Hari.nair69
Vice President - Human Resources
Raghul_singh
Hr Consultant

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Beyond Efforts, Beyond Results, Beyond ‘Recognition’

“The Greater the time difference between performance and reward, the less is its value”

Abstract:

The system of rewarding the performances has been inherited from long back in days of Mahabharata when the greatest soldiers were rewarded with gold ingots or knick-knacks, or get an extraordinary place in the king’s assembly, when they returned from states of war. The best performer in the swayamvara gets wedded with the fine-looking princess! The concept is still the same, only the approach today has become more quantitative. At its nucleus, performance management is designed to fairly and accurately assess how well people do their work, provide feedback to help them improve, identify goals and objectives for future performance, and tie the overall evaluation to some valued consequence, such as a pay increase, bonus, promotion, or some other form of recognition. People perform well and are motivated by both fundamental and extrinsic rewards. To be successful, the reward structure must make out both sources of motivation. Almost all reward systems target the three essentials of any business – attracting, retaining and motivating the best talent available on board.

“If you pick the right people and give them the opportunity to spread their wings and put recognition as a carrier behind it you almost don’t have to manage them” – Jack Welch



Not Just Money: An Introduction to Performance Rewards

For a country like India, out of all, financial rewards have always been a vital constituent of the reward system, but there are other factors that encourage employees and influence their level of performance. In fact, quite a lot of studies have set up that among employees surveyed, money was NOT the most central motivator, and in several instances managers have found money to have a DEMOTIVATING or negative effect on employees.

To make certain that the reward system is in-line with the business goals and motivates the preferred behaviors in employees, it is essential to consider carefully the rewards and strategies utilized and ensure the rewards are linked to or based on performance. To be effective, any performance measurement system must be attached to the monthly compensation or some genus of reward. Rewarding performance must be a continuing managerial activity, not just an annual pay-linked ritual.

Strategies for rewarding employees’ performance and contributions to the business objectives include non- monetary and monetary mechanisms. We have tried to put in few strategies in this write-up. The listing is not very comprehensive, and individual units/departments possibly will have to make out further mechanisms that are appropriate for and sustain their culture and goals.

Satisfaction Surveys identify lack of recognition

In a client employee satisfaction survey, the question about whether the company cared about the welfare and happiness of its employees drew divergent views. Some people agreed; others disagreed.

So, the Culture and Communications team put out a second survey asking what would make the employees feel as if the company cared about them. We developed several answers employees could check and supplied room for their comments and additional thoughts.

Fifty-five percent of the respondents said that praise and attention from their supervisor would make them feel as if the company cared about them and their well-being. As you might also expect, money, benefits, and events such as company lunches ranked high, too. But recognition from the supervisor ranked above all other choices.

I have sponsored similar surveys in different organizations. The findings are always similar. Employees want to know that they have done a good job – and that you noticed. Employees want to be thanked and appreciated.

Performance Management linked to business goals

Just visualize this: you join the Indian cricket team, and have a grand year. Your team wins the title match, and you are in the running for Man of the Match. But, the judges summon and award the Man of the Match to a bighead and ball-hog on the worst team in the league. The justification: the ball-hog has fine long hair and dimply smile, resembling the dude in the leading motorbike TV commercial.

Couldn't believe, right? Well, this is the familiar story in corporations all the time.

This is what happens when the performance appraisal process is not in line with the business goals and mission. Employees are evaluated based on subjective and pointless standards because nobody has defined the proper benchmarks. Marketing guys are acknowledged by marketing managers for bells and whistles and are praised for creativity, not articulacy or internal customer satisfaction. HR employees get de-rated if company attrition is skyrocketing, as if the HR chaps are liable to make people from production or quality departments to go away. Quality Systems people are rewarded for the big binder of strategic recommendations for business, not the accomplishment of the projects. When performance appraisal fails to make the organization efficient, that entire physical, mental, and emotional attempt drains employees and generates a negative feeling in general.

We need to further analyze that in a developing country like India, why does performance management so much stand to other side from organizational line of attack?



Performance management systems are by now in position in more or less entire corporate world. They may be unproductive, but employment statutes mandate them. Fear of union grievance fills many personnel records with worthless formalities and paperwork. Even if the organizations have evidently defined mission, time and again they don't communicate this to their employees nor do they believe on those missions



You must be surprised to know, but strategic vision is illustrious for in no way getting implemented! We have seen companies putting further exertion into new names and new logos than into actual change. The system that bogs down change most frequently is performance management, by limiting discussion and deliberation to the past and present, and ignoring the future. It's easy to talk about what you needed to do yesterday. It's much harder to guess what you'll need to do tomorrow.

Thrust Employee appreciation up a mile

Employee recognition is not being considered as vital in most organizations. Employees grumble about the lack of recognition repeatedly. Senior management is so engaged in daily work that they often ask, “Why should I recognize or thank him? He’s just doing his KRA.” Such incidental factors combine to create work places that fail to provide recognition for employees and this goes on to build up dis-grunted mindsets and finally the separation.

Senior managers who prioritize employee recognition understand the power of recognition. They know that employee recognition is not just a pleasant thing to do for people. Employee recognition is a communication tool that reinforces and rewards the most important outcomes people create for your business.

When you recognize people efficiently, you strengthen, with your selected means of recognition, the actions and behaviors you most want to see people go over.

An effective employee recognition system is simple, immediate, and powerfully reinforcing. Employees feel cared about and appreciated. It may seem simplistic, but people who feel recognized and cared about produce more and better work.

A person in charge of employees makes other people feel imperative and appreciated. The leader excels at creating opportunities to endow with rewards, recognition and thanks to his team. A leader creates a work atmosphere in which people feel important and appreciated.

Don’t just go adopting best practices: The saga of 360 degree performance monitoring

Formalized performance assessments are important for several reasons. Performance reviews are one way of establishing benchmarks for employee’s work area. In the era of chaotic work environments, these reviews provide for a prearranged time to pause, plan goals, and set concrete guidelines that the employee will be judged against in terms of deciding grade hikes, salary hikes, and his or her yearly training needs. Organisation can accomplish this without including the employee in the process, but that is to close the eyes to the employee side of the equation, and thus performance reviews make time for employee participation. This is NOT the time for the employer not to tell the employee what he/she did right or wrong, rather, it is time to discuss with them various aspects of his/her key responsibilities. Employees like to be heard by management and this is the guarantee that, no issue how hectic or practical the organization might be, there must be specific time allotted for their input.

Now actually what is this 360 degree review? The concept is to improve team functionality from diversified perspectives - supervisor, subordinate, associate, in-house contact, outside contact, and of course, the customer. It is best, on the other hand, to gradually put such systems into operation. Begin with two or three reviewers and work your gradient to a number that you are at ease with and that works for your organization. Ensure that the administrator gathering the data from the various reviewers is sensitive to the concerns of the employee being reviewed and treats all information accordingly and with the quantitative weightage (anchored with mutual discussions between the reviewer and reviewee, personal issues, etc.).

For corporations with long-established top-down structures, implementing 360 degree systems can be somewhat thornier. The employees in such cultures with their set inertia are inherently going to be rougher with the proposal of co-workers, rather than their direct supervisor, conducting a performance review. Moreover, others might not be in a situation to do a sufficient assessment because of the narrow information flow. In these situations, 360 degree systems can be used as an instrument to open the lines of communication within the company. But it is absolutely essential to start little by little to build the self-confidence of the employees in the system. If you decide against a 360 degree system for this type of setting, definitely stick with some kind of a formal performance review process - even if it means the old supervisor-only review standby.

It’s true that for organizations that emphasize multidirectional and team environments, 360 degree feedback performance review systems are great. But if you go in deep research work, like we did at SONA Koyo before implementing this colossal system, you will be shocked! A recent study about HR practices, the Watson Wyatt Human Capital Index study, found that 360 degree feedback can be counter-productive in some situations. In fact, the study concluded, the practice might produce negative returns for shareholders. Even in a work culture where people are accustomed to multilevel interfaces, having your performance judged by all these people, especially subordinates may cause discomfort.

Some incidents from companies give dimension on why 360 degree feedback can be a negative, even when the basic concept, getting feedback on managers from all sources, seems so sound. In one company most of the managers loathed the practice, and resisted cooperating. For some managers meeting with their subordinates and discussing what the boss needed to improve was too alien and frightening a concept. For others, there was insufficient training in how to use the process, thus dooming it from the beginning.

One manager in a large Wall Street bank had nothing but contempt for the process, particularly the part relating to peer review: "Once a year we have to go around and ask somebody for a peer review. It's either screw your buddy or kiss up to them. Nobody picks someone they are not tight with. The whole process is ridiculous".

That is what Watson Wyatt has to state. But to us at SONA, the issue we faced was whether 360 degree feedbacks should be part of the salary equation. One answer was to the point: once you've included 360 degree in the review, it's definitely related.

But now we didn't get into specifics on 360 degree systems. There are many out there: some are out of the box and inexpensive, some are customized and implemented by pricey consultants, while some are created in-house. There is a plethora of choices out there. Many are good and many are not-so-good. Evaluate your options and make the choice that is best for your particular organization.

Rewards need to be SMART - Specific-Measurable-Achievable-Time bound-Realistic

Performance reviews play a critical role in career development of employees, and it is in the best interest of the organisation to understand how performance reviews work, how to prepare for a review, what to do and say during the review, and how to follow up at the salary negotiation and beyond. There are ranges of ways to measure performance; the method often depends on your company and the nature of your job. The two most common approaches are the weightage scale method and the Management for objectives method. The methods use different criteria to judge performance.

Weightage scale method: This approach emphasizes competencies, traits, or behaviors. An employee's performance is rated on these characteristics and on specific items such as quality of work; quantity of work; communications skills; interpersonal skills; and decision making.

Management for Objectives method: We exercise this method at SONA. This approach measures performance by comparing the business objectives set by the employer and the employees with the results, or what was accomplished. Goals are set and prioritized by both parties at the beginning of the period. The review is used to evaluate and record the results - whether the employee has met, exceeded, or failed to meet expectations.

Rewards are no longer static, nor reactive, but adaptive

To motivate and promote high performance, it is very important to link efficient rewards mechanism or system in the organization. However we should know 3 golden rules of rewarding.

What to Reward – Certain Behaviors and Achievements that are required by an organization to be cherished, promoted and rewarded. These need to be prioritized to be rewarded; other things which are not in line with organization and performance objectives can be given second priority.

When to Reward – It is very important to reward employee instantly when he achieves the results or at least recognize his efforts; delivery of rewards may come later. It is not good to reward the employee after 6 or 12 months in the next appraisal cycle, it gives no meaning or value to his achievement.

How to Reward – Some like it in public, some in private. Each one has his own likings about how he should be recognized and rewarded. Cash, Stock options, Profits, Promotions, Relocations etc. The list could be endless

· Write out the recognition, what the employee did, why it was important, and how the actions served your organization. Give a copy of the letter to the employee and to the department head or CEO, depending on the size of your company. Place a copy in the employee’s file.

· Write a personal note or e-mail to the employee. Perhaps have your boss sign it, too. Photocopy the note and place the recognition in the employee’s file.

· Accompany the verbal recognition with a spot gift. Engraved plaques, merchandise that carries the company logo, even certificates of appreciation reinforce the employee recognition.

· Everyone likes cash or the equivalent in gift cards, gift certificates, and checks. If you use a consumable form of employee recognition, accompany the cash with a note or letter. When the money has been spent, you want the employee to remember the recognition.

· Present the recognition publicly, at an employee meeting, for example. Even if the employee is uncomfortable with publicity, it is important for the other employees to know that employees are receiving recognition.

Performance Reward is a self-management tool, not control mechanism

· Exigency in job assigned – Challenging and inspiring work assignments are the best instrument on hand with seniors to reward good quality performance. Such assignments can provide employee’s opportunities to expand to new skills, subject knowledge, and boost their visibility inside the organization. They as well propel an important message that employees’ contributions are recognized and valued. In allowing for such assignments, seniors should consult employees about the types of assignments that would be most valued, and they should also assess whether workloads will need to be redistributed to ensure employees have adequate time to devote to new tasks.

· A pat on the back – Just a modest smile or a pat or a little hug (which we at SONA call Jaadu ki Jhappi! from the famed movie Munnabhai MBBS) from seniors is consistently found to be among the most effective motivators. Employees want to be recognized and feel their contributions are noticed and valued. It is important that seniors recognize the value and importance of sincerely thanking employees verbally and/or in writing for their specific contributions.

· Employee Development through adequate trainings – Seniors should offer employees with occasions to take part in learning programs or other activities that will enlarge their competencies. Employees benefit by developing new skills, and the organisation benefits from the added proficiency individuals fetch in to the job. At a latest survey at SONA we found 87% of the fresh recruits viewed individual training as an encouraging incentive, and it appeared most meaningful to employees with postgraduate education in junior management staff.

· Of course Salary hikes too! – Grant your employees an annual merit raise to recognize consistently meritorious performance or successful achievement of a KRA that had a significant impact on a department or the organisation. The reward may be in any amount up to 7.5% of the employee's current basic salary (The figure corresponds to annual increment for FY-07 at SONA), subject to the budgetary constraints of your firm. Budgetary information regarding fiscal year merit increases are issued annually as part of the budget process as soon as the organisation’s fiscal position can be determined. To be eligible for a merit increase, employees must have been employed for at least six continuous months and at least six months must have elapsed since the employee's last salary increase, promotion, salary increase due to progression in the salary range, or transfer from another department. Employees may receive salary increases to recognize the attainment of new and/or the enhancement of existing skills/competencies or for assuming increased responsibilities within the scope of the current position.

· Grade elevations and lateral moves - Promotions and sideways movements are long term rewards that recognize employees’ professional growth, knowledge, and ability to contribute to the organisation in new roles. Promotions are typically associated with a flat increase in salary, and the increase may be any amount up to 12.5% of an employee’s current basic salary.

· Non monetary rewards - When necessary, seniors may choose to give employees informal rewards for specific accomplishments/contributions. Some laws and institutional policies allow expenditures of state and non-state funds for employees as informal non-cash rewards that demonstrate the organization’s positive reception. Seniors can be creative in identifying informal rewards that will be appreciated by the particular individual being recognized, but, in selecting and purchasing rewards, seniors must be sensitive to the organisation’s cost constraints.

Case Example: Performance management at SONA KOYO Steering Systems Ltd



Performance as seen at SONA

Incentives and Rewards are a waste on money, unless they are aligned to the strategic objectives.

The key beliefs are:

• Organization needs to be exceptional at recognizing employees in ways they value

• Recognition is a key driver for optimum performance

• Reward programs have to be proactive, not reactive

• Recognition has to consistently fair across organizational boundaries, functions and culture

• The greater the time lag between “performance” and “reward”, the less is its value

• Like fine wine, employees get better with age and performance. Reward such employees

We believe in Carkhuff’s equation for human productivity, i.e.

Productivity = Responsiveness+ Initiative+ Processing

Excellence is not a skill. Its is an attitude

Efficacy = Efficiency + Effectiveness

· capacity or power to produce a desired effect

· the ratio of the output to the input of any system

· Ability to achieve stated goals or objectives, judged in terms of both output and impact



Performance management as concept

It is Futuristic, i.e. how to plan, strategize, organize, ensure and extract the desired performance in the coming year or in near future. Performance Management consists of following components.

SONA’s performance policy

Right Policy Framework is also a key to understand SONA’s performance philosophy, performance expectations and the manner in which performance has to be delivered. A detailed Performance Management Policy is defined which outlines SONA’s performance framework, measurement and assessment methodologies, rewarding and awarding mechanisms, and performance improvement facilities etc.

Performance benchmarking at SONA

It starts from Performance Benchmarking. SONA has set clear performance goals for the entire organization starting from Top Management, to Business Groups level, Business Unit level, Department level, Team Level and finally scaling down to Individual levels. SONA’s performance goal is defined in terms of business strategies i.e. increasing market share from 15 to 20%, or increasing revenue limits from 20 crore to 27 crore, or increasing sales from 7 lacs units to 9.6 lacs units, increasing current clientele from 33 clients to 47 clients in the next year, or improving organizational productivity from x level to y level etc. It can be anything that goes with organization’s business strategies or goals. These expectations and plans can be further cascaded to department level, business unit level, and individual level. Performance standards can be set in terms of; this year we need to expand our sales figures from X level to Z level, our brand equity in the industry needs to move from A level to B level, to increase our market leadership, sustainability in the industry, improve our core competencies and increase our competitiveness etc.

Performance indicators

SONA’s PMS Policy defines very clearly what are the areas, factors that reflect benchmarked Performance, i.e. what are the Key Performance Indicators, or Key Result Areas, which show performance to be achieved. These indicators are clearly explained to each department, team and individual so everybody sees clearly what needs to be done and finished.

Performance Planning

Once we identify requirements of performance, SONA plans performance extraction in terms of the following.

The rating will be done on a total of 100 point scale. Each characteristic will be allotted certain points. Accordingly the rating will be further simplified by converting it into qualitative terms which is as follows

The combined weightage of Key Responsibility Areas (Section I) and Objectives (Section II) equals 80% of the employees total performance rating. Weightage of each section depends on the employee category. Performance Factors (Section III) is weighed at 30 % for Unit heads and 20% for all employees.

Weightage criteria:

Category Section I Section II Section III

Unit Heads 20% 50% 30%

Division Head 35% 45% 20%

Department Heads 40% 40% 20%

Section Heads 45% 35% 20%

Seniors 50% 30% 20%

Rating schedule

Use the following scale to rate the results achieved in Key Responsibilities (Section I), Objectives (Section II) and Performance Factors (Section III).

Ratings definitions

3 = Exceeds Expectations - Consistently and significantly above all expectations. Demonstrated extra mastery of Key Responsibilities, objective and / or performance factors, even when faced with (most) significant challenges.

2 = Meets Expectations - Fully met, and occasionally exceeded expectations (set for Managing Points, objective and / or performance factors).

1 = Below Expectations - Did not meet basic expectations, lacked requirements for achieving Key Responsibilities, objective and / or performance factors.

Overall rating criteria

A Outstanding 280 – 300

B Good 250 – 279

C Adequate 249 and below

Identify and understand if current job profiles, roles are consistent to extract desired performance. If there is any role conflict or need to realign or redefine certain job profiles or positions, do the rework and structure each job profile in each function (technical, frontline, operational, support functions) that enables the job holder to give expected results as per KRAs. Further clarify transparently division of labor where each employee has enough workload (avoid overloading or under loading) so that performance doesn’t get stressed and stretched. High level of employee engagement is required.

Also performance extraction can be phased out to simplify the delivery of results where say in a first quarter we should be able to achieve X, in second quarter Y and in the last two quarters Z,A,B,C etc.

Conclusion

A simple “thank you” counts as employee recognition. But, you can also make employee recognition as elaborate as your imagination can conceive. Recognition is not a scarce resource. You can’t use it up or run out of it. No budget is too small to afford employee recognition. For increased employee satisfaction, bring on lots of employee recognition.

References

Web site

www.greatplacetowork.in

www.watsonwyatt.com

,

http://finance.groups.yahoo.com/group/PassionHR

The HR Scorecard: Linking People, Strategy, and Performance by Brian E. Becker, Mark A. Huselid, Dave Ulrich

A Critical Look at Performance Management Systems - Why Don't They Work by Robert Bacal

Abolishing Performance Appraisals: Why They Backfire and What to Do Instead by Tom Coens, Mary Jenkins, Peter Block

The Performance Appraisal Question and Answer Book: A Survival Guide for Managers by Richard C. Grote, Dick Grote





The Authors

MR. HARI NAIR, a young Post Graduate in Public, Personnel Management & Industrial Relations from Osmania University, did his Graduation in Commerce and has a Degree in Education Psychology & a Diploma in Journalism. Currently he is at the helm of affairs at Sona Koyo Steering Systems Ltd, Gurgaon as its Assistant Vice President – Human Resources, and can be reached by e-mail – or and on his Mobile No. +91-98-102-89047

MR. ABHISHEK GAVANE, a young scholar Mechanical Engineer with PGDBM (HR) and having a year plus of meticulous experience as Senior Executive – HR Strategy in Sona Koyo Steering Systems Ltd, Gurgaon, functioning in Strategic HR cascading OD Interventions, Technical recruitments, Blue Ocean Initiatives for Employer Branding and Competency mapping. Can be reached by e-mail or or on his Mobile No. +91-98-913-65444

Hai Hari nair, Nice one and quite good to learn and introduce in companies and suit them accordingly. I appreciate UR effort. Keep Posting Regards, S.Sudheer Reddy Hyderabad. 9866234587
Dear Mr.Hari Nair
First of all let me thank you for your postings and personally request you to post more like these and you can share things with me on my email id through
Thanks and Regards.
Raghul.

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