The shift to hybrid work models and a people-first approach that many organisations have adopted in response to reshuffled employee priorities in the wake of the pandemic has meant re-evaluating many corporate processes, including performance management systems.
Indeed, companies have been exploring ways in which to improve these systems for years now; in 2019, pre-pandemic time brought issues like employee well-being to the fore, Gartner’s Performance Management Benchmarking Survey showed that 81% of HR leaders planned to make changes to performance management. As many as 82% of HR leaders reported that performance management wasn’t effective at achieving its primary objective, while only 38% said PMS kept pace with business needs.
Why? One reason, as Biren Anshu, Chief Human Resources Officer, The Hi-Tech Robotic Systemz Ltd explains, “Sometimes, grievances about performance management systems are really representative of the angst of employees while the real problem is at the leadership level or with the organizational culture. Having a well-designed PMS system will not remedy disengagement until problems with the organizational culture are fixed.” That said, Anshu believes that every organization requires efficient technological tools to support goal-based rewards. “With so many demands on their budgets, startups, for instance, often don’t prioritise this and it’s a mistake: it’s vital to have the basics in place and that includes using the technology that aligns goals with your strategy,” says Anshu.
Here are some ways in which experts believe technology can transform performance management systems:
Providing continuous feedback
Although the practice of annual performance reviews was introduced to justify salary actions and to motivate employees, “A lot of biases creep into performance reviews because evaluation is limited to once a year and what the professionals have done through the year has not been recorded,” says Ramakrishna Vyamajala, CHRO, Home First Finance, pointing out that technology can be used to streamline the processes and allow for more frequent evaluation and more specific feedback.
“This would allow the reviewer to understand the employee’s challenges better and it would allow employees to make adjustments, too,” says Vyamajala.
Satyam Arora, CHRO, Rivaara Labs also believes that technology could play an important role here. “Annual appraisals are the biggest pain point [of existing PMS systems]. It is a very ritualistic process and it has been documented that it [annual appraisals] doesn’t add to productivity,” Arora says, reiterating the need for a tech-enabled system that allows for continuous evaluation and agility in feedback, “so you can understand what’s happening with the employee through the year.”
For most organisations, the biggest concern is the setting of goals, and when the rigour in that process isn’t there at the very beginning, then it has an impact on every aspect of the business.
–Ramakrishna Vyamajala, CHRO, Home First Finance
“Capturing feedback on the go, putting it together in a knowledge format is something that is largely missing. That’s where tech can help a lot – it can provide much-needed flexibility in the process,” says Arora.
Such a process, where managers can offer support and feedback regularly as opposed to annually, would demonstrate the organisation’s interest in the well-being of employees as well as its commitment to supporting the development of its workforce. And this has been linked to better business outcomes.
Improving communications and enhancing transparency
Another way in which Vyamajala sees technology transforming performance management processes is by improving communications and creating a more transparent work environment. “Greater transparency will help teams align better and it would allow employers to measure outcomes better and to be more aware of employee contributions. Lack of communications and transparency is the main problem for professionals,” says Vyamajala, pointing out that a system where professionals can showcase or communicate their performance throughout the year, and where managers can monitor all this more efficiently will allow for important conversations to take place, and not just at the end of the year.
“Today, most managers don’t have the data they need to have these important conversations. A lot of these solutions [for PMS systems] are in the area of emerging tech – some products are available to address these issues, but there’s a lot of work required,” says Vyamajala.
Annual appraisals are the biggest pain point [of existing PMS systems]. It is a very ritualistic process and it has been documented that it [annual appraisals] doesn’t add to productivity- Satyam Arora, CHRO, Rivaara Labs
At the core, according to Biren Anshu, CHRO, The Hi-Tech Robotic Systemz Ltd, the problem is that performance management systems are often not aligned with strategy. “If you don’t have a basic goal-based system that is enabled by technology, you can’t run the [PM] system well,” says Anshu.
Strategy refers to an organisation’s goals and objectives as well as its action plans for achieving targets. An efficient mapping strategy across functions like marketing, production, sales, product development, management and administration, can help an organisation to prioritise tasks and it can help managers, as well as employees, gauge how everyone’s work comes together to support the organisation’s ambitions.
As Ramakrishna Vyamajala of Home First Finance says, “For most organisations, the biggest concern is the setting of goals, and when the rigour in that process isn’t there at the very beginning, then it has an impact on every aspect of the business. Employees feel dissatisfied, they don’t feel appreciated or motivated. So, it’s vital to get KRAs [key responsibility areas] right.”
Sometimes, grievances about performance management systems are really representative of the angst of employees while the real problem is at the leadership level or with the organizational culture. Having a well-designed PMS system will not remedy disengagement until problems with the organizational culture are fixed
– Biren Anshu, Chief Human Resources Officer, The Hi-Tech Robotic Systemz
“Aside from aligning these with goals, the technology can be used to measure these so that it’s not left to the discretion of managers. Technology may be the answer to a PMS system that efficiently aligns each individual’s objectives to those of the organisation – this is very tedious for humans to do and that is why many organisations don’t define KRAs at the start of the year. With technology, a click of a button can cascade the process through the organisation so that KRAs are delivered across hierarchies and geographies,” says Vyamajala.
Figuring out the most efficient way to improve employee experience is important and studies show it makes a huge impact on business outcomes. Although technology does not have complete solutions yet, 2023 may just be the year when HR Tech will do the heavy lifting and leave HR managers to focus on what matters most – people.