Performance management is key for emerging businesses to balance goals and employee growth
Performance management is directly related to productivity at the workplace. Even as small and medium enterprises (SMEs) continue to rebuild and redesign the fabric of the Indian ecosystem, it’s the lack of expertise and limited resources that may hinder the development of employee skills and growth within these organisations.
To address the problems growing companies face in designing clear performance metrics and criteria, People Matters hosted a virtual masterclass on performance management for emerging businesses. This was part of our SME Corner initiative powered by Keka.
The masterclass was conducted by Abhishek Mehrotra, CHRO, Yubi, and Kshitiz Sachan, Process Coach - Performance Management, Keka. From a step-by-step approach to the importance of performance management systems, our experts shared their insights on the best strategies for effective and agile performance management.
Performance Management Is Ever-Evolving
Every business has a certain vision or purpose, and performance management helps in aligning the business goals with those of its people. Even as organisations continue to evolve, performance management systems help in improving workforce productivity and adaptability to achieve organisational goals.
Talking about the common challenges faced by SMEs in designing performance management systems, Yubi’s Abhishek cited the fast phase of change and unpredictability in the implementation of PMS.
“Fairness and objectivity in performance assessment on qualitative and quantitative metrics; tools and resources with managers implementing the PMS and the clarity of purpose in communication are some of the key challenges faced by young and new organisations,” added Abhishek during the virtual session.
In response to a poll on factors that had the most significant impact on the effectiveness of performance management in SMEs, the majority of people in the audience voted for inconsistent evaluations and subjective assessments. The second most common answer was: Limited expertise in establishing structured performance management systems and communication gaps and lack of formal feedback mechanisms.
Some people also cited budget constraints in the performance management process impacting effective implementation of performance management.
Using PMS To Develop Performance, Not Ranking
An effective performance management system is one that addresses the ‘why’ of an organisation that drives the ‘how’ for its employees as an individual. PMS can help in setting goals and subsequently achieving them with clear expectations.
PMS can further help in striking a balance between business goals and career progression for employees through the right recognition and rewards based on a fair assessment.
Quoting management thinker Peter Drucker, Kshitiz of Keka said, “What cannot be measured, cannot be improved. The idea of making performance measurable is to make sure we can improve it over a period of time.”
PMS helps in making performance measurable and holistic through a four-step process:
Goals-setting: Identifying the purpose and things that matter to align it with the desire and vision of the organisation.
Performance Tracking: Continuous performance approach helps in initiating the right dialogue with managers at the right time to see if the team objectives are working or if any reiterations need to be made.
Review and Feedback: The frequency can be set to monthly, quarterly or annual as per the requirement to evaluate the actual outcome versus the goal set and then digitise it into a certain rating process/scorecard to measure the performance.
Reward and Recognition: The fourth step is to translate the information gathered from step 3 or Review into an actionable item that moves to the first step of the process again in the next cycle.
To further understand what the SME stakeholders think is the most crucial step in transitioning to a strategic performance management system, we conducted a poll and gave them four options. The majority (23 of the 40 participating) voted for clearly defining performance metrics and criteria. Some of the respondents also chose establishing structured performance management systems and improving communication and feedback mechanisms as key steps.
Impact of Performance Management
Organisations need to make sure of collaboration and visibility among its stakeholders to measure the impact of performance management on individuals and teams. To make performance management more effective, both aspects – employees as individuals and the organisation as a whole – need to be taken into consideration.
Data-driven decisions can help in making performance measurable and differentiating lead indicators from lag indicators, felt Abhishek. The real objective of PMS is to help employees feel empowered and improve performance to move up the ladder in terms of competence and career, he added.
“Business performance indicators are directly proportional to the performance management system and the way you are running it in the organisation,” Abhishek observed in his concluding remarks during the masterclass.
As an add-on to our viewers, People Matters and Keka also launched its exclusive e-book on performance management titled “Performance Reinvented: Your Handbook to Drive Workforce Productivity” during the virtual session.
This downloadable ebook provides solid reasons and use cases on how adopting a tech-driven PMS can help you drive performance and productivity at your organisation. “Besides the challenges faced by SMEs, this ebook also explores the role of performance management in boosting productivity and a host of other employee metrics like experience and retention. It delves into the role of analytics, strong KPIs and explains the critical features of an impactful PMS today,” Kshitiz explained while launching the e-book.
“This guidebook also demystifies the role of HR tech in improving performance management and the mindset and behaviour shifts HR needs to undertake,” he added.
The objective of the masterclass and the e-book on performance management is to create a checklist on how to set individual and team goals and find actionable ways to align them with the strategic goals of the organisation. For more information and updates, check our exclusive coverage of SMEs.
