Singapore - In poor economic times, HR needs to have better leverage on performance management systems (PMS) tools, says Michael Drawhorn, market leader for Southeast Asia for Towers Perrin.

Speaking at the recent Human Resources Insight session, Drawhorn says the current crisis gives HR an opportunity to strategically apply PMS in order to achieve tangible business impact.

For instance, Drawhorn says this crisis can provide HR pracitioners with the opportunity to re-evaluate how their organisations set targets, ensure a structured linkage between PMS and pay programmes as well as reinforce PMS as a key business management tool.

However, Drawhorn warns HR practitioners not to set soft targets just because of a lagging economy. "Performance management is about sharing the rewards when we do well, sharing the risks and sharing the downsides when we don't."

In a Towers Perin Comp in Crisis Pulse survey 2009, it found that 63% of companies say the economy has had an impact on their annual incentive goal setting approach. About 36% of companies say they have made or are considering making changes to their LTI programmes. Out of this group of respondents, 44% have changed the threshold, target and maximum payout levels, while 41% are changing the mix of long-term incentive vehicles.

In addition to rewarding employees, Drawhorn says companies should also think about non-financial rewards which are often drivers of employee engagement. Some of the non-financial drivers Drawhorn lists include training and career development, work flexibility, special projects and temporary assignments to critical roles.

Adding to this, Drawhorn asked, "Particularly when you have less money to spend, how exactly do you use some of these non-financial rewards to identify your top talent, reward them and actually use them as a driver of employee engagement?"