|
 Performance
appraisal is an integral part of the performance management system
writes Mohan Bangaruswamy, explaining how a balanced and
holistic approach greatly benefits an organisation
My
answer to the question whether the performance appraisal system
benefits anyone is—“it depends”. A good performance
appraisal process is an integral part of the performance management
system and it works seamlessly with the other components. This article
takes a holistic approach to performance management and gives an
overview of the components.
In
my opinion, a performance management system has the following components
and interfaces: goal-setting, regular reviews, annual appraisal,
development process and linkages to other systems.
Goal-setting
This
process is the foundation for a good performance management system.
It brings in the clarity required to deliver the required results.
The organisation’s expectations are set in the form of “key
result areas” (KRAs), along with strong indicators of the required
standards (also termed “measures of performance”). The
benefits of giving clear directions are many. It helps increase
productivity by enabling people to focus on the requirement, it
minimises frustration and enables employee satisfaction.
Regular
reviews
Reviews
are a critical component of the system. Reviews give timely feedback
to the individual. It is important to schedule formal reviews during
the course of the year. These can be half-yearly or quarterly depending
on the need. Structured mid-term reviews enable the organisation
to take stock of the performance during the given period. It gives
the individual an opportunity to discuss his/her achievements during
the given period and to look at areas of improvement. In a dynamic
environment, it is important to keep abreast of market situations.
Reviews can be utilised to make midcourse correction in the KRAs.
It
is possible that the macro environment has changed and that some
of the objectives have to be reviewed. For example, certain sectors
in the economy may be doing extremely well and the organisation
may see a need to review sales numbers based on these indicators.
Reviews need to be structured on a regular basis to ensure that
there are no surprises in the annual appraisal. Regular and structured
reviews are a critical component of the performance management system
and this is essential to ensure that the performance management
system is not the same as the annual performance appraisal. As a
part of this sub-system, we have processes such as coaching, mentoring,
performance improvement plans, etc.
Annual
appraisal
A
typical appraisal system could be designed on one of the following
-
Confidential report: The report is written by the supervisor
and is, typically, not shown to the individual. Decisions, such
as promotions and changes in compensation are made, based on this
report.
-
Report by supervisor that is shown/given to the individual and
discussed.
-
Self-appraisal by the individual, value-added comments by the
supervisor and a discussion: In this system, the individual writes
a self-appraisal vis-à-vis KRAs set at the start of the
year. The manager adds his or her comments. Organisations follow
one of the following methods of ratings—(a) rating given
by the manager or (b) the individual and the manager give ratings
and the organisation has a mechanism to deal with differences
between the two. There is an opportunity for the individual and
the manager to discuss the contents of the appraisal.
People
working in the software industry or in a project environment may
raise a question about the relevance of the annual appraisal. Then
there are also professionals who work with different project teams
during the course of the year. In this case we could have reviews
signed-off at the end of each project. These could be collated at
the end of the year to look at overall performance and linkages
to other systems.
Development
plan
This
pertains to the training and development sub-system. A part of the
development plan stems out of the annual appraisal. This is the
result of the areas of improvement that emerge from the appraisal
and competencies required for new roles, if relevant. A good training
and development process will also take the necessary inputs from
the organisation’s business plan. This is required if the organisation
is investing into new business or entering new markets.
Linkage
to rewards system
Linkages
to processes such as compensation, rewards, progression and succession
planning—the
performance appraisal system, in many organisations, has a link
to the rewards system. Individuals judge the performance management
system and the culture of the organisation based on the message
sent by the rewards system. If the rewards system recognises individual
contribution and ignores contributions made to team objectives,
the people in the organisation start focusing on individual tasks.
Therefore,
linkage to many of these systems need to be contemplated upon, articulated
to the people and implemented with consistency.
Dr
Douglas McMgregor in the HBR Classic, An uneasy look at Performance
Appraisal, wrote: “Managers are uncomfortable when they are
put in the position of playing God”. They do not want to pass
judgment on personal worth of their team members. This article was
written years ago and it is still relevant in the current context.
An effective system focuses on results on the behaviours that facilitate
or constrain the achievement of results.
I
have found that organisation and the individuals benefit when there
is a balance in the “Evaluation” and “Development”
content of the appraisal process. It is unlikely that organisations
will do away with the evaluation component; however, it is important
to realise that people perceive real value when the system gives
them adequate opportunity to develop.
Dr
Deming in his book, Out of the Crisis mentions the importance of
taking system variables into account while dealing with performance.
There are times when organisation processes hinder the performance
of individuals. The system needs to continuously review the operational
processes in the organisation to ensure that they facilitate and
enable performance. There is no point in rating the individual’s
performance as “not as per expectation” if the root cause
lies in the system and not with the individual’s competency
or inclination.
Therefore,
the performance appraisal process is an integral part of the performance
management system. The benefit to the organisation and the individual
will accrue if we take a holistic and balanced approach.
Mohan
Bangaruswamy is Vice President-IT Services and Organisation Development,
Apara Enterprise Solutions. E-mail: mohanb@apara.com
|
