Companies take numerous initiatives to ensure higher performance. The role of HR and HR systems has become indispensable for companies to ensure performance and survive in the competitive world. The role of HR systems of public sector units (PSU) in India is equally important in establishing a performance culture. Government has taken numerous initiatives to ensure a performance culture among the PSU’s. The Memorandum of Understanding (MoU) system is an age old process in India which underwent numerous modifications over the years and has ensured greater involvement of people with higher individual and organisational performance. The paper elaborates the concept of MoU system and its implementation approach in Indian Central Public Sector Enterprises (CPSE’s). The paper uses secondary data to identify the relation between the MoU, organisational performance, and its employees. The paper provides a new thought on the concept of MoU as an HR process based approach which enhances individual performance. The paper discusses a model for initiating performance based focus in organisations.