Performance Management

Have you heard of the question, “Where do you see yourself in next 5years?” Or “What is your career goal?” Does it sound familiar? Most of us might have heard similar questions during our interviews or must have posed similar questions at the time of hiring? But the real question is how often do we ask these questions during performance appraisal of employees within our organizations ?

Let’s hold this thought for a while and focus on Performance Management Process and how it has changed over the years.

From a phase, where performance management was an administrative task, which is used as a yard stick to measure individual performance to a stage where getting 360 degree feedback seemed like the best way to appreciate employees and get best performance, PMS process as matured today to a stage, where we are discussing about collaborating with employees to build a High Performing Organizations. Emphasis has shifted from “What Target to achieve? to “How to achieve the Target?” .We definitely have come a long way!

Millennial and Gen Z employees are not just highly focused on what they want to achieve but also well aware of tools and opportunities on how to build necessary capabilities to achieve them.

Both employees and employers prefer working on real time updates, to course correct and continuously improve performance to achieve set outputs.

Today, Performance Management is about how to build high performing organizations than simply review past performance.

Now does it makes sense to ask a question like “what are your career goals for next 5yrs ?” during Performance Management Process. Answer would be an affirmative “YES”.

Advantages if we focus on employee growth plans:

  1. We are aligning employee interest with Organization Interests! We are creating most essential ingredient for Organization Success, by creating “Employee Value Proposition”.
  2. We are creating Succession Plan
  3. This is a potential Retention Strategy
  4. Organizational Capability Building for the future
  5. Skill Development

Purpose of a Performance Management System

A carefully planned and well administered appraisal process can benefit organizations achieve productivity targets, employee engagement & overall profitability.

  • Help identify and document performance of each employee.
  • Will help organizations identify developmental needs of individuals, pave way for training and development programs.
  • Identify performance challenges and ways to address them.
  • Help in making critical decisions like, retention , promotion and salary appraisals
  • Can also help in developing Performance Improvement Plans.
  • Further help in taking necessary actions in the best interest of the organizations basis the data points from appraisal process.
  • Assist with Human Capital planning and selection criteria.
  • Help in making decisions on rewards and recognition, market corrections etc…

Let’s look at high level performance management system process flow

1. Goal setting : We begin with Organization Goal Setting, which help in determine Department Goals & further help in Individual Goal Setting.

  • SMART Goals: Goals should be “Specific, Measurable, Achievable, Relevant, Time Bound”
  • All goals should be in alignment with Organization Goals.
  • Now is the time to ask employees “where do you want to see yourself in 2yrs, 5yrs?”
  • Set goals which are helping employees grow both professionally as well as personally
  • Healthy stretched goals will help individual to strive for better performance & reach their optimal potential.
  • Goals can be individualized from employee to employee based on their personal growth plans.
  • Define Key Performance Indicators (KPIs), to help measure set goals.

2. Communication & Mutual Agreement : When expectations on goals are communicated in a clear and transparent way, employees know their deliverables and execute it as per plan. However, all goals should be mutually agreed between employee and managers. Only one way goal setting is as good as not having any.

“If you are building a culture where honest expectations are communicated and peer accountability is the norm, then the group will address poor performance and attitudes.” Henry Cloud

3. Ongoing Performance Feedback : Feedback is most effective, when it is shared real time, specific to the situation. Mutually agreed goals execution can also be reviewed at regular intervals to check progress & make adjustments. Employees can be guided on execution & Managers can help in removing road blocks. Providing feedback on a continual basis help employee knows where they stand and when they receive their formal annual appraisals, there are fewer surprises.

4. Appraisal & Feedback : Employee’s performance against set goals to be evaluated to provide employee with information on areas of improvement & why it is needed? An effective appraisal process involves objective & measurable data points. Managers can also guide employees on softer aspects of employee, like desirable and non desirable behaviors for the job role which can be specific to organization.

  • Provide Feedback in a constructive way. This should help employee to be more successful.
  • The feedback should be timely
  • Focus the feedback on the job performance and not on individual
  • Limit feedback to the extent employee can process it.
  • And finally consider current covid situation & be a little more sensitive towards employee while sharing feedback.

5. Rewards & Recognition : One of the critical factors which effect employee performance is Motivation. Though there are various ways in which an employee can be motivated, recognition for the work employee has accomplished and being appreciated for the efforts put in by him / her fuels employee to keep moving. Financial and Non Financial rewards, also equally motivates them to engage and further enhance their interests and productivity.

An effective performance appraisal process uses documented data to recognize and reward employees in a fair & accurate way. Let us focus on elements which help in building high performing organizations.

HR Analytics : HR Analytics can help organizations closely record, monitor & measure data points to interpret performances and factors impacting them. When data points are interpreted in a structured way, this becomes information that will further help organizations take necessary decisions.

“You can’t connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future.” ― Steve Jobs

Learning & Development: A well developed L&D process can help organizations address critical challenges like skill gaps, employee competency development and overall productivity. Goal Setting & Performance Appraisals Process can help in conducting the needs assessments to identify areas where training & development are required. Creating formal and informal learning opportunities for individuals can help employees save time and enhance their skills. Knowledge Database addresses recurring requests for information and timely performance of tasks. Always align L&D programs as per strategic requirements of your Organization.

Coaching & Mentoring: Effective coaching and mentoring programs help organizations get loyal employees, who are well engaged in organizations. When employees are provided feedback and also well supported on building their capabilities through these programs, overall productivity will enhance.

“Average players want to be left alone. Good players want to be coached. Great players want to be told the truth.” – Doc Rivers

One study showed that organizations with strong performance management systems are more likely to outperform their competitors in the areas of revenue growth, productivity, profitability and market value. Experts advise companies to continue to appraise their employees even during an economic downturn, even if they cannot afford to give them raises.