Preface: Many a time HR processes are introduced with a business purpose but end up as a mere formality. There is a need, therefore, to verify if your ‘Performance Management Process’ is meeting your business needs or has turned, over the years, into a glorified ritual.
Review the Purpose of your PMS – The purpose of introducing performance management of employees in your organization could have been one or more of the following:
- Aligning individual performance to organizational objectives.
- Managing promotions/career growth of employees.
- Developing competencies and skills of your workforce.
- Planning annual increments of employees.
- Managing Variable component of remuneration.
- Identifying talent and arresting attrition.
- Managing habitual non-performers.
- Utilizing feedback for Succession Planning.
- Using performance management as part of the business excellence needs of your organization.
Validate your Approach to Deployment – Having identified the purpose of your PMS, examine if your approach to its deployment did consider some or most of the factors listed below:
Aligning individual performance to organizational objectives
- A top – down approach that links the Goals of the MD/CEO to those of his/her direct reports, and of all others down the reporting chain.
- Loading these goals on employee ‘Goal Sheets‘ after defining the KPIs and frequency of monitoring achievement for each goal.
- Tracking performance as per the laid down frequency.
- Applying correction through regular counselling and maintaining counselling notes.
- Monitoring the process on dash boards which provide updated information to managers at different levels and to the MD/CEO.
Managing promotions/career growth of employees
- Viewing the total (past and current) profile of each employee to check eligibility for promotion.
- Maintaining a year wise record of employee goal-based performance, training profile, competency levels, exposure to different jobs etc, and mapping these to the JDs of higher level job positions, to enable promoting the most competent persons.
Developing competencies & skills of the workforce
- Obtaining TNI inputs from employees and their managers.
- Conducting a competency gap analysis to create employee development plans.
- Creating a training calendar for the organization and detailing employees on different programs as per their development plans.
- Capturing data pertaining to self development initiatives taken by employees to enhance their qualifications and skills.
Planning annual increments of employees
- Carrying out normalization of performance across the organization to remove the aberrations caused by harsh and lenient ratees.
- Obtaining recommendations pertaining to increment from Heads of Departments/ Functions after performance normalization of employees in their jurisdiction.
- Mapping increments on available salary budgets for each department/function and permitting downsizing based on performance of employees.
Managing Variable component of remuneration
- Having a well defined process that links monthly/quarterly payment of ‘Variable Pay’ to the actual achievements of targets for the goals assigned to an employee.
- Variable pay calculations take into account relative performance of people in a team-based environment. Have you clearly defined your approach to relative ranking of team members?
- Since the entire process has to fit into the budget allocation for the Variable component, the actual pay off to employees may have to be optimized after many iterations.
Identifying talent and arresting attrition
- What is the definition of ‘Talent’ in your organization and how its identification is being linked with performance?
- What is the existing attrition rate of talent & what process your organization has evolved to contain it? Have you ever checked the attrition rate of non-performers?
- Is your PMS providing sufficient data, year after year, to carry out factual analysis of the attrition of talent?
Managing habitual non-performers
- How does your system identify habitual non-performers? After attrition of high performers over the last five years, you may now have only low performers managing key positions. What are your checks and balances to ensure that you are not in this trap?
- What is the likely financial, legal and cultural impact of managing the exit of habitual non-performers?
Utilizing feedback for Succession Planning
- What are the number of ‘Key Positions’ in your organization and is the CEO involved in their identification?
- Do you maintain a pipeline for each of these positions?
- What are the criteria for entry and exit of employees into/from these pipe lines?
- Does ‘performance’ and ‘potential’ constitute the vital attributes of these criteria?
- Are you utilizing a 360 degree feedback to evaluate Leadership competencies for succession planning?
Using performance management as a part of business excellence model of your organization
- Which Business Excellence model (Malcolm Baldrige/TBEM/TQM etc) is your company following?
- How is your HR strategy aligned to the business strategy?
- Which all HR processes have been integrated as a part of your HR strategy?
- In what manner does your performance management process link with other strategic HR processes?
- How is the annual audit of the deployment of your business excellence model carried out and what are the audit highlights of your PMS process?
If your analysis reveals that you have to redefine the purpose of your PMS, you may plan choosing an appropriate technology to support and sustain the drive of your initiative.