Performance Management – Fundamental Problems & Key Trends 2021 0

Performance Management-Fundamental Problems & Key Trends 2021
Pre-COVID-19 performance metrics are no longer fit for purpose in the post-COVID world. Thus, revising and restructuring certain employee policies like Performance Management becomes extremely important in order to adapt to this post-pandemic new normal.

This new post-Covid era presents an opportunity for companies to rethink their position in the market, revise goals and future plans, and has motivated us into creating more tailored responses to workplace challenges, intending to shape the employee experience. Revising and restructuring certain employee policies like Performance Management becomes extremely important in order to adapt to this new world. This will aid in better management of the employees by developing a deep sense of understanding and trust amongst the employers and the employees.

Employee performance management isn’t a new concept. Performance management has evolved in many ways over the twentieth and twenty-first centuries. Over the years, the focus has shifted from operational efficiency to personality-based performance appraisal to appraisals focussed on goals and objectives (MBO) and continuous evolvement thereafter to meet the needs of the organisation and industry at large.

In 1954, Peter F Drucker introduced the term ‘Management by Objectives’ in his management book – The Practices of Management.

MBO at its core is a management practise which aims to increase organizational performance by aligning goals and subordinate objectives throughout the organization. As a concept, it is a strategic management model with the aim to improve organizational performance by clearly defining objectives that are set jointly after a thorough conversation agreed upon by both management and employees. Employees should be encouraged to set goals based on their areas of interest and improvement. This gives employees greater motivation since they have greater empowerment, therefore increasing the possibility of achieving larger organisational objectives.

MBO at its core is a management practise which aims to increase organizational performance by aligning goals and subordinate objectives throughout the organization. Click To Tweet

Post that in 1992, Dr. David Norton and Dr. Peter Kaplan introduced the ‘Balanced Scorecard’. This method holistically looks at an individuals’ contribution, beyond just operational aspects. It includes all 4 quadrants: learning and growth, business processes, customers, and finance. As you move up the organisational ladder it is important to take into consideration all these 4 primary functions of a business.

In this day and age, what is gaining prevalence is OKRs “Objective and Key Results” created by Andy Grove at Intel and taught to John Doerr by him. These are used to measure bold, aspirational goals and are moonshot in nature. These are transformational in nature – significant, value-adding, needle-moving goals and not typically linked with R&R. These are long-term and can range up to 2-3 years and preferably not more than 2 goals at a time. In less than 5 decades, Elon Musk staked a rock-solid claim to being a legend in setting lofty goals. The way he revolutionized space travel through SpaceX, makes humans an interplanetary species. He has also shown incredible resilience to continue despite dark days to achieve his lofty goals.

Employees should be encouraged to set goals based on their areas of interest and improvement. This gives employees greater motivation since they have greater empowerment, therefore increasing the possibility of achieving larger organisational objectives.

Also Read:  Beating Burnout in a Remote World

Taking an excerpt from ‘Measure What Matters’; a book authored by John Doerr, In Google, they often set goals that are just beyond the threshold of what seems possible following the OKR framework, and surprisingly, they accomplish their goals. Like the case of Google to reach 20 million seven-day active users, failed miserably before they could finally achieve it.

Performance Management-Fundamental Problems & Key Trends 2021 2

Different organizations tweak these processes based on their requirements and direction.

A fine example of this has been seen in sectors like retail. Tesco brought in the 5th quadrant to the BSC model – call it ‘The Corporate Steering Wheel’. The underlying model remains the same with the incorporation of the 5th Community Perspective. Throughout all their businesses across the world, performance is measured through the Steering Wheel. This helps to maintain focus and balance in what counts to run each of the businesses successfully.

The way performance gets quantified has evolved over the years. However, the underlying philosophy remains the same –

  1. Everyone deserves to know how they have performed and what is expected out of them in the performance planning process. Performance discussions need to be conducted in an ongoing and continuous manner, to provide constructive feedback to employees on what went well and what could be better.
  1. Organisation goals and strategies need to be communicated in a fair, transparent and objective manner to all employees across the employee hierarchy. This is one area for leaders to focus on and devise what can be done to address this efficiently.
  1. When Rewards & Recognition come in the way of employee performance and become a cause of comparison, it is often seen that people get disappointed not due to their individual performance, but when they get to know that someone else has been rewarded better. Leaders can address these perceptions by being more open about the compensation and rewards strategy followed within the company.
  1. Feed Forward is a concept that is gaining much momentum and is futuristic in its approach. Moreover, only the future can be changed and not the past. One can only change the changeable – the future which is yet to come. Having said that, feed-forward helps individuals to foresee and focus on the future and not dwell on past failures.

In Google, they often set goals that are just beyond the threshold of what seems possible following the OKR framework, and surprisingly, they accomplish their goals. Like the case of Google to reach 20 million seven-day active users, failed miserably before they could finally achieve it. Different organizations tweak these processes based on their requirements and direction.

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Research has shown that though the IT sector is quite matured and advanced in its processes and operations, many organizations have faltered on the performance planning processes that get followed. There are a few fundamental flaws that exist –

  • Lack of a well-structured, documented performance management system – can prevent employees from understanding the organizational strategies better and work cohesively towards achieving their goals with greater motivation. Gen Z and Y do not like to work in isolation. They would want to know how their contributions are aligned to the larger organisation picture.
  • Lack of clear expectation setting – Sometimes, managers aren’t able to communicate what they expect from their employees. Employees should be provided with the necessary resources to improve themselves constantly and should know the importance of continuous learning through a performance management system.
  • Lack of regular performance evaluation – If the performance evaluation is carried out annually, employees have to wait for a year to exchange feedbacks; which is not very ideal for the organization’s productivity.
  • Lack of quantifiable goals – There should be a clear understanding of what it looks like to achieve a goal and how it will be measured. Goals need to be specific, measurable, achievable, relevant, and time-bound (“SMART” goals). Some goals even if they are qualitative need to be supported with real examples and behaviors.
  • Lack of recognition – If an employee is performing above average, he or she should get the deserved recognition. Managers should understand how important it is to use the system to give appropriate ratings across the full spectrum of options—they should not be trying to avoid tough conversations, and they certainly should not be simply giving everyone the same rating.
  • Lack of a clear path to improvement – The performance management system should have a clear path for employees who meet expectations as well as a clearly communicated plan for when they don’t.
Also Read:  7 Benefits of Automating Employee Performance Management

To further strengthen the Performance System, management needs to also equip its employees with proper resources, support and training to perform their tasks effectively and efficiently. Also, it is important to move away from some of the set perceptions that this is a neverending saga – be it related to employee compensation, rewards and recognition.

On a parallel note, there are many theories about the new age philosophies pertaining to various performance systems – Like in the case of OKR, people say these are audacious goals and have to be super stretched, moonshot goals. These are for organizations who want to disrupt the business and transition into a significant new orbit to gain a competitive advantage. However, OKRs are flawed in a manner that they cannot be linked with R&R. Employees have to be self-motivated, own their goals and pursue them completely.

Likewise, multiple discussions are being held about getting rid of the bell curve and rating moderation processes. Many companies also did away with the PMS completely. However, a large set of these organizations are again thinking of getting back to the previously used systems to measure performance.

We do not yet have a definitive answer to the concept of relative ranking/comparative assessments and this dilemma would continue to be there in the times to come. But the fact that having a structured performance management system in place would help small and large organizations keep track of the progress being made by all individuals, business, and organisation levels hold true even today irrespective of the PMS model being followed.

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Anil Kumar Misra is the CHRO at Magicbricks.com. Before this Anil was leading the Human Resources function at Fidelity National Financial in Bangalore. Anil is an industry veteran with over 20 years of experience across diverse industries. He’s played multiple specialist/generalist roles within HR across sectors, in both fortune 500 Global MNCs as well as Indian corporates, with over 10000 employee base. In the past, he has held various leadership positions at Tesco, Capgemini, Just Dial, Patni Computer Systems and the Oberoi Group of Hotels. Under his leadership, companies have made to the list of “Most Preferred Companies to Work for in India.” Anil is a full-time PhD scholar of FMS, Delhi University, and has successfully completed the coursework. He got his Honorary Doctorate from the University of Entrepreneurship and Technology in the USA for excellence in HR.

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