Reinventing Performance Management

HR Digest – Newsletter

Reinventing Performance Management: Trends & Is there a need for change ? Neha Singh and Prasad Prabhakar “Performance Management is a way of getting people to do what you want them to do and to like doing it." Dr. Aubrey Daniels, father of performance management coined the above phrase; the term describes the technology behind managing both behavior and results. Performance Management has, over the years, developed into a colloquial term, as such, it can have different meaning to different people based on their association and history with the term and how it has been used within their environment. Once thought an organizational necessity, off-late, the formalized performance rating and review has come under fire by many companies who believe it’s time to breathe new life into an old process. Current performance management systems are receiving a failing grade. According to a recent World at Work study, 58 percent of HR leaders gave their performance management process a “C” grade or worse. The challenge is that while the way work gets done has changed dramatically over the last few decades, performance management processes as many organizations have remained essentially the same. Plus, as individual and organizational goals are increasingly tied to project cycles that last a few months or weeks, the fiscal year can become less relevant. Add in the matrix organization— with individuals migrating from one cross functional team to another, each with a different leader and performance management can truly turn into chaos. During the annual performance evaluation, employee performance is often judged against a competency model, which results in a performance rating, perhaps on a five point scale. The manager discusses the reasoning behind the performance rating, and makes plans to develop the employee in areas identified for improvement. At work, however, at least when it comes to quantifying performance, we try to express the infinite variety and nuance of a human being in a single number.

The real objective should be to improve the performance of the organization, and the typical performance management system fails to achieve this goal (Coens & Jenkins, 2002). To offset top-down annual performance evaluations—which can often be based on aged feedback or vulnerable to the “recency effect,” the behavioral principle that the most recent is the most likely to be recalled—many organization are thinking to reinvent their performance management processes. Opening a Floodgate of Change While many business leaders have acknowledged that change was needed, nothing substantive happened until 2012, when Adobe Systems Inc. jettisoned its traditional performance management system for a drastically streamlined, simplified process. Microsoft Inc. followed Adobe’s lead several months later when officials at the software giant announced they were getting rid of the company’s traditional stack-ranking system for a more simplified process. Deloitte and Accenture have also soon followed suit and have initiated new real time mechanisms to measure and manage individual and teams’ performance standards. Based on the observations made by these 4 organizations, here’s is our summary of what is driving this trend? People have changed. Employee expectations have changed. It’s not just Gen Y – employees everywhere and of every generation expects more. More involvement, more accountability, and more transparency. When it comes to managing their performance, employees have shifted from being passive recipients to active agents.

HR Digest – Newsletter

Organization structures. With a shift in organization structure from command type to matrix type, managers have changed too. Command and control is no longer cutting it – managers are expected to guide and coach, provide balanced constructive feedback and inspire, rather than enforce, performance. Technology has changed. Baffled by the complexity we created, focus in recent years has been on process simplification, user-friendliness and redirecting attention to what actually matters. The “big data & analytics movement” has now really raised the bar – not just in terms of what data can be gathered, aggregated and analyzed but also how it is filtered and presented to audiences to provide immediate management insights. Activity lists are being replaced by composite dashboards, lengthy reports by simple performance heat maps i.e., pictures, literally replacing thousands of words. While the above section/s is a summary of our observations and general literature; let’s take a look at what is IGATE’s Performance Management philosophy, which stands the test of time and has all that a good and effective Performance Management System needs. The Performance Management framework @ IGATE is created to address all the needs of an agile Performance Management mechanism (for example…) which addresses.. 1. 2. 3.

4.

High Performance focused goals (through SMART Framework) Providing ‘real-time’ Performance feedback to employees (through OPCF) aims to aid managers to focus on development of the employee (through OPCF and Competency Assessments) Enhance performance levels at individual, team and organization level (through Appraisals and Normalization)

Creates talent pipeline & builds the employees’ emotional connect with the organization

SMART Goal Setting

Drives business outcomes. Standardized role wise KRAs to enable High Performance Meritocracy

Promotions & Career Development

Performance Cornerstones

Ongoing Performance Coaching & Feedback

Enables us to raise the performance bar individually as well as relatively (for identified period/s)

Appraisals & Competency Assessments

Continuous Performance monitoring & handholding to drive Agility

Reiterating on the approach from rating employees to developing them not only creates a better employee experience but also has the potential to remove administrative hassle, increase the engagement levels of employees and ultimately improve the performance of the organization. And that, once again, is the goal of any performance management system. The HR profession has to reinvent itself through simplicity. “Simplifying and making performance management systems more responsive and reflective of how we work today is a really big trend, and we strongly believe it’s going to drive the way management operates in the future.”

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