Performance management has gone through major avatars and innovations in the last 10 years. This is partly due to the change in the world economy, geographically displaced workforces, new economic sectors like IT and ITES, rise of new markets like Africa and East Asia and the need to integrate differing cultural practices in one performance template. This is no easy task. For any organization which boasts of hundreds of employees, some sort of format driven performance management is mandatory.
Bell curves or Pareto Curves are no longer the favorite as many progressive companies have done away with this force fitment process. The calibration against one another on the bell curve is with the assumption that majority of employees lie around the mean with a smaller number over or under performing. This may not reflect the reality. Not everyone can be categorized as an 'average' performer under the bell curve and not just 1-2% could be exceptional.
Performance grading has traditionally influenced compensation too. Levels are set against the rating acquired. This can add a skew if the process is not transparent or if involves only the line manager. Contamination of data, views and personal preferences makes the employee unsure of the process. Such a single-line process also makes an ordinary worker prey to victimization. To make this process less dependent on individuals, companies also shifted to score card based evaluation system, with specific KPIs, linking it to financial perspective, customer perspective and organizational learning perspectives. This made the process more quantitative and evidence based which could be crosschecked and reviewed by all levels within the organization.
Over the last five years as companies have undergone rapid changes in the profiles of employees, young vs. old, technical experts vs. service employees, gender composition and the paradigms of performance management have further needed to be amended. One-size- fits-all policy has been found to be limiting in organizations where multiple roles, across multiple offices are carried out, often in varying and different circumstances. A technical expert at a manufacturing plant cannot be clubbed with a person with the same qualifications and post in a management role at the corporate office. Both may be at the same level, the same compensation package but their outputs are completely different and hence their performance management system cannot be made single dimensional. This is where companies are now linking performance systems and their thinking to the overall performance of the organization itself. This also ensures that the system is linked in to reality on the ground and not just personalities or on-paper qualifications.
A key change has been that performance management is now an ongoing process rather than a mandatory post-financial year activity. It is conducted all year around and specialist activities are mapped against the overall achievements through the year. This gives a much-needed boost to employee confidence and their long-term performance, as they feel constantly involved with a voice of their own. This ongoing system also addresses issues that may crop up as the time goes forward; team issues, resources, conflict management, barriers or problems which may be out of an individual's control. With this system, an employee and a line manager, both can be more constructive and can intervene to improve performance as and when required, rather than wait till an entire year has passed and then use it as an academic exercise just to influence annual compensation.
HR specialists the world over agree that giving constructive feedback is an art. As humans, it is not always possible to keep emotions or personal views out but increased training and information of successful international practices have helped line managers take the personal equation out and focus on the overall outcome. The introduction of 360° feedback system has helped make the employees also feel empowered to be able to give their own views without fear of reprisal.
Of course, such a change takes time. We are embedded into a hierarchical ways of thinking where 'power' flows from one influential individual and it takes time for an employee to gain confidence to believe in the process itself. Learning and development takes time and HR decisions have to be seen as above-board and fair so that any cynicism in the process can be eliminated and mistakes, if any, are quickly corrected. People in any organization are concerned about giving any honest feedback because they feel that they will be penalized for it. If it can be kept confidential in the real sense of the word, then HR would have made a great step toward building employee confidence and thence ensuring parity and honesty in performance management. However, like any policy, this too has a flip side. The HR teams have to ensure that even from the employee stand point, the anonymity does not lend it to being an issue of settling scores (since no one can find out who gave the feedback) and that the confidential process displays maturity and transparency. HR then has to play the role of a mediator to ensure that no one gets to use the process for his or her own personal agenda!
To keep the process infallible, data is beginning to play a big role, especially in situations where sales, revenues, channels developed, measurable outcomes come into play. Data can be mined and it can alone demonstrate the value created by an individual. Many international companies have developed skill sets and behavioral guidelines to match the role an individual fills. This data driven performance management is based on evidence, which can be evaluated as part of the performance process.
Finally, the issue is also about motivation to make an employee feel wanted and valued to keep up their momentum. Rewards and Recognition play a very big role here. Many studies have proved that recognition by peers is an immense motivator. In conclusion, the HR managers' job is cut out at multiple levels: actual target-based performance on the ground, behaviors demonstrated, skills acquired and implemented feedback that is constructive and constant recognition of desired outcomes and behavior. It is an amalgam of all the above that will make for a rounded performance management system that is effective, transparent, measurable and motivating.