When appraisals are around the corner, HR takes a lot of pain to drive the performance management process across the enterprise. From filling out forms to creating development plans, the performance appraisal process is a complicated mesh of activities, often interdependent and requiring a high level of involvement from the teams, managers, the HR department and the senior leadership. Many best practices are shared about how to make the performance management process fair and concepts such as rationalisation and normal distribution curve do the rounds. The fact, however, remains that no concept or practice can claim to have made performance management a fully successful HR initiative that really enables business execution. This prompts many in the HR and business circles to lean back and ask, “Where lies the need really of performance management?”

Proponents view performance management as a means for the business to establish checks and balances for the human capital of the organisation to function and align with the needs and demands of the business. Detractors of performance management see it as a channel of heartburn and disengagement within the enterprise. A trend that some predict might likely pick up in the next few years is that organisations will retire the formal performance management process in their enterprise. For the few organisations that have indeed done away with the process, it is a matter of time to tell if the move was more wise than foolish. The concerns that the process of performance management often faces leads an organisation to step back and ask several questions that range from the need of the process to the actual benefit that performance management brings to the business.

Whose need is performance management, HR or the business?

While many see the performance management system as a need for HR, the real value that it brings to the enterprise transcends beyond human capital ratings and benchmarking. If the system is viewed by participants and the HR merely as a rigorous process of rating and compensation, it ends up being an initiative that no one is willing to own or derive value from. Prabir Jha, Head of HR at Tata Motors, said, “Performance management should not be looked at as a process of force fitting people in a normal distribution or ranking scale. A performance management is an opportunity for conversations and for a manager to transition from a boss to a coach.” Therefore, a good way to look at performance management is to view this as an opportunity to uplift the individual faculties of employees.

Role of HR in a performance management process

The role of HR in the performance management process is that of an enabler. Unfortunately, the only recall of performance management system (PMS) within an enterprise is that of ratings, normalisation and increment. In its present shape and form, questions will continue to arise about the value that performance management brings to an organisation. If the management and senior leadership of the organisation have failed to recognise the importance of the PMS, then the primary problem is of prioritisation.

The primary conversation that an organisation requires is about all those factors that aid human capital enhancement such as leadership, engagement and performance. The conversation about PMS should only be around how the process will support those initiatives. Unfortunately, the PMS conversation is conducted separately from other human capital conversations in most organisations. Perhaps the greatest blunder that an organisation can commit is to build a performance management philosophy and then tailor other human capital enhancement initiatives to fit the PMS. In reality, many organisations unfortunately commit the error of fitting talent management with the PMS.

Not having a clear definition about the meaning and purpose of a PMS makes it harder to justify why an organisation should invest in it. One of the key approaches that an organisation can take to define the purpose is by identifying the business objectives that PMS facilitates. When employees remark that they do not have insights about how their daily jobs affect outcomes for the business, there are no ready tools available for the organisation to demonstrate that impact. PMS serves as that bridge by which an organisation can define how an individual’s daily job trickles down to the overall business strategy and outcomes. HR, therefore, needs to have this conversation with business leaders on how to define the scope and objectives of the PMS and why it needs to be driven by the business and not HR. Tojo Jose, Chief HR Officer at the white goods company Blue Star said, “If a business head asks about what is it in a PMS for the business, HR should be confident to tell that it is though the PMS that the broader business and strategic objectives trickle down to the last man on the ground.”

HR’s big role is to translate the competencies that talent in the enterprise requires into behaviors needed to inflect outcomes. The key question that HR should be asking is how to convert competencies into behaviors and habits that affect outcomes. With a clear objective that the PMS is aimed to help employees get a clear sense of career progression, HR gets equipped to have the right dialogue with the business. It is, therefore, important for HR to get clear articulation on the objective of a PMS.

The central role of technology

Technology plays a central in the performance management process. Irrespective of whether the organisation decides to go centralised or decentralised with the PMS, technology can help the organisation trickle down company objectives into individual objectives. While designing the PMS, however, an organisation should be very careful about the overall objectives expected from technology. Many organisations fall into the trap of viewing PMS technology as just a bell curve fitment tool. Several others view it as a compensation and incentive measurement platform. Technology is an enabler to the business process and not the other way around. Companies should know what they expect from their performance management systems before they look at digitising this process. Technology has many positives, it helps HR to simplify the process, makes the system agile and easier to change with the need of the business. It enables workflow and aggregation and hence making the process more efficient. However, organisations should be careful that technology does not dehumanise the system.

These industry leaders expressed their views in the SAP & People Matters Round Table Series

Focus on the ‘How’

Ritu Anand, Deputy Head, Global HR – TCS

Experienced HR organisations are constantly seeking different ways of executing performance management because the success or failure of a business depends on the success or failure of individuals and teams. While everyone around is talking about HR and business alignment, what HR should be asking is whether HR has seriously tried different things to align its initiatives with the business. Mature organisations have realised that the “how” to do performance management is a key concern. Organisations struggle to understand “who” is responsible for the performance management- business or HR. Irrespective of “how” the organisation defines the PMS in the enterprise or “who” owns it; one would agree that the ultimate objective of the PMS is to ensure that individual effectiveness adds up to business effectiveness. That is what a PMS should aspire to achieve.

Technology yes, but emotional cord too

Vivek Paranjpe, Consultant & Strategic HR advisor – RIL

Usage of technology is certainly a must in modern day HR function. Several benefits are derived by deploying right technology such as timely MIS, Efficient processes and systems, can be used in Governance, Predictable processes that are automated. Overall efficiency and effectiveness is best achieved through deployment of right technology in large set ups. HR professionals however have to be cautious that they don’t deploy technology as a fashion or fad, they have to also keep in mind that technology can dehumanize the processes and systems. Enough steps have to be built in to the automated processes to ensure emotional cord between the employees and the corporation are strengthened and not weekend.

The core of PMS is conversations

Prabir Jha, Senior Vice President & Chief Human Resources Officer - Tata Motors

The issue of PMS is what is the purpose? Is it for compensation? Is it for raise? Is it for career growth? I believe that the first ones are actually just an incidental by-product of the process; the real purpose of the performance management process is the conversations that lead to development. It is an opportunity for a manager to become a coach from a boss. HR’s role is an enabling role to make that happen. As HR we have got obsessed with rating, compliance etc., and that is the problem. Let’s not talk PMS, let’s talk development, leadership and mentoring first.

For the business, by the business

Tojo Jose, Executive Vice President HR - Blue Star

One of the most important questions that HR can help answer the business heads is, “What’s in it for me?” HR should be able to show business heads how the PMS in the organisation takes up a business objective and trickles it down to employees on the ground. By showing the connection between an individual and business performance, HR can show why business needs to invest time and effort in PMS.

HR must support dialogue

Sharad Gangal, EVP HR, Admin & IR, Thermax

Performance management is a business process, a dialogue of advocacy and enquiry. The process of dialogue is the most important part of the whole exercise. The role of HR is to support business in this process of dialogue. The question is: Are business managers coming to us for help on how to manage that dialogue? Are we giving managers the space to come and ask for that support? That is the question we should ask ourselves.

Let employee voice be heard

Ram Subramanian, SuccessFactors

What is an employee looking for in a performance appraisal process? Employees see the annual appraisal process as an opportunity to get their voice heard. While h/she might be having a regular conversation with the manager, it is not clear if his/her voice has been heard at the next level. A good performance management process allows for the individual to be heard beyond the direct manager. ager, it is not clear if his/her voice has been heard at the next level. A good performance management process allows for the individual to be heard beyond the direct manager.

Performance or Consequence

Sudhanshu Tripathi, Group President - HR, Hinduja Group

There is way too much linkage between performance management and consequence management. A manager finds it difficult to have a conversation because what s/he tells the team member is likely to have an impact on their compensation and promotion and the manager does not want to get into that. How do we separate conversations from the appraisal process? How do we separate conversation with consequences?

Handling difficulty with care

Judhajit Das, Chief HR - ICICI Prudential Life Insurance

A very important role of HR is to ensure fairness & consistency. The hard part of the performance management process is to have difficult conversations with care and sensitivity, particularly conversations with people who have plateaued in their role and do not demonstrate the potential to move to the next level. It is a skill that not many managers and HR professionals have. Many managers have a high need for affiliation and they tend to be popular managers and lack the skill and temperament to have hard conversations with care & sensitivity.

Start from the basics

Suresh Sahu, Head HR Operations, Reliance Communications

What is the objective of PMS? If you get that wrong then everything goes wrong. Is the objective performance pay payout? Is the objective career progression? These are very different objectives. It seldom works well if both objectives are combined. So, first the organisation needs to decide what we want to get out of it. Only when the objectives are clear, then the will of the managers can align to make that happen. A clear objective defines the process, the framework and the timeline and is the foundation for the success of the system.

Communication is crucial

Bhagirath Shanbhag, Head - HR & Personnel, L&T Realty

Communication is crucial to make sure that PMS works. Whatever is the framework of goal setting that a firm uses, once the CEO and the business head’s goals are fixed, the most important next step is to make sure that there is a communication process to drill those down and HR plays a very important role in achieving this. It takes time for people to get used to a process, communication can facilitate that but it is important that companies do not change their process too often.

The right conversation

Ankur Saigal, Head - Key Accounts - SAP India

As a line manager, I know my team very well. In many cases, the team has been hired by me and I talk to them day in and day out. To my mind, the quarterly conversations are more motivational in nature. If the person is doing well, then the conversations are about growth; if the person is not doing well, the conversation is to tell the person to continue the momentum and motivate him and bring him back on the ground. I am more interested in having a conversation with somebody who is not doing so great to make sure I keep him motivated.