If an organization is spending 2 million hours of effort on measuring performance, an annual activity that’s doesn’t make sense to anyone, we have strong reason to relook at the cost and effort spent on this activity. The countless number of hours spent on filling self-reviews, manager review forms, meeting, arranging and collating performance data is certainly not justified.
During my corporate career, my team and I always expected two outcomes from performance review (mid-year and annual):
- Feedback from my manager on how I have done
- What will be the increment in my salary
While both the reasons are strong enough to hold my team’s and my interest in performance reviews, it was always disengaging. HR, Business Unit Heads, and team managers have to follow up endlessly with people to get self-reviews completed. It’s a strong enough evidence that people are not looking forward to this annual ritual. Further, a study by Willis Tower Waston fond that ONLY 20% of employers believes that merit pay is effective in driving higher levels of individual performance in their organizations. Here are the top 5 reasons of dis-engagement with performance review process:-
- Performance management process is not employee centric: The yearly performance review process and system are designed to get top 10, average 70 and bottom 20 percentile of people to facilitate C&B (Compensation & Benefit). To achieve this activity, organization’s and HR leaders forgot to put employees and managers in the center of doing performance review process(now day’s it’s also called as design thinking). As an employee, if I know that outcome of the annual performance management process is money, my projections about my performance will always be HIGH. And the manager will be more focused on justifying the rating and/or percentage of salary hike. In this all, giving actual feedback to the employee on how she has performed and how she can improve in future takes back stage.
- Measurement on KRA/KPI/questioners which doesn’t make sense: KRA’s are static in nature; today’s business world is way too dynamic. Team’s priorities and targets keep changing on day to day, month to month and quarter to quarter basis. And team members are not able to correlate their day to day work with assigned KRA’s and KPI’s. Even if they are able to correlate, how much progress they have done to achieve the KPI(s) cannot be measured quantitatively and qualitatively. Don’t believe me, ask your employees. At the end, the current process leaves the judgment of how well I have performed on manager’s wisdom.
- Lack of clear communication on expectations and what should be done to grow: When was the last time your organization has clearly communicated to your employee on competencies they need to get better on. And which competencies they need to acquire to grow to next level. Team members often come up with an assumption that they are ready for next role, without realizing whether they are even ready for that or not. And managers don’t have enough data to tell the team member why they are not getting promoted to the next level.
- Recency bias in evaluation: – How many times you have observed that when performance reviews and appraisals are approaching, team members suddenly become more proactive, disciplined, showcase best of their behaviors and start delivering things on time beyond expectations. I still remember one such incident: One of my team members who was sitting in different office location started sharing the status update on time, without follow-ups, was calling me on regular basis to tell me how lucky she is being in this assignment. As a manager, you will tend to take the decision based on recent events and perceptions.
- No transparency: – Organizations lacks transparency in the entire performance management process with too much dependency on manager’s decision. While manager’s role cannot be denied in the process, it’s the employee peer’s who know how this person has performed throughout the year and whether she is a good team player or not. And though increment has always depended on the how the company has performed and on macroeconomic conditions, managers give feedback to justifying the bell curve rating or to justify the rating communicated to her from the higher management.
The way you measure performance defines the core culture of your organization and it will define how your people will perform in the future.
In part 2 of this post, I will share how you can take the journey of moving your organization from performance measurement process to performance enablement process.
- Performance management is dead, future belongs to enabling the performance.
- Current Performance management process is not employee centric.
- Managers lags data of employee performance through the year, leading to recency bais in evaluation
- If done right, enabling performance will accelerate business growth
Part-2 of this article can be found here.