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4 Idiots Of Performance Management

Updated: Sep 18, 2022

While organisations are instinctively working out newer models and practices to retain and attract talent today, it is evident that there is a need to evolve the approach drastically…


FEB 23 2022

In the process of reviewing the ‘as is’, we are perhaps missing out on the ‘need to be’ outlook. The primary purpose of the Performance Management System (PMS) is to provide feedback, improve work and deliverables and help make data-driven decisions for the future. A management system that can only ‘manage’ holds lesser strategic value in this digital era. Moreover, whether we like it or not, the entire process is susceptible to managers’ bias, preconceived notions, stereotypes and influences. An organisation that can smoothen and integrate these 4 idiots can reap the requisite benefits of performance enhancement. The following are the tenets that go a long way in gauging, shaping the talent and making more informed decisions for the company’s future:– Periodicity Review to be ‘As & when needed’ The appraisal months viz. Dec-Jan or Mar-April wells up the ‘Mere Karan Arjun Aayenge’ (MKAA) feeling across the board. Every year like Rakhee (Bollywood actress), we expect ‘this year may be the one when I’ll be recognised for all the efforts’. This once-a-year process has turned more into a ‘Report-Recall, Re-assess & Allocate (R3A)’ process. Instead of being used as a review and development tool, unfortunately, we are using it as a tool to justify and allocate resources. The companies evaluating performance using the Management By Objectives (MBO) model even today surely need to act swiftly to address the transition in the work canvas and employee expectations. Though several companies have implemented models like OKR and better platforms, the inadequacies of a proper evaluation process still prevail. survey states, ‘Some 90% of performance appraisal processes are inadequate.’ The BIG QUIT The BIG QUIT is an opportunity for us to re-evaluate and disrupt the age-old HR practices. The entire belief system that one’s life is ‘settled with a job’ has been shattered. The PMS approach is not serving its purpose for several reasons:– We are still reviewing work as committed or planned despite the VUCA environment and evolving business needs The negative impact on the morale and performance is evident instead of a positive impact year on year (Half of the executive surveyed said that the evaluation and feedback system have no impact on motivation or performance instead it has a negative impact) Both workplace and employment ‘as we know’ has radically changed to Hybrid and Virtual instead of in-person The evaluation has limitations like Halo Effect, Recency, Relativity, Preference, Rock star effect or Role Bias, etc. Setting the process, running and moderating the final scores is a time-consuming process that can better be utilised for more valueadding work Other problems with appraisal include poor execution, the infrequency of communication, unclear & non-datadriven criteria defined, lack of integration with compensation and development, missed opportunities for learning and individual scores being more than the team score, etc. While organisations are instinctively working out newer models and practices to retain and attract talent today, it is evident that there is a need to evolve the approach drastically as there is a shift of power from the hands of an employer to the employee. Fairness & Communication To Reinforce perceived fairness over ‘ongoing dissatisfaction’ More often than not, employees feel that the appraisal system is like match-fixing, only the managers’ favourites will get a good rating, irrespective of their achievements and hard work. Though it is hard to make the process defect-free, we essentially need to enhance the ‘fairness quotient’. People who perceive the system to be fair also state the process to be effective; it is the eye-of-the-beholder aspect’, as per McKinsey. The chances of being perceived as fair can increase with 3 fundamental practices:– (a) Link employee goals with business priorities and maintain strong flexibility (b) Invest in coaching skills of managers (c) Reward the stand out performance for some roles while also managing converging the performance for others. Good communication backed by timing and technology adds to how an employee experiences and perceives it. A survey of executives revealed, “58% believe their current performance management approach drives neither employee engagement nor high performance. 90 minutes of managers’ time can enhance the quality of subordinates’ work for the next 2 weeks for some 80 plus hours”. This has been implemented by some top companies. GE said they could drive 5 times productivity in the past 12 months and sourced several profitable ideas through these discussions. Adobe saved 80000 hours of manager’s time and saw a 30% reduction in voluntary attrition or turnover too. It is no surprise therefore that companies like GE, Adobe, and Deloitte are getting rid of PMS and moving to One-on-Ones. With the usage of the right tools and methods, we can improve efficiency, create a fairer process and enhance the overall ‘Trust Quotient’ - the number one stickiness or bonding factor. Quantifiable & Qualitative Data is the king and Technology is the Queen Despite all PMS pieces of training and awareness drives to set SMART goals, quite a few KRAs are on average still not well supported by measurable metrics or are subjective. The surprising part is even when the data is supportive of higher performance, the leader has a choice to rate it as ‘meeting expectations’ by using arguments like ‘it was easy to do’ or emphasizing some missing traits. Whether we define and measure ‘apple to apple’ or make it qualitative or specify both can provide clarity on ‘what matters’ and how one can grow in their career. To create better quality in the evaluation process, we can consider crafting the tenets after some reflections, as shared by psychologist Susan David from Harvard. Job Crafting involves looking creatively at your work circumstances, however difficult, and finding ways to reconfigure your situation to make it more engaging and fulfilling. Here are a few questions for you to clarify and craft:– Q. What activities do you find most engaging at work or outside your job? Q. Who all do you interact with at work? How do these interactions help you? Q. Is there a professional relationship or an opportunity that you are yet to explore? Q. Why do you do ‘what you do’? Does your job incorporate values that are important to you? If not, how could you make this happen? The future belongs to companies that can curate processes and adopt technology to meet the evolving employee needs making it more fulfilling a journey for both. As per the Korn Ferry, December 2021 report, “40% of employees are looking for a job actively; 46% feel less connected to their companies versus the last year; 49% will turn down the offers if the company mandated their reporting to office full time.” The Hybrid and Virtual mode has created a unique set of challenges for HR. The above study emphasizes the need to adopt technology that aids flexibility and adds quality to the process. Performance & Potential Over Curve Employees need to feel valued. The Bell Curve is nothing but a ‘Rank & yank’ approach, as termed by Forbes. There are more problems than solutions in fitting employees’ performance in a bell curve. Adopting normal distribution creates a divide and doubts in the minds of both employer and the employee. Coupled with an increased lack of connection, higher burnout, stress, and grief over the recent years, it has only resulted in disoriented performance and lower morale. The human performance or potential cannot be defined and limited by a curve, definitely not a normal distribution. Is there an alternate approach? Let us take The Power Law Distribution which is also known as the Long Tail goes by the principle that a very small number is a low performer; a large chunk is good & a few are Hyper high performers too. A similar approach has been shared by McKinsey as the L-Profile which is also evident from what Bill Gates used to say, that there are a handful of people at Microsoft who made the company, if they left there would be no Microsoft. Would the 80-20 or L Profile approach be a befitting, alternative? an example of cricketers, there are so many of them who fall in good category and some who have not been able to create any mark, while a few names are to reckon with. A new approach that allows us to gauge an individual’s character and traits like adaptability, emotional agility, and empathy are much required. With a shift of focus to incorporate and develop the 4CsCollaboration, Connect, Clarity & Character, the review mechanism can serve its objectives and truly align to its purpose. Here’s the question we need to ask – Are we willing to evolve or radically change this process & be double prepared for the future? Is your company ready and can you make these 4 idiots come together all at once or one at a time? Such disruptive times are an opportunity to evangelize HR practices across corporates. Most disdain the Talent Management process and owners dread it too, it is time we change this.


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