Performance Management System in Nepali organisations

-Dipesh Man Shrestha-

Most organisations in Nepal now have Performance Management Systems (PMS) in place. In most cases, I have noticed that PMS has been institutionalised merely for the sake of having this system. Many HR professionals are not able to relate the outcome of PMS with the goals and objectives of the organisation. So, there is a fundamental question as to whether PMS is adding value to the organisation. In this article, I will be sharing some of my experiences and views in implementing PMS in various organisations.

Alignment with Organisational Goals and Objectives
I feel that PMS must be designed in such a way that it adds value to the organisation. Whether the organisation has objectives of focusing on productivity, or the organisation’s primary objective is to focus on the development of its talents, or the organisation wants to build an engaged work culture, there could be a primary objective as well as secondary objectives. If the organisation has a primary objective of building future-ready talents, the secondary objective could be to improve productivity for sure. So, HR professionals must understand the objectives of the organisation by understanding the business’s long-term and short-term goals and then design the PMS accordingly.

a. Organisation with Primary Objective of Enhancing Performance: This is true for most organisations, and more than 95% of the organisations would be focusing on this through PMS. In these cases, PMS may be more focused on the following, among others:

  • PMS must be able to identify high performers for sure while there could be mechanisms to identify talents with different levels of performance.
  • PMS also focuses on clear targets at regular intervals.
  • PMS could be more concerned about the results than the ways of achieving the same.
  • PMS would have a focus on goals and objectives with monitoring of achievements of the same while less focus on developmental inputs of talents.

b. Organisation with Primary Objective of Development of Talents: Mature organisations usually focus on the development of talent. These organisations would be focusing on means of achieving the objectives rather than going after the tangible goals and results. In these cases, PMS may be more focused on the following, among others:

  • Organisations may not have many levels of performance achievements through PMS.
  • PMS will have a thorough mechanism of continuous guidance to talents.
  • PMS will have a detailed mechanism to identify skill gaps and plans to mitigate the same.
  • PMS will be focusing on the behaviour of talents rather than performance achievement alone.
  • PMs will be focusing on potential of talents in terms of Leadership Competencies, Functional Competencies and how individuals are aligned to Core Values of the organisation, and not just their performance.

c. Organisation with Primary Objective of Enhancing Engagement Level of Talents: Mature organisations have realised that unless the talents in the organisation are engaged, the organisation will not be able to perform at a desired level. These organisations have been focusing more on team management and the happiness in the organisation. These organisations will also have a sense of humility in engaging with talents. In these cases, PMS may be more focused on the following, among others:

  • Engagement levels of team members with clear goals and means of achieving the same are incorporated into the PMS.
  • There are regular reviews on engagement levels through various review mechanisms.
  • Engagement level of team members could be a hygiene factor rather than one of the parameters of PMS.
  • The PMS will have more focus on enhancing team spirit within the organisation. So, behaviours exhibited during the performance period will also be focused.
  • The PMS will have more focus on identified Leadership Competencies required for the business success.

Regular PMS Cycle and Components
PMS is usually governed by various methodologies and principles. While not going into detail about these methodologies and principles, I have seen the following PMS cycle and components in Nepali organisations:

PMS Cycle Organisations usually start their PMS cycle from the goal-setting step to the consequence management step.
i. Goal Setting – Organisations have a Business Planning cycle which will give details about the tangible goals and objectives for the business along with Focus Areas to achieve them. This gets cascaded to Departmental (functional) levels finalising the KPIs/Key Results Areas for the department in any performance period. Departmental goals and focus areas are then cascaded to sub-departments until individual levels ensuring that there is a clear linkage of individuals’ KPI/Key Results Areas with that of the organisation.

ii. Regular Conversation – Most of the Nepali organisations do reviews of all levels (organisational to departmental to individual levels) at the end of the performance period (usually one year), while most mature organisations have started reviewing the performance achieved at half-yearly or quarterly periods as well. The main focus of the review is not only to check the performance achievement but also to provide guidance, direction and support by the supervisor to their team members. These kinds of conversations are usually documented and the summary of such regular conversations adds up to the overall performance level for the performance year. Further, some mature organisations have started conversation on a monthly/project basis as well. In these cases, performance conversation happens and many a times ‘Feed Forward’ is given to subordinates to prepare themselves for upcoming projects/responsibilities.

iii. Overall Performance Assessment – If there are regular performance conversations throughout the year, the Overall Performance Assessment becomes very easy to determine. This merely becomes the summary of all the regular conversations, and the results are clear without any confusion. If there are no regular conversations, there could be a scenario of confusion and dissatisfaction of PMS results to both supervisor and individuals.

iv. Personal Development Plans – Many organisations have a mechanism of Personal Development Plan (PDP) as a part of performance assessment conversation. Along with the PMS results, individuals’ PDPs are also finalised, which becomes a part of the Training/Development Plans for the subsequent years.

v. Other Consequence Management – Based upon the PMS results, there are many types of Consequence Management systems being practised by various organisations in Nepal. To mention some of the mostly used practices are as follows:

  • Salary Increment
  • Yearly Promotion
  • Performance Pay
  • Talent identification
  • Retention Bonus
  • Salary Revision
  • Other Rewards and Recognitions

PMS Components
Here I will be detailing most of the PMS components that Nepali organisations have been practising.

i. Key Performance Indication/Key Result Areas There must be SMART (Specific/Stretched, Measurable, Attainable, Realistic, and Time-bound) goals and objectives which are finalised at the beginning of any performance period so that everyone is clear about it. This will be the basis of planning and performing during the performance period. Some organisations just have a result to be achieved while others have results along with means of achieving the same clearly defined as a part of the goal setting. I have also seen in some organisations that there are clear objectives and then Key Results Areas are clearly defined to achieve them.

ii. Desired Behaviours Most organisations have started focusing on how the results have been achieved and how individuals have been behaving throughout the year rather than just focusing on the performance results. Organisations assess individuals on identified Leadership Competencies, Functional Skills, Organisation Core Values, or Organisational Identified Key Behaviours. It is important to set the parameters of exhibiting the desired behaviour at an initial stage only so that it is clear to everyone about the same. Some of the practices in Nepali organisations to assess this part are as follows:

  • Clear definition with examples clearly defined for all levels of performance which could be a guide to everyone on different performance parameters.
  • Some organisations purely assess based on the supervisor’s decision on the parameters.
  • Some organisations use customised psychometric tests.
  • Some organisations take feedback from all stakeholders to arrive at the performance levels.

iii. PMS Modality Many of the Nepali organisations have a mix of Performance and Behaviour assessment to arrive at the final PMS achievement result. There could be a 50:50, 60:40, 70:30, or 80:20 mix of performance achievement results and behaviours exhibited throughout the performance period.

iv. Performance Levels Performance goals and objectives are usually segregated into 5/4/3 different levels on each KPI/KRAs while the overall PMS scores are also finalised in similar different levels. These will be different based on the objectives of organisations from PMS as detailed out earlier in this article.

v. Other Components There are other components being used as a part of the PMS while some of the other major components include the following:

  • Major Personal Details
  • Personal Development Plans
  • Career Aspirations of Individuals
  • Mobility of Individuals
  • Performance – Potential Matrix

Most of the Nepali organisations have been practising PMS without aligning with organisational objectives and goals. The modalities of PMS will differ based on the life of the organisation to maturity of people-related systems and practices. HR professionals must understand the business well and then recommend regular revisions in PMS support business in meeting its objectives. It is also important for HR professionals to not only focus on managing individual talents within the organisation but also focus on institutionalising various methodologies to plan and manage organisational performance as well.

The author is Human Resources Professional; he can be reached at

Scroll to Top