Redefining Performance Management System

One of the positive impacts of covid19 on performance management systems is that organizations are converting the annual process to continuous review and feedback system. During the lockdown, the majority of employees were working from home, and it was necessary for managers to keep them engaged, motivated & productive. Initially employees and managers were overwhelmed because of constant calls and reviews from managers and seniors. Daily, weekly check-ins were too much, however, after a few months it was a routine for all. Managers and employees learn how to manage this. Continuous reviews and feedback became a practice. Employees who were not comfortable became stressful and few left the job because of stress. 

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Organizations realized that this needs a balanced approach. My hypothesis is as under:

“Pandemic and consequent lockdown has forced organizations to review their performance management system.”

“They are focusing more on continuous review and feedback mechanisms which helped them to reinvent the performance management system.”

So, what has changed?   

Performance management became the integrated part of the business processes (and not a HR process)  in organizations. Organizations started working on following five areas,

• Continuous Reviews (Goal and reviews, earlier so-called PMS)
• Continuous Feedback, (Feedback and development actions)
• Continuous Recognition, (Reward and Recognition)
• Timely Reprimand, (Consequence Management System)
• Learning and Development, (Overall Learning & Development plans)

Not necessary, above all is one approach and mechanism, but different approaches encompassing all together for one purpose. Systems and practices may be different but contribute to overall performance management. 

This brought a need of 

• Transferring the HR Process to Business Process,
• Digital platform to integrate above 5 areas,
• Creating the culture of accountability and ownership,
• Educating and Empowering managers to manage their teams. 

Of course, this is not rocket science. Most of the time, we get carried away with technology and digitalization and think that implementing it will solve all your problems and your world will be perfect. Technology is the media to record; it helps you to analyze, review and retrieve the data whenever you need it. However, it is not the replacement of human interaction while reviewing & feedback. 

This is not possible without the proactive role of managers by owning the process. Managers have to change their mindset of management towards leadership. HR role is to facilitate the culture of continuous learning for managers and employees. In this process managers have to learn the approach where employees don’t get overwhelmed by the reviews and feedback. They should see the benefit by participating in the process. Employees may perceive this approach as micromanaging by managers. They may perceive the overall process as being watched too much.  I came across the approach, “tight, loose and tight.” 

Tight: Tighten the goal setting, (even flexible, changing by every month) process discussing ambitious goals (SMART) without compromising on the quality of goal. 

Loose: Give the freedom to work. Let employees decide how they wish to achieve those goals in a given framework and as per expected behaviours. 

Tight: Again have a review and feedback session seriously. Appreciate and acknowledge their contribution and achievement however understand the reasons for non achievement and  give them critical feedback directly without sugarcoating it. 

As a leader, your empathetic and compassionate approach will help you to run the process successfully.  

(Opinions are purely personal & does not represent my organizations, current or past) 

Author's book are available on Amazon, Flipkart, Pothi and BookGanga. Income from books is used for social cause. 

The missing link in PMS

Future of Performace Management

My interview published

Future of Performance Management System

What is currently missing in the way overall employee performance is being managed?

Most of the times, the performance management system is just a ritual. This is because the missing part of the system is “purpose”. Manager and Employees have their own perceptions about the performance management system. Their “purpose” is to compensate their employees. Hence higher rating is always perceived for a higher merit increase. It is leader’s job to give the larger purpose to the system..i.e. it is not just for the merit increase but recognizing employee contribution and his development areas to be a better employee in the organization.

On the organizational level, this should be the integrity exercise not just to complete the process and run the yearly exercise.

Second missing point is the “relevance” of such systems to the current business scenario. The PMS system is established and very rarely it is reviewed periodically. Performance is always important, but the actual results are always considered rather than how these results are achieved. I am speaking about behaviors. Do we really consider the right behaviors and values while evaluating employees?

Third missing point is “the way it is conducted and communicated.” Are managers trained properly to give the right feedback? Are they giving the feedback based on the events and circumstances? It should not be an annual ritual. Performance Management System should be one of the milestones in the journey of the employee lifecycle.

Fourth missing point is misinterpreting performance to the potential. The general tendency is to identify the talent based on the performance instead of potential. Hence, I always advise delinking the performance management system. Compensation and identifying the talent based on performance.

Given that a company’s workforce now has a significant proportion of virtual and freelance workers, how should performance management include them?

I will suggest having regular business performance meetings, department performance meetings and then individual feedback sessions for team regularly. Business performance meetings can be monthly and quarterly individual feedback sessions. During such meetings focus should be on actual performance and peer learnings.

During periodical feedback sessions focus can be on “how” part on behaviors and development needs and employee should get the sense that managers are supporting them instead of identifying faults.

Managers need a lot of training on coaching, feedback giving and other aspects of performance management.

What are employees, managers, and decision-makers looking for to make performance management more effective?

I think it is about “expectations management”. Employees and managers including decision makers have their own expectations from each other. If you make these expectations clear, then effectiveness will be there. This can be done with more concrete goals (SMART-objectives), aligning goals to the common purpose of the organization and job purpose; Qualitative feedback about the job; and trying to put the expectations well documented.

Transparency and openness is the key to any effective performance management system.

What are some of the new things being introduced in Performance Management that are working/not working?

It is evolution. There is no rocket science. It should not be the copy paste system. It should be relevant and aligned with your business needs. Some trends are as under:

• There are companies who are eliminating the bell curve. Still, people are rated but not calibrated in force rating.
• There are companies who are focusing more on development discussions instead of KRAs and KPIs. KRAs and KPIs are still set up but these are not an integral part of the jobs now.
• Companies are delinking performance with the potential and running separate talent calibration sessions for identifying the talent, (HiPos, TiPos).
• Few companies have in fact total stopped the annual appraisals for a merit increase. Compensation is paid based on the matrix which is based on role, comp ratio with a certain percentage of appraisal rating.

If not periodic appraisals, then what & how?

The word” Appraisal” is not relevant today. It is an evaluation of the performance based on “what” (achievement) and “How” (behaviors, values, purpose). With this understanding, it can be any time as an organization deems fit. However, it should be the right time for the feedback.

I always suggest that you can have business performance reviews monthly and half-yearly formal feedback sessions with employees.

Informal feedback sessions and coaching sessions should be regular and this is one of the vital responsibility of people managers.

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Related Resources:

• Time to review your performance management system
• Compensation….Give me more…but why & how??
• Do you have your PDP, IDP?
• Feedback should not be like GSM

Time to review your performance management system…

“You are asking employees to be collaborative and at another side everybody in the organization is assessed based on their individual targets. Where individuals are more focused towards their own targets, how can they be collaborative. In fact, “my targets” feeling is actually detrimental to team spirit.” One employee was challenging his supervisor during annual performance evaluation meeting. Superiors are superiors and they have explanation for everything, but when they don’t have any valid justification, they refer the matter to HR.

The supervisor also referred the employee to HR. When employees went to the HR Manager, she actually had no explanation either. The performance management system was established in the company almost few years back on the recommendation of some top consultant. When the system was implemented the circumstances were different, however there were no changes in the performance management system.

Above story is common in corporate world. Almost everybody follows the similar performance management system, same KRA and KPI system; based on “What should be achieved”. Some organizations add the element of “How it should be achieved” by introducing some competencies, capabilities and behaviour where they make the system more equivocal. At the end of the year. Off course they also don’t forget to classify their employees in forced distribution. By doing this all, they don’t even consider the nature of their business. At the end of the year, it becomes just one of the rituals and tool for giving salary hike to beloveds in the hand of line managers. You can see the examples where business is not doing well, but employees in team are rated excellent. Most of the times, HR is clueless as usual. Line managers are more smarter than HR to adjust any HR system as per their convenience.       

Deloitte consulting had published the research on global HR trends and clear cut assumption is related to performance management. It says,:    

“Today’s widespread ranking- and ratings-based performance management is damaging employee engagement, alienating high performers, and costing managers valuable time.

Only 8 percent of companies report that their performance management process drives high levels of value, while 58 percent said it is not an effective use of time.

Leading organizations are scrapping the annual evaluation cycle and replacing it with ongoing feedback and coaching designed to promote continuous employee development.”

We need the system where employee would be evaluated but also be fairly evaluated. However the system should be in align with your organizational business and culture. If your business needs more teamwork and collaborative thinking, you may have to choose the combination of team based and individual based targets and complimented by bahviour, but if your business needs “daily bout” like FMCG segment or media marketing,  you may choose to have more focus on individual targets.

I am not saying the whole performance management should be replaced, but we need to take the holistic approach as per the business need and cultural context of the organization.   

Also read Performance Rating Or Quota System....

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