The Evolving Science (and art) of Effective Employee Performance Management Systems
There have been vast changes in the business and economic landscape over years. Today’s business scene is characterized by speed (of doing business), ease of connectivity and reach, higher accessibility of markets, funds and resources, more choices for customers and for employees. This changed landscape has been driven primarily by the rapid technological advancements and the changing demographics of the workforce and consumers across the globe.
As expected, the businesses approach to employee performance management has also changed to keep up with these changes. In fact, in progressive organizations, the Performance Management Systems (PMS) have evolved to become the key instrument in driving their strategic agenda and business priorities. The PMS in such organizations is treated (and rightly so) as a strategic management tool to succeed in the changed operating model, and to meet (read, to exceed) the customer expectations and to engage meaningfully with the changed demographics of the workforce. Ironically, we still have a few organizations that are operating on the old ‘once-a-year’ performance management system with little Plan-Do-check-Act (PDCA) loop or active Performance Improvement Plans (PIP). While the momentum of such firms and their existing customer base has kept them floating, it is high time they address this very fundamental and super critical business HR item or they risk fading away as history.
The present disruption caused by Covid-19 pandemic has further exposed the failure of the legacy Performance Management systems. If not already undertaken as a priority, this is the right time for organizations to review their performance management systems – and to make amends as required – so as to remain competitive and to drive greater business results.
Below, we look at the key factors that need to be carefully considered and evaluated by the business leadership in defining or re-setting their employee Performance Management Systems.
Strategy Deployment:
What is the method of strategy deployment at our organization? Do employees across the organization understand our direction and priorities? Do our employees see the link between the corporate goals with their day-to-day job? It is very important to ensure that this deployment of strategy and the link between their day-to-day jobs with that of the corporate priorities is clarified to employees as part of your performance management program. Here, sharing the ‘direction’ refers to not just the tangible business goals, but also the vision, the values and socio environment causes the organization supports.
Key Performance Indicators:
Have we made sure that the business strategic priorities are cascaded down as tangible performance indicators for our employees? While the previous factor of Strategy Deployment included the ‘intent’, ‘culture’ and ‘value’ aspects of the business, this point of KPI clarity is around most tangible items that are closest to the day-to-day work outcome of the employees. The tricky part is to ‘scope’ it meaningfully – i.e., the KPIs need to be based on the job roles in question, i.e., how granular should you go for a role versus another role for it to be relevant for the employee and manageable for the organization to measure and drive improvements.
Weightage to corporate values:
Organizations built around a clear vision and driven by well-defined employee-owned values are the ones which make it big and succeed in the longer term. Remember ‘Built to last’!? Irrespective of the stage of your business or the size of your operations, a well communicated vision and corporate values need to be part of your fundamental approach of Policy deployment (Japanese management term for strategy deployment). An Employee Performance Management system that does not nurture the corporate value set of the firm is incomplete in its design. Such a scheme can only be effective, if at all, for a very short time. As such, it is imperative that your employee management system and associated processes are designed to reinforce your organizational values.
Categories for Employee PMS:
In the field of Human Resource Management and People Processes, one size can never fit all! Organization needs to think through the potential categorization of employees for PMS. Among other factors, they have to certainly address the differentiation based on the nature of job roles and then their logical grouping.
Specialized HR Consulting firms such as PeoplePrudent Consulting & HR Solutions have proven PMS models that are used to classify such PM sets – e.g., field jobs, clerical jobs compared to others such as Technicians on the shopfloor, or service engineers in after-sales-service assignments, or professional white collar role holders in an admin set-up, or the various types of management roles. The Performance Management System to drive performance of sales force needs to be different from that of content writers or research associates while ensuring the common thread of corporate vision and values runs seamlessly across the workforce. Similarly, questions around the frequency and type of PM engagement needs to be thought through and concluded – whether annual, quarterly, monthly periodic reviews are reasonable or continuous on-going feedback makes sense? whether one to-one feedback around daily metrics is relevant? or a team dashboard with business / financial ratios and its review on a weekly basis make sense?
HR Technology:
Unless the business of the organization is ‘Technology’, it should not become the central theme around which all the other business functions have to adjust. Unfortunately, in bigger firms, the technology, in particular Information Technology gets so entrenched that it becomes the center of their universe – i.e., a glorified bottleneck! When appropriately managed, Human Resources IT solutions are enablers that help organizations with speed, agility, scaling, analytics and deeper insights that could not be thought of in prior decades. However, at times organizations that have established grand ERP Solutions, mostly implemented to enhance business processes around sales, marketing or production choose to implement add-on People Process/HR modules by somehow retrofitting their people processes to suit the grand ERP offering. This obviously leads to pain, firefighting and ultimately demotivation to the HR operations team instead of improving their productivity or helping them on more strategic HR agenda. The risk is higher in case of implementing such add-on Performance Management Systems as it impacts the very engagement level of the workforce and also has direct adverse impact on the business
Bottom-line
There are niche HR IT solutions specifically designed to manage the PMS scenarios for firms of all sizes. Some have even industry specific offerings that are much more effective than add-on HR offerings from giants IT ERP firms. Business HR leaders should explore such applications instead of falling prey to HR modules of from mammoth corporate ERP provides that will only force your HR team to manage PMS in a cumbersome and ineffective way. Another important point that the business and HR Leaders need to consider while choosing their PMS is the aspect of its linkage to upstream and downstream HR processes such as to Business Score Card metrics, Total Rewards Policies, Employee Training and Development systems.
