an attempt is made to offer a conceptually sound and operationally
viable PMS model as a more robust model than the existing one. The relevant data and information were collected from
health care professionals operating in the reputed health care organization with the help of pre-tested structured
questionnaires personally administered by researcher during April and May 2013 The research employed disproportionate
stratified random sampling techniques to choose the respondents. In addition to user satisfaction survey, the researcher also
held semi-structured interviews with administrative staff in order to ascertain the operational difficulties and lacuna in
implementing the present PMS.
KEYWORDS: Health Care Organization Performance Management, Organizational Development
INTRODUCTION
Healthcare is a high-pressure industry facing increasing government regulations, cost controls, and demands for
higher quality patient care. With the increase in complexity, competition and corporatization, the urge for quality
performance and excellence has also crept into Indian hospitals. In the present scenario running a health care organization
is a tough balancing act. On one hand, there is need to ensure the delivery of high quality patient care, at a reasonable price
and on the other hand, to ensure that healthcare organization operates effectively as a profitable business
(MKTHCFS13-1206MA) Successful business and profits stem from performance-oriented people. To meet these
requirements health care organization need competent, committed, flexible multi-skilled and talented work-force.
Therefore, health care organizations need to implement policies to develop and utilize their human resources to the
maximum extent possible thus maximizing quality of service and subsequent patient satisfaction. Today Hospitals need
to manage carefully the performance of all resources like infrastructure, human resource and capital investment,".
Lack of alignment of people with business goals, unclear expectations, and undefined accountabilities often lead to
organizational inefficiency as well as staff disengagement. In this context health care organizations are turning to a solution
called Performance Management System (PMS) Health care professionals worldwide believe that .Performance
Management Systems if properly implemented will help to meet the expectations doctors , employees and the owners of
the health care organization.
International Journal of Human Resource
Management and Research (IJHRMR)
ISSN(P): 2249-6874; ISSN(E): 2249-7986
Vol. 4, Issue 3, Jun 2014, 9-18
TJPRC Pvt. Ltd.
10 A. P Achar & Deepa Nayak

Impact Factor (JCC): 4.9135 Index Copernicus Value (ICV): 3.0
Little has been researched or published on the introduction of performance management in health care
organization. In this context study on evaluation of PMS in Health care organization is undertaken. The main aim of the
study was to understand and assess the effectiveness of Performance Management System (PMS) in the health care
organizations, based on the perceptual data/information gathered trough quantitative empirical survey.
THEORETICAL BACKGROUND
Performance management has been one of the most important and positive developments in the sphere of Human
Resource Management in recent years. The concept of pe Performance management was borrowed from management
literature and has been recently adopted by the health care organizations (Beer, M. and Ruh, R.A (1976 The performance
management was first used in 1970s but did not become a recognized process until the latter half of the 1980s
(Armstrong & Baron, 1998). While in the 60s and 70 performance management was often equated to some form
merit-rating, in the 80s and 90 it has been linked to new management paradigms such as Management by objectives,
performance appraisal, Behaviourally Anchored Rating Scales and Pay for performance. (Javier 2001)
Performance Management System is the key tool that can be used to transform peoples talent and motivation into
a strategic business advantage. Performance Management system enables the health care organizations in making strategic
decisions about their cost structure, overall financial health and improving the value for money of patient care. PMS ensues
that employees are accountable for achieving results that are clearly tied to organizational goals.
Performance management is applicable at all levels of the hierarchy where the output and tasks are measured and
set to meet the larger goals of the organization. An effective PMS also places the responsibility for performance
management in the hands of the staff, stands upon a solid competency base, and builds the skills needed to make the
system work. Maximizing Performance helps to create a high-performance workplace by training everyone, from senior
executives to the front line, on how to align their performance with the organizations vision, values, and strategic
priorities. Performance Management is a continuous process of identifying, measuring, and developing the performance of
individuals and teams and aligning performance with the strategic goals of the organization (Herman Aguinis, 2009).
Well designed Performance Management System gives all leaders and staff the skills they need to develop Key
Responsibility Areas (KRAs), identify required related competencies, create personality development Plans, monitor and
measure performance, and plan for the future. Thus PMS helps the employees make accountable for achieving results that
are clearly tied to organizational goals
Although there is no universal model of performance management, a review of literature and practice suggests
there are a number of elements which might typically be found in a PMS. These elements are often depicted as a
performance management cycle (IDS, 2003). In general, performance management models place objective-setting and
formal appraisal systems at the centre of the cycle, and the literature suggests that these two areas might be particularly
affected by the cultural context (Milliman et al, 1998; Fletcher and Perry, 2001; Lindholm et al, 1999)
OBJECTIVES AND METHODS
The main aim of this paper is to understand and assess the effectiveness of Performance Management System
(PMS) in the sample health care organization. The specific objectives of study were
To describe the present PMS in the sample health care organisation
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To assess the level of satisfaction of health care professionals about present PMS
To identify and discuss the major defects and challenges in implementation of PMS
Suggest measures to improve the present PMS in the sample organisation
Primary data for study was obtained by administering structured questionnaires personally to 125 health care
professionals (70 medical doctors, 30 technicians who assist doctors and 25 key administrative staff) in a leading private
health care organization.
The researcher also held semi-structured interviews with administrative staff in order to ascertain the operational
difficulties and lacuna in implementing the present PMS.
Books and periodicals were also consulted for the purpose of understanding the key concepts and theories relating
to the current field of study.
The Statistical Package for Social Sciences (SPSS-XI) was used as a tool to process the field survey data.
Relevant statistical techniques such as percentages, chi-square statistics, were used for analyzing and interpreting the
survey data.
RESULTS ANND DICUSSIONS
The results and discussions of the study are presented in three parts
Present Performance Management System (PMS) in the sample organisation
Views and perceptions of health care professionals regarding the present PMS
Effectiveness of PMS from users perspective
Suggestions to improve present PMS
PMS in Sample Health Care Organization
PMS in the sample organization is designed to align individual performance objectives with the strategy and
objectives of the business and to direct individual efforts to the achievement of company results The Performance
Management System comprises of two parts (a) Annual Performance Planning & Review (b) Competencies Assessment
The Annual Performance Planning & Review will determine the Variable Bonus Payment. However, the merit
based Salary Review is determined equally by the Annual Performance Planning Review and Competencies Assessment
Annual Performance Planning and Review
Annual performance planning & Review involves (a) defining performance objectives (b) identifying
performance measurement indicators (c) evaluation of performance
Defining performance objectives (KRA) will be done the beginning of the year or at the time of joining the
organization in the case of new hires.
The department/functional objectives are derived from the objectives of the company. These objectives become
the achievement levels of the department with contribution from each team member in the concerned department.
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Impact Factor (JCC): 4.9135 Index Copernicus Value (ICV): 3.0
The consolidation of the contribution/achievement of each member of the team would help achieving the department
objectives.
While the department/function objectives are frozen between the CEO and the concerned department head,
an individual appraisees objectives are derived from the objectives of the department. Department head and appraise
jointly decide objectives of the Dept and Individual objectives
Compentency Assessment
Competency assessment is the integral part of PMS. Competency appraisal is more qualitative in nature.
This appraisal is more future oriented, and has longer range and is much useful for the career path and development of
employee. Competency Appraisal focuses more on the how of performance. It also takes into account the behavioural
changes of the employee.
The competencies assessment comprises of following 10 types of competencies.
Achievement Orientation: Drives to meet results and ensures that the organisational goals are met consistently
within the set time frame
Self Initiated Learning: Proactively improves self and others through continuous learning to realise the full
potential of the organisation
Customer Focus: Commitment to internal & external customer delight
People Development: Inspires and empowers others to achieve by providing constructive feedback,
reassurance and encouragement
Team Orientation: Steers a team and achieves results through leadership
Communication: Listens effectively and responds clearly and concisely in a manner that gains confidence and
influences behaviour
Entrepreneurial Spirit: Capitalizes on business opportunities regardless of personal or professional risks
Integrity: Maintains high ethical standards both personally and professionally. Shows integrity and fairness in
dealings with others and always delivers on commitments.
Orientation towards Quality: Focuses on quality of process and output at all times. Pays attention to details.
Explores and creates ways to achieve improvements in quality on a regular basis.
Systems and Process Orientation: Works in a systematic, planned and standardized manner. Creates and
implements systems
PERFEROMANCE MEASUREMENT
Performance measurement is done at two levels:- (a) departmental level (b) individual level
Department Performance: The Department performance will be evaluated by the CEO and the respective
department head to determine the Target attainment. The performance component will be based on the target attainment by
the departments:
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Individual Performance: The individual performance will be evaluated by the appraiser to determine the target
attainment of each objective. After evaluation of the individual performance, performance rating is done as follows
Performance rating
Table 1
Ratings Outstanding Good
Improvement
Required
All
Employees
30% 50% 20%

Performance Feedback
The departmental heads gives the feedback regarding the performance of the employees and accordingly the HR
department reviews the assessment and provides feedback to employee. Base on performance feedback training needs for
individual employees
Administration of PMS
The corporate human resource department is responsible for the administration of PMS. The period of PMS is 12
months between April March every year .All those who have worked above six months in a year will undergo the
evaluation and will receive the Performance based in incentives on prorata basis. However, employees who have not
completed six months in a year will not undergo the evaluation
Views and Perceptions of Health Care Professional about Present PMS
Profile of Respondents

Figure 1 Figure 2


Figure 3
Among the total respondents of 47.5% of the respondents were in the age group of 30-40 and 47.5% of the
respondents were in the age group of 20-30 years . Only a small percentage i.e. 5 % was were above 40 years. Male female
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Impact Factor (JCC): 4.9135 Index Copernicus Value (ICV): 3.0
ratio was equal 65:35 Out of total respondents, 56% were medical doctors, 20% were administrative staff and 24% were
technicians
Awareness/Understanding/Importance of PMS
Employees awareness about the process and need for PMS plays an important role in successful implementation
of PMS. Respondents opinion about the present PMS is presented in the following Figures

Figure 4 Figure 5
The awareness of Present Performance Management System among the health care professional is very high.
Nearly 95% of the respondents are aware of present PMS system followed in the company. Further nearly 90 of the
respondents agreed that PMS is required in the organization for growth and development of the organization as well as
employees
Implementation of PMS
Performance Management System is the process of performance planning, Performance Monitoring and
Coaching, Measuring Individual Performance linked to organizational goals, giving him/her feedback, rewarding the
individual based on his/her achievements against set performance goals and required competencies, and working out a plan
for his/her development Performance planning involves (1) identifying Key Responsibility Areas (KRA) (2) developing
performance indicators (3) identifying competencies to achieve the performance objectives. This will ensure role clarity
and enables teams work effectively and efficiently in the organization
The analysis of effectives of performance planning is presented in following Figures

Figure 6 Figure 7

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Figure 8 Figure 9
Majority of the respondents (90) strongly agree that identification of KRA is done in the beginning of the year.
Nearly 65% were satisfied with the process identifying KRA and weightage given to each KRA. Further respondents are
strongly agree that Competencies are identified as per the requirement of KRA and this will help them in role clarity while
working in team.
Impact of PMS
Performance Management System must yield some visible benefits which will enhance both organization
performance and personal development of employees. This will enhance employee satisfaction, which increases
productivity and profitability of the organization as the performance of an organization, depends directly on the
performance of its people. (Dr. R K Sahu, 2007). Successful implementation of PMS in an organization helps to enhances
individual performance and career development. Respondents opinion on impact of PMS on individual performance and
career growth is presented in following figure

Figure 10 Figure 11
It was observed that nearly 12.5% strongly agree and 47.5% agree that the PMS helped them in increasing their
performance. However 20% of respondents do not agree that PMS has positively impacted their performance. Further
majority of the respondents (10% strongly agree and 40% agree) that present PMS helps in their career growth
Implementation Process PMS
Success of PMS depends largely due process and fairness in implementation of PMS. Respondents perception
about the present PMS is presented in the following figure
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Impact Factor (JCC): 4.9135 Index Copernicus Value (ICV): 3.0

Figure 12 Figure 13

Figure 14 Figure 15
Analysis of employee feedback on implementation of PMS as PMS as whole reveals that majority of the
respondents agree that PMS is good and it achieved its intended objectives. Majority of the respondents are satisfied with
annual performance review. However majority of the respondents do not agree that PMS in implemented in fair and
impartial manner
Suggestions for Improvement
Based on the detailed analysis of PMS in the sample organization followings measures are suggested to make the
PMS more effective and effective
Present system should be upgraded with E-PMS or It should be introduced in the Pilot Phase to check its
effectiveness pertaining to organization, the rationale behind this suggestion is:
To reduce the unnecessary paper work so that compilation and assembling can be done quickly.
To make the task more convenient, organized and structured.
To fasten up the process so that the next schedule of activities are carried out on timely basis.
Individual Development Plan should be Introduced:
To identify and assess future development needs in required competency areas
To provide structured learning experiences linked to organizational needs, goals, and job requirements.
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To establish an agreed-upon set of learning objectives and developmental activities as part of a formal career
development program.
To make the weightages more clear & transparent, an Expert Choice Software (AHP) should be introduced as
employee reportedly suggested that they want more clarity in terms of weightage. (Expert Choice is a
multiattribute decision support software tool based on the analytic hierarchy process (AHP) methodology
developed by Saaty) The Analytic Hierarchy Process (AHP) is a multi-criteria decision making tool that helps
the Manager or Decision-Makers facing a complex problem with multiple conflicting and subjective criteria
CONCLUSIONS
Performance Management system has become heart of Human Resource Management practices in health care
organization. The sample health care organization has designed PMS to align individual performance objectives with the
strategy and objectives of the business and to direct individual efforts to the achievement of company results. Its
interesting to note that PMS directly linked with individual growth and development of employees in the organization
which results in high performance work culture in the organization.. Study shows that majority of the employees are happy
with existing PMS and also it had helped achieve its intended objectives. PMS should give more focus on career growth of
employees. Up gradation of present manual PMS with E-PMS and transferency in appraisal process will enhance
efficiency and effectiveness of PMS.
REFERENCES
1. Aguinis, H. (2009). Performance management (2nd ed.). Upper Saddle River, NJ : Pearson Prentice Hall
2. Armstrong M. and Baron A. (1998) Performance Management: The new realities. London: CIPD.
3. Armstrong M. and Baron A. (2005) Managing Performance: Performance management in action. London: CIPD.
4. Beer, M. and Ruh, R.A (1976): Employee growth through Performance Management, Harvard Business
Review, July-August, pp 59-66
5. B.K. Sahu (2007): performance Management System published by excel book Delhi
6. Dr Javier Martinez (2001): Assessing quality, outcome and performance management published by world
health organization
7. Fletcher C. and Perry E. I. (2001) Performance appraisal and feedback: a consideration of national culture and a
review of contemporary research and future trends, in N. Anderson, D. S. Ones, H. K. Singali and C.
Viswesvaran (eds) Handbook of Industrial, Work and Organisational Psychology, vol. 1: Personnel Psychology.
London: Sage
8. Human Resource Management in an International Context by Rosemary Lucas, Ben Lupton and Hamish
Mathieson. Published by the CIPD
9. IDS (2003) Performance Management. IDS Studies No. 748, April, London: IDS.
www.incomesdata.co.uk/studies/perfman.htm
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Impact Factor (JCC): 4.9135 Index Copernicus Value (ICV): 3.0
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Western MNEs in China, in C. Brewster and H. Harris (eds) International HRM: Contemporary Issues in Europe.
London: Routledge
11. MKTHCFS13-1206MA Development Dimensions International, Inc., MMIII. Received MMVI.
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