Question

Below question is of Human Resource Management. Please guide:

Maxie Finance, an associate company of Maxie Group, is an Indian Non-banking financial company. The company is currently engaged in consumer finance businesses and commercial lending. Consumer Finance includes financing Maxie Group Two Wheeler, Loyalty Customer Loans and providing Loans against property. Maxie had a performance appraisal system where the employees were rated annually. With dual reporting system, goal setting had lot of ambiguity, minimum time was spent on performance planning and analysis, appraisal was considered as a routine process with no follow ups on ratings and feedback. Identification of learning needs were never identified based on performance review discussions. Customer perspective was not taken into account while considering good performance. Also, employees who had spent more than a decade were not convinced that good performance necessarily leads to reward and promotion at Maxie. There were even complaints that managers were reducing performance feedback to a discussion on target achieved/not achieved and thereafter blaming the team members for non-performance. Employees were supposed to work in their roles more mechanically, irrespective of the fact whether they liked their roles (or tasks associated with their roles). Performance management system was never viewed as an effective intervention tool for self-renewal of Maxie. Director HR Manoj Bakshi who joined eight months ago, understood the shortcomings and wanted to change the way performance management system was working.

Based on the objectives of performance management system you know, investigate the challenges associated with performance management system at Maxie Finance and design a plan as to how performance management system at Maxie Finance may be made effective to meet its objectives.

Answer 1

Maxie Finance's performance management system faces several challenges such as goal-setting ambiguity and lack of follow-up on appraisals. Implementing a 360-degree feedback system, aligning performance goals with company objectives, and establishing transparent reward criteria could reform the system. Training and management support are key to the effective implementation of these changes.

Step-by-step explanation:

Challenges and Reformation of Performance Management System

The challenges in the performance management system at Maxie Finance include ambiguity in goal setting, minimal focus on performance planning, lack of follow-up on performance appraisals, failure to identify learning needs, and neglect of customer perspective in evaluating performance. Furthermore, there's a disillusionment among long-term employees concerning the connection between performance, rewards, and promotions.

To overcome these challenges, Maxie Finance could implement a 360-degree feedback appraisal system, providing a more comprehensive view of an employee's performance by incorporating feedback from multiple sources including supervisors, peers, and customers. This system promotes transparency and a holistic understanding of performance. Additionally, it is imperative to integrate continuous follow-ups and development plans based on the appraisal outcomes, which encourages ongoing employee engagement and improvement.

Maxie should also focus on clearly aligning the performance goals with the company's objectives and ensuring that these are communicated effectively to the workforce. Transparent criteria for rewards and promotions should be established to motivate and assure all employees of a fair evaluation process. Ensuring a participatory role for employees in this process could also enhance their job satisfaction and commitment to their roles. Training for implementation and ongoing management support will be crucial to the effectiveness of the new performance appraisal system.