Ratingless performance review and FlexBen strategy at SAP
About two years back, SAP India had transitioned to a rating less performance management system and now they have introduced a personalized benefit strategy, FlexBen (flexible benefits) for their employees. Here are few insights from the interaction with Shraddhanjali Rao, Head of Human Resources, SAP India, where she talked about SAP's transformation journey for both these strategies:
Q. What has SAP’s philosophy on performance management been?
Performance Management is a topic which is very close to SAP's heart. Employees lie at the core of every HR strategy and we believe that every employee adds value to the company. Two years back, we moved away from the traditional performance rating program and it has been a significant journey for us. Initially, went in a pilot mode for 8000 people globally and the focus shifted from the rating system to a more continuous dialogue between manager and employee. Although it primarily focused on the goals, career development was also an integral part of it. After achieving great results with the pilot, we expanded the scope of the program to 90,000 people, across the whole organization. It's been a year and it has been an interesting experience.
Our performance management strategy moved away from being retrospective. Continuous dialogue between manager and employee became more important rather than a report card every end of the year. We were one of the first companies who took this decision much ahead of the curve. We have got phenomenal results on multiple fronts. Our employees like this approach because now every single SAP talk as we call it is compliments to their development. The talk is not just about work but also about career and aspirations. This provides a great platform for both categories of employees, employees’ who are aware of their career aspirations and employees’ who are still at exploring stage. Our entire philosophy in Performance Management has been around providing a framework, where talent is recognized and developed.
Q. What are some of the key challenges that HR and business leaders are facing after the pushback on the bell curve model and rating system?
It is not just about a rating system or a bell curve going out, it is a cultural shift. Such change creates a need for a shift in philosophy. To execute a transformation like this the managers are required to change. Earlier managers were assessors of their reportees. And the performance review was just a one day dialogue. And the employees generally had a different expectation. Now when we tell them that the focus from certain block circles and numbers has shifted to coaching, we are asking them to have a different approach and customize it to make it relevant to every employee. From a conversational perspective, managers today need to have a lot more depth and holistic view of their employees. And this is a philosophical change that we are expecting from our managers. As this is something that doesn't happen overnight, even the managers need to be enabled to execute this new system effectively. For this, at SAP we had a 7-8 months long extensive program to walk our managers through this transformation. The learning was conducted across multiple formats. Some part of it was online and some of it was in-house.
Q. How did you get the leadership buy-in for this transformation?
We went to the board to present our case and to suggest a philosophy level change and articulated why we see value in that change. Our strategy was to start from the top. We shared three critical things with them: what is it that we see in our employee, where do we see the need for change and what do we anticipate that change to look like. After having a very open conversation and getting the consensus of the leadership, at the board level we took it down level by level. After the board took, we took it to the next level, L1. These are the leaders that report to the board. We walked them through the philosophy and gave them time to absorb it. Also, gave them the opportunity and time to challenge us. We asked for leaders to volunteer for the pilot. This increased the chances of success as people didn’t participate because HR nominated them to but because they wanted to be a part of it by their own choice. People who saw value in it became part of it, and that’s how we managed to get the buy-in.
Q. What another significant change has SAP witnessed as part of its HR strategy?
The latest transformation has been in the benefits strategy of SAP. FlexBen is the new employee benefit initiative by the company which empowers the multi-generational workforce to choose what they need. It provides an opportunity to the employees to choose from more than 25 optional benefits with 18,000 flex points. Besides regular benefits like insurance, medical, accidental and life, superfood and health coaches are also part of the benefit plan. This new initiative further expands to experiences like traveling, snorkeling, photography and mountain climbing. We believe that all of these experiences build the personality; hence, we also cover these as a part of the benefits strategy. FlexBen is not restricted to only the employees but extends to their family as well. For example, if someone has an elder parent at home and both husband and wife are working, employees have the option to choose for the elderly care and utilize the Flex Bens point for the same. Mental health is another aspect of this strategy. Till last year we had employee assistance program which was available to all 12,000+ employees in India. Earlier, this year we expanded this to their family members as well. Employees came back to us and shared their personal stories and how a flexible benefit strategy made them feel valued and personalized the whole experience for them.
Q. What was the intent behind FlexBen and how did you identify its need in the organization?
SAP has always kept employees at the center. Currently, there are 5 generations of people working with us within the company and there is a significant difference in their needs when it comes to benefits. As the newer generations, the millennials came in we tried to create a holistic policy. But we realized we are not able to address the needs of many. The challenge for us was now to customize the whole benefit experience. The solution was to put the employees in the driver’s seat and empower them to make their own choices as per their current requirements while ensuring the transparency of the framework. This approach helped us to acknowledge the diversity inside the company, explicitly. And from a design perspective, we built medium to foster inclusion and transparency. To design the strategy we took the help of 400 employees and together with the HR team co-created and identified the benefits to be included. We had a huge population of employees providing us inputs and going into workshops with us. They gave suggestions and helped us in validating the process at the testing stage. FlexBen has been built on four principles: wellness, personal development, diversity and inclusion, and lifestyle.
Q. Considering the pace of innovation, what’s your take on the future of HR?
HR is at the core of this change and innovation because people are at the core of every change. HR is not just a business partner anymore, but a strategic navigator. Automation and efficiency are being brought in to help HR in all the transactional and operational work. As HR professionals it’s a great position to be in as now you can focus on the cream processes and strategies and create a larger impact on business.
(With the appraisal season not too far, People Matters brings to you a series of articles to help you gear up for the season. Be prepared, '#MarchIsComing'.)