Pains and Pitfalls in Performance Management

- Harish Devarajan

This article was first published in Tapasya the triannual journal of the Indira Group of Institutes, Pune. (Year XII, Vol. I, Summer 2011)

Performance Management is probably the most talked about HR process. It is, also, potentially the most effective lever in organizations. In this article, I have attempted to share some of my observations and experiences in the use of Performance Management by managers in Organisations.

Performance Management frameworks vary quite considerably from a simple year-end, one-page note on an individual’s performance to a comprehensive performance assessment covering deliverables against pre-set targets, competency mapping, potential assessment, identification of development needs, rating of performance on a discrete scale, and qualitative comments on the overall performance.

Typically, organizations have kept making the framework more and more comprehensive as they gained experience in using the process. However, there is also a fair number of organizations who have gone in for the most elaborate process and framework without creating adequate appreciation and capability building amongst their people and managers, therein lies a challenge.

Performance Assessment carries with it all the issues related to judgement of one person by another. Not all managers are able to practise objectivity in the assessment of their subordinates.

Achievement of Targets : The first issue that is often a common malady in this process is the casualness with which the rating of target achievement and overall performance is carried out. Today most organizations have adopted a Management by Objectives (MBO) approach. This requires every employee to have a set of Objectives / Targets to be agreed with his/her manager at the beginning of the year. The problem is that these targets / objectives are often stated in an ambiguous fashion and at the year-end when the achievement is measured against the set targets, it results in much debate and disagreement.

The recommended “SMART” (Specific, Measurable, Aspirational, Relevant and Time bound) target setting approach is a good way out of this problem. However, when it comes to commenting on the extent of achievement even against SMART targets, the manager has to be objective in deciding what should be considered as Target achieved, when should it to be rated as not achieved, and when should it be rated as partially achieved.

This is often left to the imagination and decision of the manager. Some managers are quite strict in their assessment and even a percentage shortfall is treated as “not achieved”, while others use a more liberal scale of treating 90 % of target met as “achieved” and 50 to 90 % as “partially achieved”. Therefore, it leads to much variance in the way it is dealt with across the organization; and objectivity and uniformity of assessment is, also, given the go by.

There needs to be an organization-wide approach to how the assessment of target achievement will be done. This is important to ensure that there is no individual bias or rancour that is blamed for the disappointment in performance. With objectivity people begin to appreciate that full achievement is more often than not a truly commendable feat. Partial achievement, if sensibly defined, is also worthy of some appreciation. If this is understood by all, then the problem of “calling a spade a spade” is manageable.

Quality of Assessment Commentary : Quite often, at the year-end, when the manager has to complete the performance assessment of his/her team members the factual inputs are missing to make it specific and meaningful. In many cases, this is on account of the lack of efforts by the managers in engaging with their team members to understand the real context of performance and what has been their approach to it. The task completion often dominates the mind-space of a manager that he/she does not spare the time to understand the building blocks including the team capability and individual member’s issues.

This often leads to a very broad brush and generalistic commentary, which hardly does justice to the individual’s real performance. Many managers tend to take the safe path of saying positive generalities –

QQQQQ did a good job and addressed all expectations of the role. He has steadily improved and is a well-regarded member of the team. He responded to the demands of the job very well.

All of the above are generic phrases that could be used for anyone without reference to their specific context and contribution. It is this approach that builds the foundation for lack of distinction between the performance of one and another.

On the other hand, if the articulation of the performance actually covers the context and the challenge, the efforts and the contribution, the impact and the result; the whole exercise gains genuine appreciation of the performance –

QQQQQ was assigned the task of project management for the establishment of manufacturing facility in the new tax-free zone. He developed exceptional project monitoring skills and played a key part in the tracking and highlighting of the project schedules. His strong coordination efforts with the electrical and plumbing Contractors to reschedule their respective delivery time made it possible for us to complete the project within the revised deadlines.

A good performance assessment commentary will bring to life the true picture of the individual’s contribution every time it is read (Quite often many months or years later).

Personal discussion : In most cases, the performance assessment is done and completed by the manager unilaterally and the inputs for various decisions is sent on that basis. This is often the trigger for heartburns and frustration amongst employees. Even in cases where the manager has a performance discussion with the team member, it is more to communicate the appraisal rather than to have an engaging conversation.

The positive effect and value of a performance discussion is beyond measure. The purpose of this discussion is to share and understand the different aspects encompassing the employee and his/her performance at the workplace. It is not only about the year gone by, but also about the holistic relationship and feelings around the job and the dreams / aspirations held by the employee.

It is an opportunity to sense the cares and concerns that the employee harbors in his / her mind. The manager has a great opportunity to understand how the employee views his / her journey so far and what may be ways in which he / she may be supported going forward. A well-engaged personal discussion is a firm step in building the commitment of the employee to the organization. It is bound to help him / her to strengthen the performance contribution in the coming years.

Performance Rating : The struggle for most managers is in terms of assigning a rating for the performance of their team members. Organizations typically have a 5 or 7 point scale for evaluating the performance. Many organizations also prescribe a norm for the distribution (e.g. Bell Curve) of the performance rating for every team / unit / entire organization.

Since this is a relative rating of the performance, it willy-nilly indicates how the individual employee compares in terms of performance with respect to all others in their team. Managers who are not sure of their assessment, or managers who are uncomfortable in discussing their true assessment of their subordinates struggle with this requirement of differential rating

Many managers prefer to give same and similar rating to all their team members (good, or above average rating). This ensures that they do not have to explain the reasons for differentiation. While in some instances genuinely there may be no case for differentiation, in a majority of cases differences do exist in the actual performance; and if the line manager pays close attention to his / her team members’ contribution, he will be able to use the differential scale to good benefit.

I have noticed that when the manager is able to support his assessment with examples of actual performance indicators (what and why), the team members tend to respect the judgment. The objectivity in such assessment needs to of a high and sustainable nature. High-performing team members prefer managers who differentiate and recognize high performance.

 Bane of the Bell Curve :

One issue that I have seen most Line and HR Managers fight over is the Bell Curve. The concept of the Bell Curve is that in any reasonable sample or population the performance scores tend to follow the shape of a Normal Distribution (Bell Curve).

Hence, the HR department expects the managers of every division / department to rate their team members in a manner that the distribution of ratings is Normal (take the shape of a Bell Curve). This is understandable when the population is large and random.

However, in many high performing organizations, the population of team members is a highly distilled team of quality resources, who have been hand-picked for their assignments. Over the years, the variation in performance pattern is eliminated by the exit of team members at the lower end of the performance curve.

 Thereafter, the team is made up of people, who are typically at the middle to higher end of the performance scale; and to expect that their performance rating will be normally distributed is a tall order. The new situation demands that the manager must distinguish fine differences in performance.

 Statistically speaking, the Normal Distribution can be achieved; but practically speaking, it will call for exceptional judgement on the part of the line managers and a framework of assessment that works like a “tooth-comb”. The reality is that neither the framework nor the capability is of that order and, hence, this is a perennial fight.

 Consequence Linkages :

The mood in a number of organizations around the performance assessment time is dreary and despondent. The reason for this is that most employees fear that they are going to be misjudged and have to bear the burden of biased assessment, while managers postpone the (uncomfortable) task of determining who gets how much reward.

 Yes, the performance assessment is equated to reward decisions (at least in the minds of the employees). The reason for this is that over the years they have come to realize that the main purpose of the performance assessment is to decide annual increments and bonuses. No doubt, that the reward lever is a crucial one for managing the performance of people and, therefore, it is linked to the performance assessment so that the loop is closed. Further, it can lead to reinforcing the impact of the lever.

 The real value of the linkage is when it is used in an objective and balanced manner. Earlier in this article, I have outlined how the objectivity of the process can be enhanced.

As regards the rest, one has to understand that the performance of individuals is a function of many factors: aptitude, capability, context, capacity, motivation, attitude, and aspiration being the key amongst many others.

In a large number of organizations, the realization of the multiple factor linkage is absent. They operate in a uni-dimensional fashion assuming that the reward linkage is the one and only factor that will lead to performance enhancement. The overuse of this lever leads to dysfunctional behaviours and results. Quite a few organizations are aware of the capability dimension and use development approach to enhance performance.

Very few organizations (especially the sustainably high performing ones) tend to look at multi-dimensional factor linkages to enhance the performance of individuals. Whereas we need to look at individual performance achievement and its support in the same manner in which we assess and address the performance of project teams and business as a whole.

Good performance management should look at factors such as: the appropriateness of the goals / targets for the individual; the intrinsic flair and comfort of the individual to operate in the specific arena; availability of the resources needed to achieve the goal; the context in which the performance is being expected and the changes that are taking place therein; the existing knowledge and skills of the individual; the aspiration of the individual and how it relates to the performance demands and achievement; the willingness of the individual to actually respond to the challenges presented by the manager / organization, etc.

Key Leadership Tool :

I have seen and heard many people comment that the problems with Performance Management are universal and everlasting. I consider that to be a fatalistic approach to the subject. It is such attitudes that make it a problem and a pain. Hence in this article I have focused on common issues encountered in the practice of Performance Management and also given my suggested approach to a better process / experience.

No doubt Performance Management is an arduous process but if sincerely approached it can prove to be a powerful process, which can enable the complete understanding and achievement of the potential in individuals, teams, and organizations. It needs to be seen and operated as an integral core of every organization. While it maybe facilitated by and considered as a part of the HR Professional’s ambit, it needs to be owned and operated with passion and purpose by every manager in the organisation.

Leaders of business and teams can be more successful if they know how to unlock the hidden potential in their teams. People tend to flock to leaders who help them blossom into winners and heroes. Good HR Practice is positioning Performance Management as a key Leadership tool.

Vision

People Unlimited is a vibrant entity with a passion for people.

Profile

Harish has more than 29 years of experience in the corporate and consulting sectors. He started his professional career with TVS Sundram Fasteners Ltd. in 1985, and then in 1989 joined Hindustan Lever Ltd., India’s leading multi-national company.

D Harish,
Leadership Consultant