Rajesh Padmanabhan is with Welspun Group as Director and Group CHRO. He is a member of the Group Council. Rajesh has post graduated in HR as well as finance, from Narsee Monjee Institute of Management Studies. At Welspun, he focusses on culture building across the group, leadership effectiveness and helps create people processes and excellence. He drives people excellence through centers of expertise and business embedded HR and uses digital and innovative practices to create a new age HR function.
What is currently missing in the way overall employee performance is being managed?
India is at the cusp of start-up growth where innovation in fields such as Big Data, Cloud Computing, Gaming, and the Internet of Things has given us a lot to choose from.
Performance & Rewards as an area of focus is shaping up to answer some of such dilemmas proactively. With the advent of Artificial Intelligence and Predictive data modeling, organizations today can experiment with a higher degree of confidence. Improvisations or regular innovations in traditional systems & processes is the order of the day and while there are a plenty of success stories, the challenge that still remains in alignment with the overall business context.
The sole purpose of Performance and Rewards management should be, to put up a process in place enabling employees in maximizing their capabilities and potential.
With the advent of Artificial Intelligence and Predictive data modeling, organizations today can enable this younger workforce using a mix of scientific tools to provide a better cultural alignment, functional expertise & capability building. Below are few of the aspects that could pave way for designing performance management for the future.
1. Real-time Performance Feedback: Real-time feedback 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 a 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.
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. Connecting the Dots: A culture fostering trust, openness, and transparency along with the 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 link between the offerings by the organization and personal desires. How do I fit into the overall organizational purpose draws a higher energy from an individual?
4. Role of Technology: Predictive performance management involves applying a suite of statistical applications that sift through vast amounts of data to discover meaningful correlations, patterns, and trends. Such analytic techniques for modeling, 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 mindset that is required. Just simplifying the process without believing in it just might not get the intended results.
Given that a company’s workforce now has a significant proportion of virtual and freelance workers, how should performance management include them?
The future of workforce evolves through relinquishing a physical corporate office and allowing employees to work from home. That in turn, eliminates costly real estate expenses, improves work-life equations and expands the company’s capacity to recruit top talent more quickly. The future of the workforce is through Virtual mode and Freelancing culture, where people with specific expertise collaborate for a time-bound project, and disperse once their contribution is over.
To manage them at the best of their capabilities, we will definitely need an equally potent performance management which can set up the agenda for their engagement clear and nudges them to their expected course of action.
In order to include them in performance management, we might need to shift from “performance management” to “performance engagement” as unlike conventional employment, the virtual and freelance workers in the Gig Economy are not completely driven by the rewards mechanism, rather they are more focused on the quality of work and at the opportunity for their growth.
Companies will need new measures, new processes, and new expectations for what success looks like on all sides of the employer-worker relationship. There should be a shift from “compensation and benefits” to “experience and rewards” throughout the organization.
There are few emerging challenges for implementing rewards programs in the open talent economy. The first is to keep pace with the rapidly changing expectations of full-time employees across all the generations in the workforce, from veterans and boomers to millennials.
The second challenge for total rewards is to begin the complex process of creating rewards, meaning, and careers for employees who are not on a company’s balance sheet. One of the areas in which new approaches and innovation are needed is how companies can compensate, reward, and create career options for workers in all segments of their talent portfolio. This might involve creating tiers or categories of freelance employees with different levels of access to projects, work opportunities, and corporate learning and development programs (both online and in person).
Compensation for virtual and freelancing resources should involve different levels of rewards for different levels and types of participation.
What are employees, managers and decision makers looking to make performance management more effective?
2017 & onwards has brought in a phase of increased innovations and also the associated challenges as we make strides towards digitalization. The fanatic pace of change has become critically relevant.
As we re-engineer some of our old ways of living and working, these are some of the areas which employees, managers, and decision-makers can look at to help organizations, take calculated risks with a high sense of accountability.
1. Performance Discussions: We can look at this from three dimensions. First, a shift away from Annual or Bi-annual process to a more frequent manner of capturing performance feedback can help employees align their contributions to making a real-time impact. Second, companies can measure achievements with a backdrop of organization’s goals rather than individual metrics and the third aspect will be to simplify the performance indicators. Looking at the Volatility; Uncertainty; Complexity & Ambiguity and linking it with ‘Failure’ should propel organizations to redeploy and re-imagine their success in short-term around Cash flows; Top line and EBIDTA growth projections.
2. Reward that matters: It’s no longer just the cover of medical treatment and life insurance that employees look forward to. Peer to Peer recognition, Spiritual and emotional well-being, providing opportunities to create a better world around us are some of the areas employees value today. Additionally, looking at the broad canvas of rewarding both Long Term & Short Term results is equally critical. Organizations in the past have been most successful in driving the desired outcome by using vehicles such as Employee Stock Options (ESOPs); Restricted Stock Units (RSUs); Stock Appreciation Rights (SARs) etc. – but can this digital age workforce settle for something as long for wealth creation?! This group expects instant gratification for their contributions and therefore a short-term mechanism incentivizing collaboration, cross-functional success stories, group accolades should reinforce motivation and team spirit across the organization.
3. Learning Empowerment: The shift will be more towards empowering individuals to decide on their learning journey and enterprise will act more as facilitators. This gives us an opportunity to look at the concept of ‘learning CTC’ where an employee is encouraged to spend that part of CTC towards capability building. With the increasing penetration of work automation and robotics, employers must provide scope for re-skilling their workforce to encounter the lag which such advancements may create.
4. New Generation of Leaders: Organizations might have to even over-invest in creating a solid foundation for the next generation of leaders. The average age of the first-time manager is around 30 years and the ones in leadership training can be around 10 years older. According to a recent survey, 63 percent of workers aged 34 and below from all over the world complain they aren’t being properly trained for leadership roles. This creates an opportunity for this young generation to search for an employer who cares for their professional development. This gap of over a decade provides opportunities to bridge the competency deficit. Options like, customized one to one leadership building initiatives and creating a WOW can help in achieving the desired results.
5. Career Progression: It’s in your hands! According to a report published by a leading executive search firm, around 44% of employees leave due to limited career progression and this is the topmost factor in retaining talent. For me, this is clearly a two-way process. As much as the organization is responsible for career development, the demand to do something different or more should come from the individual. Defining a
clear roadmap for skill & competency development can help organizations look at better retention rates – provided the employees commit to their willingness to experiment.
Most importantly, Communication – A culture fostering trust, openness, and transparency along with the simplicity of executing the desired practices holds the key. Similar to training on ‘What’ and ‘How’, employees must understand the ‘Why’ quotient to understand their role and responsibilities.
What are some of the new things being introduced in Performance Management that are working/not working?
Nowadays, Performance appraisals have a broader scope than any of the traditional method and provide a more comprehensive as well as accurate evaluation of a candidate. Amongst many of the available appraisal techniques, organizations have an option to choose the best fit for them to identify the performance of their employees.
1. Behaviorally Anchored Rating Scale (BARS)
This method actually combines the critical incident and graphic rating scale method. This appraisal technique gives emphasis on the job-related behaviors expected of the employees. The method breakdowns the job into various behaviors which are listed on the rating scale. Then the actual behaviors of the employee are compared with the predetermined behaviors rated on the scale.
2. 720 Degree Appraisal
It is also one of the new methods of performance appraisal wherein the assessment is not only done by the stakeholders within the organization but also by the groups outside the organizations including the customers, suppliers, investors etc. This is one of the methods which is used to determine the success of the organization as a whole.
If not periodic appraisals, then what & how?
A multi-rater or a 360-degree system is one of the effective techniques to capture an employee’ performance – and all in real time! It provides inputs on both Professional and Personal development of an employee requiring focus today. Today, there are intricacies arising out of reporting relationships that break conventional norms of working and hence organizations are shifting from periodic appraisal to continuous 360-degree system of appraisal.
When Teams work across different time zones, locations and matrix structures, it becomes essential for organizations to study employee’s performance through the value chain comprising of various stakeholders that he/she deals with. In addition, this approach has become the cornerstone of Talent developmental strategy. More than 85% of all the Fortune 500 companies use the multi-rater feedback process as a base for their overall leadership development process. It’s an effective way to get a large group of leaders in an organization to be comfortable with receiving feedback from direct reports, peers, bosses and other groups of internal and external stakeholders.
A single manager view of a team member is extremely myopic in today’s context where every role has a significant impact on many stakeholders. Hence it is only relevant to measure the impact through all stakeholder lens which will be the right reflection for an individual.
Let’s look at some of the Pros that could pave way for introducing this change in place of a traditional approach:
1. Disappearing Performance Ratings: Having a number scale to calibrate performance and employee development just doesn’t work. It continues to breed internal competition and may lead to 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.
2. Better Communication: This system of review encourages managers and all team members to communicate more openly, constructively and honestly about their performances. This builds cohesion and improves teamwork.
3. Support Developmental Needs: Offers a clear picture on the 360-degree need for training and development programs and hence providing an effective measurement of the ROI of such initiatives.
4. Reinforcing Organizational Values: It provides clarity on how different groups or levels within an organization perceive organizational performance. Outlying measures and corrective action can be identified and implemented appropriately.
5. Reduced Discrimination Risk: When feedback comes from a number of individuals in various job functions, discrimination because of race, age, gender, and so forth is reduced. The horns and halo effect, in which a supervisor rates performance based on the most recent interactions with the employee, is also minimized.
The effectiveness of this process lies in one of the most fundamental areas where things can go wrong – How to give effective feedback? Many reasons account for this disconnect. Strong emotions on both sides, a focus on character rather than on behavior, and a lack of clarity about what needs to change and why may just be a few of the factors that can undermine accurate feedback.