International test cricket was the mecca for cricket fans in the 1990s. The quality of play and its “stability” was indulgingly appreciated by its cult following. The T20 format, in contrast, is a vast transformation. The dynamism of the format, nimble talent, and fast pace of the game has brought an enormous thrill to its growing fan base. Come to think of it, companies have had to go through a format transformation of their own – from mature and unwavering mammoths to agile, nimble, and ever-adapting entities. In such a scenario, one of the biggest game changers for success has been attracting managing and retaining the best talent.
As the millennials give way to Gen Z and businesses get disrupted by innovations, there is a need to continuously align the workforce with business priorities, empower them, and provide real-time feedback. This has impacted the way performance is being managed across organizations.
A new pitch
Fast forwarding the history of Performance Management Systems (PMS) in organizations, we have seen it evolve from a simple evaluation system to a far more comprehensive process in the recent past. We are now seeing a reversal in the trend, to simplify and decentralize the process. Several corporate marquee firms such as Adobe, IBM, GE, Microsoft, etc. have been in the news for revamping their appraisal process in order to adapt to the changing business and employee preferences. Most of them are still trying to stabilize the new process and several others are attempting to decide what would work in their context.
Aon’s research – “Performance Pulse of India Inc.” – showed that PMS is the top focus of organizations in the next two to three years. Almost two-thirds of the participating organizations have made changes to their PMS in the last one year and the rest are mulling over possible modifications in the short term. The top area for change has been ‘Process’, with almost 76 percent of firms making changes in their appraisal process over the last one year. It is no longer a predictable and ageing annual process but a more agile one, which is aligned with the pace of change in businesses.
For starters, rather than annual goals, increasingly organizations are focusing on defining short-term and immediate business/functional/individual priorities for each quarter/project.
In order to facilitate continuous business alignment, frequent feedback is provided to employees. Nearly a third of the organizations that participated in our survey have quarterly or more frequent conversations between employees and managers. As per our insights, 57 percent of firms that provide qualitative feedback/summary more frequently (>mid-yearly) are hyper growth*. We also noticed from our survey that hyper-growth firms focus on the quality of conversation by ensuring that managers spend sufficient time during the conversations. They also seek inputs from multiple sources for providing feedback.
Majority of hyper-growth firms ensure that manager-employee conversations last for 40-60 mins. They incorporate inputs from at least one more stakeholder besides the manager/skip-level manager to ensure objectivity in the feedback. Savio D’Souza, Director, HR, Coca-Cola India & South West Asia, says, “The core of the change to performance enablement is to focus on performance; a shift from a process that waits till the end of the year to decide who performed and who didn’t to a practice of regular feedback, coaching, and performance conversations that drive performance through the year. This shift has to be matched with a change in rewards practices as well, reinforcing the link between performance and reward. These changes take time, as managers realize the value of the practice and build their capability to have robust performance discussions.”
Any discussion of newer forces in the appraisal process would be incomplete without addressing the (two) elephants in the room – bell curves and ratings. Employees, managers, and leadership have had a bittersweet relationship with these mainstays in the recent past. Also, these have been usually considered as two sides of the same coin. However, our study shows that these two features do not necessarily share the same fate. While 82 percent of CHROs agreed that ratings help in optimally differentiating performance, this number significantly drops down to 59 percent when asked about the bell curve.
A similar picture unfolds when we look at the number of organizations that still follow ratings and bell curve. The study shows that 88 percent of organizations still use ratings while this number drops down to 58 percent for organizations which still follow the bell curve. While forced distribution was widely adopted to set standards for performance and enable the organization to “weed out” low performers, it has come under severe scrutiny in the recent past. Some of the key reasons organizations consider for dropping forced distribution is because it is believed to enable managers to have quality conversations, build a collaborative culture, and increase employee engagement.
A majority of firms continue to believe that differentiation is a key enabler for organizations in achieving business objectives, irrespective of the fact that they may or may not be using forced distribution. Most of the firms seem to be substituting forced distribution with rigorous managerial discussions on ratings, shadow ratings, empowering managers to distribute rewards, etc. Also, firms seem to be leveraging technology extensively to enable “performance on-the-go”, with nearly 80 percent of organizations adopting technology platforms for efficient process control and analytics.
The sticky wicket
There is more to the waters than what we see on the surface. We analyzed some metrics in the organizations which do not have/have dropped bell curve and had the following facts in front of us:
This essentially means that while for some organizations, the decision to move away from the bell curve is working, for others, it might not be running as per plan. We looked a little deeper by examining deal breakers for organizations which do not have a bell curve/did away with the bell curve (42 percent of the total organizations) and these are:
- Managerial accountability
- Managerial capability to do performance conversations
“As a process, appraisal is the manager’s responsibility. However, it is mostly observed that managers tend to have a central tendency. They give an average rating to most of the team members,” shares an HR insider from a leading automobile company. It is interesting to note that although organizations may be aiming to pick the low hanging fruits of changing process elements, they might be missing out on the bigger picture.
How the game changes
It would be right at this point to conclude that organizations may have been holding the wrong end of the stick. The focus of changes in the recent past has so colluded towards the most apparent process changes that firms have not realized that the real game changers lie elsewhere.
Some organizations have undertaken structured and long-term efforts to complement the process related changes with building internal capabilities, while others have missed out on the same in the “me too” jiffy. Building internal capabilities of the manager cadres and the HR team is often an afterthought, or worse, a late realization, to the prima facie modifications which organizations are indulging in. However, firms will need to reimagine the way the process changes are implemented. Successful organizations take a comprehensive view – they identify, onboard, and enable key stakeholders.
They focus on building managerial muscle to have future-oriented developmental conversations and also assume accountability for the team’s compensation planning. Also, it is well known that no matter how big or small the change, it is doomed for failure until and unless it has absolute and continued leadership sponsorship and is supported with comprehensive communication.
While managers and leaders need to be continuously educated and supported, the HR team needs to adopt the role of the talent advisor to ensure process justice. As managers are expected to assume accountability of their performance programme decisions, the HR team would need to be equipped with the right tools, procedures, and enabling infrastructure to drive change. The HR team has to perhaps adopt a different role, from process custodian to that of subject matter expert, in order to efficiently drive execution excellence.
Our attempt to uncover the emerging trends and challenges of the performance process has brought forward these critical insights. Uniting the internal stakeholders into a cohesive unit and enabling them with the right infrastructure and capabilities could well be the game changers in the T20 of high performance. Any sport can be a great teacher, and one of its finest lessons is perhaps that while talent can win games, teamwork wins the championships. As a talent management executive from one of India’s largest IT conglomerates signs off, “We focus immensely on manager capabilities. We run structured online and classroom programmes for all people managers through the year. While the HR partners have the onus to ensure coverage of the managerial population, they also have an option to self-nominate.”
Swadha Ojha is a Consultant at Aon Hewitt.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)
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