Performance Managment

Organizations are dependent on human performance. Performance refers to the fulfillment of expressed expectations. Performance is an expected individual deliverable for the four R’s - recruitment, retention, respect and reward and consequently has to be regularly assessed.

 

Performance assessment helps organizations provide a measure of control over desired outcomes. The process helps organizations align business needs with individual goals, increase role clarity, close competency gaps through development, and offer a barometer for retrenchment.   From an individual’s point of view, an objective assessment facilitates a fair compensation regime and an effective career growth and reward system and a clear learning curve.

 

A good performance assessment process includes at least three elements: smart goal setting, coaching, an effective appraisal process and corrective action, which may or may not include a development plan.

The Performance process begins with a performance plan (otherwise called goal setting) and ends with a development plan / separation. The process is detailed below.

1.   The Performance Plan – SMART Goal Setting:

Goal setting, if carried out effectively, goal setting provides specific and measurable strategic objectives for an individual employee and defines what is expected from a job holder. 

SMART goal setting begins with the identification of Key result areas – areas of focus based on business needs, department function and the individual’s job role.  These areas are identified from the Vision – where is the organization going?  And the Mission – the reason for its existence.

Strategic goals follow the key result areas on the basis of the answers to the question - what should be achieved to improve results in these areas?  The key to the measurement / assessment process of course, are the indicators of deliverability in terms of quantity, quality, time and place.

This cascading process, ensures alignment and performance measurability.

2.   The Appraisal Process

a.    The self appraisal.

An employee’s performance evaluated against set goals is the first step in the Appraisal process. It’s important because:

1.    The Employee gets involved in his assessment and his future. It also promotes in him a sense of worth.

2.    The Manager / appraiser get a broader perspective on which to base his appraisal of the employee’s performance.

3.    The reviewer has an opportunity to identify perceptional differences, prior to the review meeting. 

4.    The Organization’s management process is energized through a formal dialogue process that focuses on alignment, priorities and challenges.

Writing a self appraisal sounds easy, yet is difficult, when actually undertaken, as it must reflect an objective reality.  An ideal self appraisal includes the following elements which are easily remembered by the acronym TSAR, as in tsar of Russia:

a.    Task -  restate  the objectives

b.    Situation – inform the circumstances in which the task was to be achieved.

c.    Action – recount the activities and action undertaken to achieve the objective

d.    Result – state the results achieved, including as always, the reasons for a short fall, if any including training needs where necessary.

A well written self appraisal goes a long way in ensuring an effective appraisal process.

b.      Writing effective appraisals:

Effective appraisals are objective and avoid rating biases such as the halo effect, the devil effect, the leniency bias, the central tendency, confrontation avoidance, initial performance bias, recency bias and a false attribution bias.

Organizations continuously make efforts to minimize the negative effects of rater biases on individual and group morale, using a combination of the following methods:

1.    Effective Goal setting – The Key performance indicators are validated for realism, quantified and the job holder’s role in achieving them leaves no room for ambiguity.

2.    Justification – A full written justification is compulsory when ratings are either at the top end or the bottom end of the scale.

3.    Training - All managers / appraisers are provided with initial and refresher training to recognize and eliminate known biases.

4.    Peer and Subordinate feedback – 180 / 360 degree appraisals are slowly catching on especially in respect of higher management echelons.

5.    Normalization and Forced ranking – Rating styles differ from the liberal to the frugal.  Recognizing this, organizations apply a process of normalization through the application of a corrective factor. Forced ranking or the bell curve methodology is also applied in some organizations to correct excessive leniency.

6.    Employee Involvement – The Appraisal process compulsorily involves the employee, through the self appraisal, the appraisal interview, and the review and provides him with an opportunity to comment and sign off on the same, signifying his involvement, if not agreement.

An effective appraisal process is the critical responsibility of the management, human resource department and the manager concerned, and they must jointly work towards this Strategic goal.

c.    Managing differences in Manager & Employee Assessments of the employee’s performance:

Perceptions differ. Consequently manager and employee ratings are bound to diverge, often beyond a set threshold. The review process seeks to narrow the differences in perception and arrive at a fair rating of performance that helps both the individual and the organization. 

Like a legal appeals process, the review meeting deals with performance perceptions of the manager and the employee already on record during the appraisal process.  The reviewer directs his energies toward narrowing perceptional gaps by reasoning and consensus.  However, such consensus may elude the concerned parties from time to time and reviewer arbitration becomes necessary.

Other methods of managing manager employee perceptional differences include a peer review system (in a non unionized workplace) where a small group made up of equal numbers of employees and managers review disagreements.  Organizations are also known to appoint independent ombudsmen to arbitrate on divergent appraisals.

d.    The process of normalization:

Performance is almost always distorted by the rating styles of managers. These may range from the lenient too harsh. Employees reporting to specific managers may benefit or be harmed by these skewed ratings,  as more often than not these ratings determine their remuneration, promotion and incentives.

Many organizations therefore go through a process of normalization of scores, intended to enhance objectivity and fairness of the process. The Normalization process is mathematical and involves the following steps:

1.    Deriving “X”, a statistical mean of the organization rating pattern of all managers.

2.    Obtaining “Xi”, a statistical mean of each appraiser at their peer levels.

3.    Dividing  the  two statistical means to obtain a  correction factor (C)  viz. C= X/Xi

4.    Dividing the employee’s individual rating by the C factor to provide the organization with an individual’s normalized score.

Normalization is widely used and is reasonably effective in normalizing errors caused by differing rating styles. 

The Bell curve:

Companies also adopt a performance rating review based on the normal distribution of employees on a bell-shaped curve. It helps correct the tendency to be lenient or avoid confrontation and hence overrate their employees.  However it does not address the phenomena of harsh ratings.  The benefits of this methodology can only be obtained if the system is intelligently and ethically conducted.

e.    Dealing with poor performance:

Poor performance as evidenced by an objective appraisal process, is caused by inadequacy in inside in processes (Individual Competence (ability * Knowledge) * Commitment (Motivation * Personality) to cope with Role Stressors and/or extreme pressure from negative outside in processes (Organizational Culture (Organization Structure and Processes and Working Conditions) and Union Influences, or indeed a combination of the two which is generally the case.  

Below is a basic guide for working with poor performers at the individual level:

•         Continuously monitor performance in relation to set strategic goals.

•         Coach first, then warn/

•         Discuss an employee’s performance lacunae with him. While doing so, focus on the problem not the person.  Get the employee’s agreement on what needs to be corrected and why.

•         Support the employee’s efforts to improve, through coaching, changes in position, organization support and resources, training where necessary, and reward and recognition as appropriate.

•         The last resort – Disciplinary Action including separation.  It should follow if poor performance is deliberate or sustained.  Progressive discipline is the way forward in such cases.  

We must believe that poor performance can be improved upon, to actually see it happen.

f.     Applying the assessment process to improve employee performance & development:

As discussed above, aligned employee development is critical to organizational performance in a business world that craves for skills to deal with a rapidly changing business scenario, altered consumer behavior, geo political imperatives and financial stringency. 

The questions that organizations need to answer are, who needs it, what does he need, when and why. The performance assessment process has in built mechanisms to answer all of these, through cause and effect relationships that identify the reasons for poor performance, be they individual or organization related.   Individual lacunae are in any of the competency components – Knowledge, Skills or attitude, and once identified, they lend themselves to improvement through a systematic development process in the class room, on the job, or through coaching and mentoring.

Conclusion:

Clear direction, regular feedback and coaching, a measurement process and adequate consequences for non performance are the building blocks of good performance and the assessment process is a vital cog in this wheel of fortune.