Designing Performance Management Process

INTRODUCTION

It can be argued that ‘performance management process’ (PMP) is one of the most critical, if not ‘the most critical’ HR processes for any organization. This article is an attempt to comprehensively capture the design dimensions and key considerations related to PMP.  It will provide a conceptual framework for organizations who wish to review or redesign their PMP.

This article is organized under following main sections

A.      What are the attributes of an effective PM process?

B.      What should the PM process measure? : Defining the elements of PMP

(Elements: Basic Job Responsibilities, Goals & Objectives, Qualitative Attributes and Capability and Potential)

C.      Choosing the main guiding assumptions behind PM process

D.      Operationalizing the PM process elements

E.       Integrating the PM process elements for holistic assessment

F.       Additional aspects related to PM design : Relative ranking and pre-requisites for effective PMP roll out

This article covers discussion about many of the key dilemmas and issues faced in PMP design. A few examples include:

-          Should the PM process measure qualitative aspects of performance? If yes, how should these be integrated with the quantitative aspects of performance?

-          Should the PM process include measurement of potential?

-          Is it possible (and desirable) to have a PM process that is entirely objective and quantifiable?

-          Is it a good practice to have weights associated with goals? Is it desirable to use standard goal templates?

-          Is forced ranking a good tool of Performance Management? What precautions should be taken while implementing forced ranking?

-          Is it worth investing lot of efforts in training supervisors on having effective appraisal discussions?

It also covers examples of PMP practices adopted at organizations such as Accenture, Unilever and Marico.

Please use this link to download the PDF version of the article

http://www.scribd.com/doc/76821702

So here is looking at you, mirror ……..

Couple of weeks ago I had an opportunity to attend a HR Conference. Many senior and accomplished HR leaders spoke about the ‘path breaking’ and ‘strategic value adding’ work that was keeping their teams busy. There is no doubt about the fact that there are many HR functions in India that are doing fantastic work – but every time I listen to these speeches and presentations, I can’t help but feel that we HR professionals are generally in a great hurry to pat ourselves on the back. Quite often we are very happy and content with the high funda, glamorous sounding work that we do (‘Organizational development, leadership pipeline, culture transformation, competency based HR, talent stewardship, strategic HR , HR analytics’ are the a few of the perpetual favorites with the presenters ) – without really asking honest questions about the true impact that we have on people and organizations. While sitting through one long presentation on Strategic HR, I started make a list of some basic but important things that we as HR functions most often fail to do well. As I went on adding items to the list – I was amazed by the paradox – these lacunae indicate a significant dissonance with the professed HR principles. We seem to really struggle in translating these principles into action. As you can see below – these are not glamorous and earth shatteringly strategic HR issues – but are really basic things, which if handled well, can certainly make a great difference to our organizations and people. The quick list that I came up with is given below – hope it will help all of us introspect a bit and improve our real impact.

(I must add a caveat here – I feel that the most of the IT / ITES organizations do a better job on majority of these aspects because of the well defined processes they have to manage the large scale. Hence the list below may not apply that well to these organizations. )

Recruitment and selection

1.      Dysfunctional recruitment websites – In spite of so much hype about impact of internet, social media etc., the recruitment sections of the corporate websites are often non functional. Many organizations do not have a system of mining the uninvited CVs received in a meaningful way. Not even one percent of hires come through these ( zero cost ) routes.

2.      Position briefing during recruitment - Briefing a prospective candidate about the exact role, the role context and details of compensation and benefits the organization offers is often not done well. Due to this many prospective candidates are unable to take a considered decision about the role and new joiners are often in for some nasty surprises related to compensation and benefits.

3.      Tedious and redundant application blanks – Many organizations have application blanks that run into 4-5 pages and have all kinds of philosophical and metaphysical questions. While the candidates spend lot of time in filling this all up, there is no structured process to use this information. The selection panel also often ignores this information completely.

4.      Ambivalent use of psychometrics in selection – Very few organizations have a meaningful and clearly thought through way of using the psychometric tests. Most often, there is no clear thinking about how exactly to use the information generated by the psychometric test – nor are there adequately trained employees inside the organization who are calibrated and aligned on use of the tool.

5.      Giving good career opportunities to internal talent first – In spite of all the discussions about HR being a talent custodian – most organizations fail to offer the new roles to worthy internal candidates ( because the bureaucracy and ‘turf guarding’ behavior comes in the way ) and resort to the lazy option of hiring from outside.

Induction

6.      Poor functional induction - If we look at the three components of induction – organizational (history, policies etc.) , social ( getting acquainted with all relevant  people ) and functional ( role and function related ) – the functional induction is the most critical element required to make the newcomer productive with speed. It is also the element that requires specific planning and preparation. But more often than not this is the least planned and weakly executed element.

Learning and Development

7.      Inability to leverage ‘non classroom’ development approaches - Most of the organizations now stress upon the importance of ‘non classroom inputs’ in their learning philosophy. But very few have well developed processes to leverage these avenues. (Admittedly these avenues ( i.e. coaching, live projects, communities of practice etc.) while more powerful are also more difficult to develop as compared to organizing classroom training programs. But then that’s the acid test for real ‘ good HR functions’ )

8.      Failure to organize learning and knowledge resources - One important ‘ non classroom’ learning avenue is books and journals – so while many organizations spend lot of money in buying books and subscribing to periodicals – very few have a well administered library which can enable easy access for employees.

9.      The ritual of development center ( DC ) – Most of the organizations do a very poor job of developing employees who do not have professional qualifications (CA, MBA, Engineering etc.) To make the matters worse – the high performing non managerial employees who do not have professional qualification are often put through a ritual of ill designed development center. So an outstanding Sales professional who has enviable track record is put through the DC and he comes out with very poor ratings because he is just not comfortable with English , a brilliant software analyst comes out with poor ratings because he is an introvert and does not participate in the group discussion. These aspects -  (a) How to facilitate development of employees that do not have a professional qualification and (b) how to meaningfully ( and whether at all ) use interventions such as development centers  really need a complete rethink.  

10. Wasted investment in low impact behavioral training –  These is enough evidence and expert opinion available now that clearly shows that deep and enduring changes in an individual’s behavior can only be brought in through very powerful, personalized and sustained interventions. We must accept that a two day classroom training program by an average trainer on ‘ How to be more innovative / assertive / open to change’ etc.  is not going to have any meaningful impact on people. We would be better off in pooling all such investments and launching fewer but highly focused and deep interventions in collaboration with leadership team of a given workgroup.

Performance Management

11. Having a judicious mix of qualitative and quantitative factors in performance evaluation – we would all agree that accurate performance evaluation needs to be a very judicious mix of quantitative ( goal specific ) aspects and qualitative ( how the goals are delivered and what kind of other contributions are made to the organization ) aspects. Most organizations fail to achieve this – they either have a process that only focuses on quantitative side or have a very mechanical formula driven metric to factor in both the aspects. In both these situations, the most critical aspect of PM process, good managerial judgment calibrated by holistic data and multi rater inputs is completely lost out.

12. Appropriately moderating personal biases of influential senior leaders – while finalizing performance ratings and promotions – In some organizations a few powerful leaders often overshadow views of all other leaders and significantly influence the performance ratings and promotion decisions. The set of people who get a ‘star performer’ status during these conditions are often unable to retain it when their sponsoring leader moves out of the organization. And many other employees truly deserving the recognition end up getting disillusioned ( and often leave the organization ). This is certainly not a desirable situation for the organization.

Compensation and benefits

13. Extremely complicated and opaque financial metric for variable pay schemes – In theory, the variable pay programs are supposed to help employees align their efforts to the organizational objectives. But very often the metric chosen for organizational performance are so complicated and poorly communicated that the employees have no idea about exactly how their variable pay gets calculated ( and hence the question of aligning the effort does not even arise )

14. Timely and proactive review of policies – Ideally the benefits related and administrative policies should make employees’ life easier and facilitate business performance. But in reality, policies get modified only when employees make a lot of noise about the need for corrections and that too after a long, bureaucratic review process.

Organization Development

15. Controlling damage caused by unsound behavior of some of the ‘ top performers’ – In principle the ‘ Organization Development’ function is supposed to be the custodian of the culture and long term vitality of the organization. But we often see organizations where ‘ top performers’ are allowed to get away with lot of unsound and toxic behavior ( which can range from bullying, biased and rude behavior, creating political coteries to hyper competitive behavior etc. )

Customer service

16.  Clearly informing the internal customers who does what in HR department and also letting them know what are the feedback mechanisms - Prompt and high quality service to internal customers is very important for success of HR function. However very often the HR function does not take any efforts to let the employees know who in HR function is responsible for which activities. Employees are also not made aware of the mechanisms that they can use to provide feedback or escalate issues.

I am sure I have missed many other aspects which we as HR functions can improve upon. So please do share your views and add to the list. It should help all of us raise our game …..

Sacking of the CEO and ' the Golden Rule'

“The CEO shown the door” … “Mr. ABC sacks the CEO” … We saw many such headlines in last week’s business newspapers. When I was reading these news items, several thoughts went through my mind – I was reacting to the news as an individual and also as a HR professional. What I am writing here is NOT specifically about last week’s story – but only about thoughts triggered by it.

First things first – I fully believe in importance of ‘a culture driven by strong performance’. I believe that the owners / board members of an organization have a responsibility to ensure that the organization is led by capable leaders, who can deliver superior stakeholder value. It is the owner’s / board’s prerogative to reprimand the leaders – even change them if need be. All of us know that in today’s ( to use the most clichéd but true phrase) ‘hypercompetitive, ever-changing, interconnected and globalized’ business world it is extremely challenging for any business head or function head to deliver outstanding performance year after year. Quite often, factors completely outside the organization’s control significantly influence the business performance. This is not to say that changes in business leadership should not be considered if the business or function has underperformed – but the only point I am making is that adequate balance and respect should be shown while affecting such changes.

When I read those headlines – my first thoughts were with such well regarded leaders ‘who are asked to step down’. More often than not, such leaders would have typically devoted a large part of their lives (and life energies) to the organization. They would typically have made significant and long lasting contributions, influenced the organization’s direction and culture, built strong teams and groomed a set of leaders. Of course they would have seen their share of failures and mistakes – but there usually won’t be any doubt about their intentions and dedication towards the organization. I can’t even imagine how one (and one’s family and well wishers) would feel to read such disrespectful headline as the ‘one line’ public conclusion about one’s career spanning a few decades. (Sensational and distorted headlines make the matters worse)

This made me think about the ‘Golden Rule’. So much has been written about leadership, people management capabilities, winning the heart and soul of employees. Few million hours and dollars must be getting spent on discussing, debating and training people on these matters every year. I have often felt that if organizations and managers try and follow the ‘Golden Rule’, i.e. ‘TREAT OTHERS AS YOU WANT TO BE TREATED’ – majority of people issues will disappear and quality of people management will improve dramatically. (The ‘Golden Rule’ is a major subject in Philosophy and Religious Studies http://www.jcu.edu/philosophy/gensler/goldrule.htm .I strongly believe that this single principle, with necessary caveats, has very high significance for HR as well as people management – but that’s a subject of another post J  )

So what can the organization do when it needs to let go of the senior leaders, who have made stellar contributions in the past but have not performed well in their current roles. Situation also could be such that the incumbent leader may have actually performed at satisfactory level – but the organization has now found a potential game changer, to whom it wishes to hand over the reins. I think in such transitions the organization needs to ensure that the existing incumbents are treated with appropriate sensitivity, respect and their contributions are duly acknowledged. This should be done in a manner clearly visible to employees, associates as well as public at large.  In terms of specific actions, it could mean – the senior most leader ( say the Chairman ) personally addressing the entire management team in presence of the outgoing leaders, a very clearly worded press release, efforts to ensure that media coverage is not disrespectful and so on. Not only is this the ‘right thing to do’ – but it also has a tremendous impact on the morale and commitment of the other employees. With appropriate communication, the employees will largely accept and respect the management decision to bring in a change in leadership. But they will never be at peace if they see that the organization has been ungrateful and disrespectful to a well respected, long tenured leader. If this happens, employees will get extremely cynical and they will lose faith about fairness of the organization. Even good performers will start thinking – ‘this may happen to me tomorrow’. No organization that is interested in winning the heart and soul of the employees can afford this situation - and should keep this mind when dealing with separations.I know of an incident where a set of middle to senior managers left the organization because they felt that their leader was treated in an unfair manner.

What do we learn from such incidents, at a personal level? While we continue to put our hearts and souls in our jobs and careers, we must not lose the perspective that there is more to life than the job. We must tell our families and friends that while our career is a significant part of our life, it is not equal to (or more than) our life. This also tells us that we can never rest on our past laurels or get too comfortable in same role or organization. We must constantly invest in ourselves, ensure that we are growing in capabilities and the range of roles and industries we can work is ever expanding. We must also focus on achieving financial security. While work certainly should be a significant source of fulfillment; we must not forget to cultivate and invest in those hobbies, interests that provide us unadulterated joy. It’s all about balancing two contradictory forces simultaneously – on one side taking lot of efforts to build a successful career and on the other trying to minimize our vulnerability to vagaries of organizational changes.