Most firms do performance appraisals in a counterproductive way
Any kind of change is difficult and requires immense effort from defining workflows, required data, processes, owners and all of that takes a lot of time & effort both mental and physical
Q. Tell us about your journey in Oracle, the different portfolios you have handled and what has been the most interesting part?
A. I wanted to move back to Asia and Oracle Australia had an opportunity. I worked in Oracle Australia for 18-20 months and then I moved to the Asia Pacific region as the Head of HR and started setting up HR there.
At that time, it was a very different organisation with a different reporting structure and I reported to the APAC business Head, now I report to the global functional head. Also the organisation was growing very rapidly and we had to keep up with the pace of change and implement the HR systems. In 1996, we started implementing the HR systems.
It was tough to start with. Any kind of change is difficult and requires immense effort from defining workflows, required data, processes, owners and all of that takes a lot of time and effort both mental and physical.
Since the pace of growth was very fast, getting people on board and identifying leaders was our topmost priority. Also, countries like Korea, India and China were growing very fast but these market lacked talent maturity and experience. So to address these, we created programs to identify and groom top talent, develop leaders and a constant support and guidance mechanism that could guide the young leaders to cope up with their new roles.
Q. From 2007 onwards, the strategy of the company changed moving towards inorganic growth with acquisitions. What is the role of HR in the whole process of M&A in Oracle?
A. We have a team within HR and across all functions who handle only mergers & acquisitions. This cross-functional team does the due diligence before any merger happens and HR is also part of the due diligence. All information is closely guarded during the due diligence process and no one else but the cross functional team is aware of the company details. However, once the deal is finalised and announced, HR gets involved in the complete integration process from aligning addressing culture gaps, to systems, job levels, pay grades, benefits, employment laws and so on. We also look at structural redundancies and have to take the tough decisions of asking people to go if there are overlaps and people can’t be moved around.
Q. How different are the talent challenges across the various regions that you handle?
A. Issues are different across regions. For example countries like Australia have a much older workforce as compared to India. The average age in India is 28-29 whereas that in Australia is 40. And in the next five years 10 per cent of our working population will retire. Besides finding people to replace them, we also need to figure out ways to retain the knowledge base that is at risk with their departure. We will have to figure out ways to keep them connected to the organisation as coaches or advisors or may be something else. In the younger and fast growing countries, the challenge is to find the right leadership. Some countries have challenges that are unique to the country itself. For instance, Japan does not have a separation clause, a job is for life. The employee can’t leave or can’t be asked to leave either.
Q. Oracle has done away with a mandatory performance appraisal system? What led to that decision?
A. I believe that the way most organisations do performance appraisals is counterproductive and ends up de-motivating employees rather than motivating them to perform better. In a scenario where you tie up performance appraisals with rewards, employees achieve objectives and are rewarded accordingly; however if the employees perform and get a high rating but their rewards are not as per expectations then there is disconnect and that leads to disengagement. In my view, performance appraisals shouldn’t be tied to an annual cycle instead people should be assessed on the basis of their competencies and potential.
Another concern that I have is about performance appraisals being mandatory but not done well. If you don’t do a mandatory process properly, the grievances can be very high and HR ends up picking up the pieces. Most of the times HR realises that either there has been miscommunication or employees don’t know where they exactly stand. Another problem that you often come across is that the appraisal process is completed and an employee gets a good performance rating, however three months down the line the manager wants to fire him/her. Logically, you would go back to the performance rating and you see “exceeds expectation.” So you end up asking how has the person been downgraded so quickly or you took the easy way and rated him “exceeds expectations”. Such instances create more problems than providing solutions and in the end the exercise doesn’t achieve anything therefore I’d rather not do it or couple it with rewards cycle.
I believe that performance appraisals should be done as a separate exercise at an entirely different time of the year and not connected to rewards at all and people should be rated on the basis of their competencies not objectives. If you have to have a mandatory performance appraisal process, which is linked to rewards, you need to ensure that it is done well, communication is consistent and continuous. If you are able to deliver that, it makes sense however I am not sure how many companies are actually are able to achieve that.
That is the reason why in Oracle performance appraisal is not mandatory, it rather depends on the individual global head to opt for it or out of it. For us performance management is the holistic process, which includes appraisal, coaching, training and development, managing overall performance and ensuring that you have the appropriate skills to perform and grow in the organisation. However, I should highlight that in employee opinion surveys the importance placed by employees on having appraisals is very high, at the same time there are people who think of it as a complete waste of time and resources.
Q. You have handled people across geographies and demographics. What would be your advice to younger HR professionals?
A. Focus on your business, learn the business as much as you can and act as per the needs of your business. If you want to be successful, you need to be abreast with global happenings that may impact your business and proactively act towards solving impending problems or preparing for challenges. If your business goes through a crisis, you need to know how to handle people while maximising productivity. And other than learning HR and business, you should develop very good understanding of financials.