SHRM India - Archived Webinar - Designing an Effective Performance Management System


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SHRM India - Archived Webinar - Designing an Effective Performance Management System

  1. 1. Webinar – Designing an Effective Performance Management System 18th January, 2012All materials are Copyrighted 2010 by Strategic Human Resources Management India, Pvt. Ltd. or Society forHuman Resource Management unless otherwise expressly noted. All rights expressly reserved.
  2. 2. Structure1. Aniruddha Limaye – Performance Management Design Principles1. Vijayan Pankajakshan – Structuring the Performance Design and Implementation as a Change Initiative – Key Design Challenges and Solutions3. Question and AnswerSlide 2
  3. 3. Key Performance ManagementDesign Principles When to institute a new Performance Management System? Elements of current PMS. What is missing? How to design PMS to achieve results?Slide 3
  4. 4.  When to institute a new Performance Management System ? – Key indicators to look at:  Employee related issues  Performance related issuesSlide 4
  5. 5. …When to institute a new PerformanceManagement System? Employee indicators 1. Unfavorable feedback from employees on PMS  Goal setting  Performance Assessment  Reward and consequences 2. Increase in employee attrition linked to appraisal cycleSlide 5
  6. 6. …When to Institute a new Performance Management System?  Performance indicators: 1. Low line ownership, tremendous follow up by HR 2. Organization consistently struggles or fails to achieve goals 3. Considerable finger pointing when goals are not achieved 1. Low mutual trust, turf mentality 2. Lack of teamwork – within and across teams 4. Severe difficulty in implementing any new decisions, initiatives or changesSlide 6
  7. 7.  Elements of current PMS. What is missing?1. Goal Setting  Annual Goal Setting Process at the Apex Level.  Goal Cascading Process.  Some organizations create a “Balanced Scorecard”2. Sometimes there are monthly or quarterly “Business Reviews”3. Appraisal and rewards guidelines are arrived at by HR Semi-annual and/or annual individual appraisals are carried out4. Some have employee self-assessment5. Ratings are submitted to HR and “normalization discussions” to decide on final ratings and rewards/consequences6. Process is guided by budgets, rewards philosophy, results of a compensation survey, and the process of forced ranking and application of “bell curve”Slide 7
  8. 8.  …Current PMS. What is missing ? 7. The final ratings and rewards are communicated to line managers, who in turn (are supposed to) communicate these to their respective team members 8. Some amount of grievance redressal may happen 9. New Goal Setting Process beginsSlide 8
  9. 9.  …Current PMS. What is missing? 1. Most current appraisal systems are not really Performance Management Systems or Performance Enabling Systems,  Are end of the period Performance Assessment/Appraisal Systems – an administrative or HR process  Don‟t guide individual employee to do what to achieve results, and  Don‟t help individual employees to make mid-course corrections  Don‟t take into account the behavioral basis of enabling Performance - disregard this element 2. Goals most often set and measured are “challenging stretch goals” that lead to always falling short 3. Intermediate goals or essential milestones are rarely defined, measured and tracked 4. Little inputs from ground upSlide 9
  10. 10.  …Current PMS. What is missing ? 5. Goals not arrived at through rigorous, open, data based discussions and deeper understanding 6. Goals represent top leaders‟ ambitions or the organization‟s grand aspirations 7. Critical assumptions are rarely discussed and captured 8. Goals not clearly linked to specific initiatives, actions and behaviours that actually drive the desired outcomes 9. Lack of clarity and ownership at managerial and employee level about critical actions and behaviours needed to achieve the desired results 10. No base-lining of past individual performance 11. Goals don‟t take into account past base line performance and existing capabilities of each individual employeeSlide 10
  11. 11.  How to design PMS to achieve results? – Key design principles  Behavioral basis for enabling performance  Making PMS an effective core business processSlide11
  12. 12.  Design Principles – Behavioral basis for enabling performance 1. Each employee to have line of sight goals 2. Identify specific actions and behaviors that will help them achieve the goals  “Causal link” between actions & behaviors and achieving the desired results 3. Goals are in line with the employee‟s strengths and current level of capabilities 4. Actions, behaviors and intermediate results (milestones) are concurrently measured and are analyzed and graphically representedSlide 12
  13. 13.  …Design Principles – Behavioral basis for enabling performance 5. Specific and immediate feedback provided about the behaviors and results achieved 6. Feedback given as quickly actions/ behaviors and resultant outcomes occur (Best that employees can get automatic feedback) 7. Feedback is information in a form that can help the employee understand what to persist with, do more and what to stop or change, and how 8. Feedback is non-judgmental, factual and without “negative emotional content” 9. The employee himself can understand where he stands 10. May need help to figure out what needs to be done to improve resultsSlide 13
  14. 14.  …Design Principles – Behavioral basis for enabling performance 11. The desired actions and behaviors are “positively reinforced” by the manager very frequently and regularly  By definition, “positive reinforcement,” is actions that lead to frequent and consistent recurrence of the desired actions and behaviors  If this does not occur, it means the “intended reinforcement action” is not working for that person  Some trial & error and iterations are required - deeper understanding of individual employee helps  Manager can provide “different strokes for different folks”Slide 14
  15. 15.  …Design Principles – Making PMS an effective core business process 1. Ensure Organizational Strategy is formulated out of “rigorous thinking and debate and questioning assumptions,” not result of high ambition 2. Set goals focus on building capabilities – organizational and people – and serve different stakeholders to achieve sustainable results (Balanced Scorecard approach) 3. Understand fundamental process of value creation in the organization to ensure that  Individual Contributors - functional specialists/technical experts – also get their due importance and rewards  Differentiated rewards really reflect differential contribution and rewards are equitable  Organizational, departmental/team and individual goals are all given due weightage – not one at the cost of other  Enable senior leaders and line managers to see the causal link between right actions & behaviors that achieve endSlide 15 results – not just focus on results
  16. 16.  …Design Principles – Making PMS an effective core business process 4. Measure initiatives, actions and behaviors that drive results 5. Underscore importance of concurrent measurement, review, effective and immediate feedback and reinforcement to each individual to enable performance Create non-judgmental feedback mechanism 6. Resolve inherent conflict between goals of different organizational entities to ensure all pull together 7. Recognize interdependencies between different entities and ensure effective “collaboration and support” to each other 8. Don‟t blindly follow “forced ranking/bell curve distribution Consider whether it would be better to set “absolute performance norms” for each entity and Reward all those who achieve or exceed targets/norms in place of forced ranking/bell curve distribution Use past achievements and reinforcement to raise the barSlide 16
  17. 17. Structure1. Aniruddha Limaye – Performance Management Design Principles1. Vijayan Pankajakshan – Structuring the Performance Design and Implementation as a Change Initiative – Key Design Challenges and Solutions3. Question and AnswerSlide 17
  18. 18. Performance Design & ImplementationIMPACTS…Expected behaviour - Engagement withresist, fear, resigned customers / clients /acceptance , consumersacceptancewith conviction “Lens of Change Management” Value perception of aFought for/ contentious group /set of employeesoutcomes - – shifts up or downRed flags get captured first Performance benchmarks & other key elements of org culture - entitlement viz a viz having to sweat longer/harder/faster viz a viz having toSlide 18 stay longer
  19. 19. Leadership Agenda -Top Management/Board Is the timing right? Executive Sponsor(s) Cross functional, level Design Team- not to be led by HR Brief and Boundary Management- Sponsor and CFT Communication by Sponsor(s)- other Leaders and rank and file - Why at all, Why now, Scope, Timelines, high level expected outcomesSlide 19
  20. 20. Current State Analysis & Diagnosis • Communicate to Team Leaders, People Managers … simultaneous … orchestration . . . across time zones … • Communicating ongoing progress- How much, What level, How frequent • Written briefs, FAQ‟s…• TF- engage with various groups (multi level)- to listen to „grounddynamics‟– Modify response, „seed „ thoughts / trial balloons . .• Gate approvals/Engagement with Sponsor(s) at regularintervalsSlide 20
  21. 21. … analysis & diagnosis (Contd…) • Project Scoping, Leaders, Facilitator, deadlines • Tasks/Process/Steps- parallel, sequential • Obtaining alignment- progress and process• Do a Pilot – If likely change is „significant‟ in scale and/orimpact• Buy in- What is in it for everyone?• If significant change contemplated- Stagger the impactSlide 21
  22. 22. Structure1. Aniruddha Limaye – Performance Management Design Principles1. Vijayan Pankajakshan – Structuring the Performance Design and Implementation as a Change Initiative – Key Design Challenges and Solutions3. Question and AnswerSlide 22
  23. 23. Communicating & Aligning Business StrategyAnd Goals - To SBU / Unit / Team / Individual objectivesHow much to communicate, when, whom : - Organization Culture being the determinantIntegration of Organization PerformancePlanning and Review Process/Systems with thePMS : - Extent of integration- Global /Regional GoalsContext and setting of Goals :- Openness and Transparency- Balance - top down, bottom up and across - conversationsOne on one conversations : - Group Goal SettingSlide 23
  24. 24. Encouraging Managers - To have meaningful performance coaching & review dialogues • Philosophy, Assumptions, Nomenclature : • Performance Appraisal, Performance Assessment/ Review, Performance Assessment & Development? • Expectations from Team Leader(s)- • Performance levels, Performance Improvement & Development, Potential Unlocking - releasing Talent • Focus/Importance on Team Leaders’ Competency • Development in inspiring „extraordinary‟ performance outcomes form „ordinary‟ talentSlide 24
  25. 25. Aligning Performance Assessment with Reward • Obliterating focus on Reward – outcome of Performance Assessment Processes- Deadens the core intent • „Highly paid‟ employees of a Company - Most often not reflected in superior Business/Market Performance – Compared to other „lesser paying‟ ones • Good to Great: Jim Collins and Porras: Research • Over focus on Reward linkage- insight - Employer Brand is weak • Rarely in History- has monumental/path breaking Performance outcomes - Happened due to a ‘pot of gold’ as the prime driverSlide 25
  26. 26. Ensuring Objectivity & Uniformity of Evaluations across units/functions• There is a limit to Objectivity…at best quality and trend of „judgment calls‟ improve over time• Variability is inherent in all processes – Inherent to life, agriculture • (the quality of a Mango fruit this year, will be different from the one last year- even if grown under same soil and other conditions)• Markets, Functions, Professions - Market ascribe different value at different times• Bell Curve led Normalization - Popular methodology to ‘cut the suit according to the cloth available’• Line Results first measured - Then support functions• Finance- sign off ‘claimed results’- When tied to significant Bonus/Variable Pay outcomesSlide 26
  27. 27. Designing a PMS for VirtualOrganization • Project duration is the foot print to be planned, coached and assessed- not calendar year • Assessment of the employee’s Performance must seamlessly flow into and out of Business led Project Performance Assessment and signing off • Employee’s Performance- to also focus on how he/she supported others and also sought support • Cultural nuances – built into Project Planning and kickoff stage itselfSlide 27
  28. 28. … PMS for Virtual Organization (Contd…)• Employee‟s contribution – Investing in the Knowledge Management Process- part of signing off• Face to Face assessment - at least once a year- - subject to other Business compulsions• Project to be kicked off- incorporating the linkages (including consequences of compliance/non compliance) with Performance Management ProcessesSlide 28
  29. 29. Questions ? thanks!Slide 29