A good performance management system is not plainly an organizational process that is limited to the pen and paper and use of sophisticated software and tools. Reviewing the performance of an employee on an annual basis as a ritual is also not the key to good performance. It is an activity that is to be carried out by the organization along with the employee so that there is mutual gain (Sielearning.tafensw.edu.au, 2015:293-298). For this the organization needs to intricately understand the employee, their strengths and weaknesses, styles of working and a lot more so that the results of the assessment helps the employee in being more effective and productive (Gomez-Mejia, Balkin&Cardy, 2001:121-129). The system needs to fundamentally assure that everyone in the organization is benefited and puts in their best at work.
Hence, the broad framework of the system suggested has six basic phases that begins with knowing where the organization is now in terms of the evaluation process. Once the shortcomings of this is known well the process can be modified in accordance with the organizational strategy. Then the goals for the employee are to be set after a comprehensive and constructive discussion with the employee so that the goals decided are mutually agreeable (Sansone&Harackiewicz, 2000:395-423). The evaluation of performance is to be done periodically throughout the year in multiple stages and at the completion of the year when the goals and expectations for the forthcoming year are defined. Feedback that is specific and clear is very critical.
The current system for performance management at P & G follows the MBO principle or the Management by Objectives principle that places emphasis on the end results and the objectives achieved. The organization focuses on employee satisfaction and accountability regardless of the position and title of the employee in the company. This method even though quite effective has a disadvantage of giving room to set unrealistic expectations.