Article (April-2017)


First, bring change in philosophy & mindset

Rajesh Padmanabhan

Designation : -   CEO

Organization : -  Talavvy (


365936 Total View        

With the changing dynamics of business models, macro-economic trends, digital disruption, performance management has become a hot topic of discussion in the HR function. While some of the organizations have re-modelled their overall approach to measure performance, some are currently thinking of following the industry trend and there are few that might continue with their current approach and may introduce small changes in the times to come.

According to some sources, the traditional form of performance management system started around 220AD where members of Wei Dynasty used this approach to rate official family members. A more formal adoption of this system took place during the 18th century in the US when around industrial revolution; workers were evaluated and paid based on the output. Following century saw minor improvisations in the approach, however appraisal systems for measuring managerial and professional employee performance weren't used extensively until about late 1950s when there was an emergence of 'Management by Objective'. Employees were appraised on the basis of achieving short-term goals, jointly set by the employee and the manager, rather than personality traits.  There was also a shift in the purpose of performance appraisal system towards employee development and feedback.

Today, there's somewhat of a crisis of confidence in the way industry evaluates employee performance. According to a research by Forbes, worldwide only 6% of organizations think their performance management processes are worthwhile. Many companies have undergone a move away from traditional, metric-based performance assessment in recent years. Reason being employers and managers largely work with their personal "instinctive feeling" on who they like or dislike. The bigger fact is that the overall nature of work has changed and resultantly the skill set. The traditional phenomenon of setting annual or mid-term goals has been a point of worry largely due to shorter & much volatile cyclical fluctuations in macro & micro economic environment, changing workforce demographics and rampant speed of the technological progress. All these put together are creating an unending pressure of re-looking at talent attraction and development strategies.

By 2020, India is set to become the world's youngest country, with majority of its population in the working age group of below 35 years. With the advent of artificial intelligence and predictive data modelling, organizations today can enable this younger workforce using a mix of scientific tools to provide a better cultural alignment, functional expertise & capability building. I would like to share some steps that could pave way for introducing this change in approach.

1.Real time performance feedback: A shift away from a 'long' annual or Bi-annual process to a more frequent manner of capturing performance feedback is becoming essential. This can help employees align their contributions to making a real time impact. As a result, organizations too will be able to resolve a real time problem and not go all out to address the ones with retro effect. While it is important to reflect on past results and achievements, it is equally critical to have forward looking conversations to address performance gaps that may arise in the future. Annual/B-annual reviews mean an employee has about a limited duration to check how they're doing and their achievements in the past year. Frequent conversations, will help keep matters discussed at the forefront of both from employee and organization's perspective to deliberate on 'contribution' made / expected rather than discuss just performance.

2.Balancing the act: An effective manager needs to understand the skills of giving out both praise and criticism. While praise is easy to give, it is far more challenging and unpleasant to give out negative feedback. While it is important to occasionally show employees where they need to improve as people generally respond more strongly to negative events than positive ones, it is vital for managers to learn how and when to give negative feedback.

3.Disappearing performance ratings: Having a numeric scale to calibrate performance and employee development just doesn't work. It continues to breed internal competition that may lead to an overall reduced productivity. On the contrary, businesses can shift to evaluations in terms of how successful each member is at working toward company goals and what can be done to improve within the desired timelines. Similarly, while data around people analytics can provide insight into skill levels, it doesn't mean much about engagement. Working towards employee delight similar to customer satisfaction can be a real winner.

4.Alternative to Bell curve: An alternative to the traditional Bell-curve seems to be gaining traction is some parts of the world. According to some articles, a "Power Law" distribution, also known as a "long tail" indicates that people are not "normally distributed." In this statistical model, there are a handful numbers who are "hyper high performers," a broad swath of people who are "good performers" and a smaller number of people who are "low performers."It seems to have different characteristics from the traditional Bell Curve. For example in the power curve most people fall below the mean (slightly). Roughly 10-15% of the population are above the average (often far above the average), a large population are slightly below average, and a small group are far below average. So the concept of "average" becomes meaningless. There are superstars in every organization. Some employees could be 10-15 times more productive than the average; such "hyper performers" could be the ones to attract, motivate and empower. Steep differentiation is becoming key and moving away from socialistic and conventional distribution may fade in times to come. Accordingly, the system needs to be nurtured in recognising and rewarding appropriately.

5.Connecting the dots: A culture fostering trust, openness and transparency along with simplicity of executing the desired processes holds the key. Similar to training on 'What' and 'How', employees must understand the 'Why' quotient to establish the connect between the offerings by the organization and personal desires. How do I fit into the overall organisational purpose draws a higher energy from individual?

6.Role of Technology: Predictive performance management involves applying suite of statistical applications that sift through vast amount of data to discover meaningful correlations, patterns and trends. Such analytic techniques for modelling, forecasting and simulating potential outcomes can help answer critical questions such as:

  • Which measures drive the business progressively?
  • Where do I need to improve and by how much?
  • Are employees aligned with the strategy?
  • How should I adjust my strategy and modify initiatives?

Today most of the companies want to re-think about their performance management process but before doing so, it's a change in the philosophy and mind-set that is required. Just simplifying the process without believing in it will not get the desired results. How will this trend pan out is still to be seen and we may see an increasing adoption of variation in the process. Organizations that are successfully creating a culture of ongoing performance management are the ones transforming the process from an annual administrative task to an ongoing, collaborative strategic priority that delivers meaningful business results.