Optimizing Performance Management Process (PMP)

It’s good news that after being spoken in hush - hush manner for so long, the sacred cow of the HR processes- the annual review and rating / ranking system has been done away with by the organizations like Adobe, Accenture, Microsoft (and some 6% of fortune 500 companies, as reported).

It obviously needs courage of conviction and leadership to be the first, though so many of us and for so long, have felt that the cost of the traditional annual appraisal system far outweighs the benefits.  

Though the first step has been taken towards optimizing PMP, it’ll be naive to assume that the rest will fall in place by itself. While the benefits of timely feedback / performance discussion is almost a settled issue, the process of reward administration- an unavoidable necessity, will need careful attention. But first, a few comments on the ‘timely performance feedback’.

1. a) For me, ‘timely’ is as close to time of the performance / behavior to be discussed as a manager can manage, but not later than may be a week or so. Researches tell us that the impact of such discussions is more when the feedback is immediately after the occurrence of the behavior / performance to be discussed.
2. b) This needs to be handled by the managers as ‘performance enabling and developmental exercise’ for which the managers would need to be properly trained. It cannot be taken for granted otherwise we may well have negative consequences of performance discussions more often than once a year.

From the point of view of reward administration, we need to define what constitutes ‘outperformers, average performers and low performers (or any other terminology we may use) with much greater granularity and communicate the same to the employees at large. Managers may even need to be  rigorously trained on the interpretations. While this may look like going back to the old system, we have to ensure a common understanding these categories of performance across the organization and appraisers need to make the best possible effort to adhere to it. It is extremely important to take care of this because while we may not compare one employee against the other and rank them, they ( the employees) are going to do it soon after the letters are released. And therefore, we need to take care that the subjective variations are kept to the minimum.

For the reason cited above, we also need to put in place a system to capture the key aspect of the performance discussions / feedback through the year since we may not be asking either the manager or the appraisee to detail the whole year’s contribution at the end of the year and yet we as managers, have to take into account the whole year’s work before deciding on the reward.

As we think about it, it becomes clear that departing from the traditional system alone is not a panacea for all the problems involved in the performance management process. The ‘’change management” challenge involved is equally important, to be dealt with in a holistic manner.