Please read this article... will draw the fine lines of what your role should be (it is taken from my blog dated Dec 2008 and was widely discussed in LinkedIn as well):
PERFORMING ON YOUR PERFORMANCE MANAGEMENT SYSTEM
Its the year-end, appraisal time for all!!! The part of the year I like the most... Just kidding! Its among the most difficult times for both employees and employers as this is a time for 'sweet' yet 'unpleasant' discussions! These are the times when companies tend to use an 'equal opportunity based' 'performance evaluation and reward system' for its employees... There are multiple challenges to a successful system. Lets try to understand how the HR needs to work through such areas. Especially if your company believes in awards like the 'Best Contributor' or 'Best Employee', the going would be tougher! These awards are essential, but they need to be properly administered by your HR department.
An equal opportunity based performance evaluation and reward system is supposed to be one that is fair and makes no bias towards any race, sex, age, religion, role, position or other influences. Technically speaking, therefore, it needs to be independent of the function and the role that the employee has in the corporate organogram. This is, in my view, the biggest challenge, and often, not well implemented. Some of the challenges include:
1. Equitable Comparisons: Equity comes from ensuring that one doesn't get skewed by absolute values. Hence, here one needs to look at the expectations of the roles vs. the fulfillment of the roles. Lets put this in perspective. A CEO needs to ensure good working, longevity and profits of the company (just to name a few parameters). The lift operator who works at the corporate office needs to ensure that people are being taken to the correct floor and that they are comfortable. The expectations from these two persons are different. Their fulfillment is also measured differently. Does the lift operator of your company have the same chances of winning a 'best contributor award' as the CEO say? If your answer is yes, does historical, circumstantial and cultural evidence support this openness?
2. Limitations of Statistics: While targets could have multiple meanings, the instances of fulfillment become important. Taking the case further, the lift operator might well be performing tasks within the 6 Sigma Limits! There might be other roles and processes that are carried out just once in the year (say, renewal of the annual sales partnership contract)... How does one compare performances these?. While the former can be tested, trend-fitted and confirmed, the latter is a single data point that doesn't provide a feasibility to statistical analysis. How does your system work around such issues?
3. The Shadow of Management Systems: The organization structure, value chain and the profits often have an overwhelming influence on the reward process. Needless to say, it requires a special 'cultural change' to be initiated by the HR to ensure that these influences do not affect the dignity of labour within the company. A simple test is the political undercurrent that one sees in meetings. Does your corporate grapevine have different messages from those aired out during the meetings? If yes, then you need to look at re-aligning your corporate culture.
4. The Case of Hidden Contributions: With people that have different traits, one often see employees who 'entertain' their colleagues with 'boastful' stories and others who are 'silent performers'. Imagine a great sales person who has come out of a difficult negotiation. He only reports that he has sold... The tough negotiation then becomes a 'hidden' contribution. The biggest risk for a management system is having a 'blind spot' to such 'hidden contributions'. Culturally, the corporate system must ensure that it doesn't turn a 'blind eye' to this phenomenon. Do you hear of 'unfair' treatment to colleagues in your grapevine? You might probably want to look into the 'hidden' contribution component. Failure to do so would only mean an incorrect performance evaluation and reward system.
5. Limitations of Ranking Systems: Ranking systems are typically driven by impressions, perceptions and subjective assessment. Further, ranking systems are not flexible in looking at the zone of delivery that the circumstances, the organization or the employee brings to the position. It often restricts itself to explicit requirements and established 'normative' means and systems of assessment. This, at times, affects the big picture. What component of your measurement system is automated? What is the objectivity in the automation? These might be factors of interest in ensuring that your system is fair. Are people having access to look at their performance at intervals of interest to them? This is a major factor in most IT companies. I have seen large IT corporations have automated and objective systems where employees can track their performance online. Thereby, they know what they need to do and how they have to deliver! Do you have such a system?
In the big picture, HR professionals need to guide the values of the corporation, helping people embrace change and grow with the corporation. The performance evaluation and rewards systems are the 'corporate way' of defining what they 'really value' and what kind of 'target culture' the company has. In slow economic times, such HR 'instruments' help boost the morale of the organization and look at helping one define a new and better culture. For its the people, who hold the key to the company's destiny.
Amidst the vast myriad of options for HR, we have defined ways to improve the fairness of reward systems. My team is looking at a rationalized process oriented system that helps one to look at the right kind of assessment system for rewards. Further, we have identified ways to improve the efficacy of such systems by optimizing the reward cycles, the definitions and the implementation methodology.
If you are looking forward to improving your performance appraisal and reward management system, contact us here.