Risk & its relation to Performance Management

By Nithin Prasad

Objectives

Identify the risks, the management carries if Performance Management is not implemented. Identify the risk on the management, if Performance Management is implemented. Categorize the risks.

Definitions

RiskA possible source of uncertainty or the adverse effects the organization may have to face due to various factors. In this case it is Performance Management (PM).

PerformanceDefining the characteristics like behaviors, tasks and situation with regard to a person under which the results are achieved.

Performance ManagementIs the Process where by current performance in a job is observed and discussed for the purpose of adding value to that level of performance

The need for PM

Its an approach to manage people, Plan goals and objectives, Measure and provide feedback and recognition. To motivate people All done to realize peoples maximum potential. The mutual benefit is the holistic idea.

The management carries RISK

There are mainly 3 classification of risk, internal risk, external risk and catastrophic risk. But from PM,. 2 types of risks have been identified.

Risk from People perspective Risk from Organization perspective

Risk is categorized as High risk (H), Low risk (L) and Middle/Moderate (M) risk, based on severity.

Risk carried by not implementing PM

On people perspective No role clarity - no developments in job (H). No improvements in ASK Poor T & D activity (M). No recognition - Poor compensation, rewards and benefits (H). Operational risk (H). On organizations perspective Financial (profit) loss risk (H). Hiring and succession planning risk (H). Market loss risk (H). Legal risks (H). Corporate value loss (H) Credit (glory) risk (H). Increased employee turnover (H).

Risk carried by implementing PM

Organizational perspective People perspective Financial loss risk (M). No co-ordination (H). Fear, frustration-Conflicts Hiring and succession planning risk (L). (M). Legal risks (M). Ego / self esteem (L). Stress or over burden (M). Corporate value loss (L). Market competitiveness (L). Operational risk (M). Credit risk (L).

Conclusion

Risk is inevitable, there is no activity without RISK. Business world is complex, unpredictable and uncontrollable. Risk cant be neglected, but can be negotiated by managing the risk. It is all about planning and decision making. PM helps to manage risk.
[objective setting, identifying performance measures, planning improvements and action planning]

Thank you