As the year ends, India Inc. spends a huge amount of energy in performance appraisal. Time spent in an appraisal discussion is possibly half an hour on an average. However, total productive hours spent in this process is at least 2 full working days per employee, potentially 1% of any organization’s revenue. If we can increase the efficiency of this process and cut down the time spent by 50%, companies’ profitability will rise by 50 bps. Needless to say that employee engagement will increase significantly leading to better productivity, higher retention and a stronger employer brand. What could these possibilities be?
Current state of affairs
Most often, the performance appraisal process is kicked-off by the HR team with a bunch of do’s and don’ts, a set of forms, salary budgeting process and a set of timelines. Employees work endlessly trying to dress up the bride. They put their best foot forward to show how glorious the past year has been for them and hence, how they deserve the best possible reward.
Reporting managers do their best not to upset the applecart. They need most of their team members with their full commitment and energy through the next year. Yet they have to differentiate rewards based on individuals’ performance and thus, risk dissatisfying some of the team members for being unable to meet their wants. At the same time, they have a limited budget within which everyone’s expectations are to be accommodated. They are under stress as they walk the tight rope.
Given this backdrop, is this a desirable exercise? However, we need to drive meritocracy, promote competition and drive excellence. There must be a better way of reviewing performance, rewarding standout performers higher than the others and driving accountability!
Our workplace is a lot more digital than what it used to be a decade ago. Thankfully, there are tools to facilitate personalization and flow of activities right from defining key performance indicators (KPIs), competencies, setting targets against the KPIs to the assessment of performance and potential. Further, it is very easy to report performance on an ongoing basis based on the frequency defined for the KPIs, such as daily, weekly, monthly. The reporting manager can give feedback with the same frequency.
No need of an Appraisal Season!
Unlike the old days of annual performance appraisal, we can have daily feedback now. Spot awards can be given to people for outstanding performance at any periodicity that the organization decides. The system can rank performances and send automated triggers to employees giving them a scorecard periodically. Appraisals do not have to happen at the same time for the organization as a whole which often builds an environment of heightened grape-vine, gossip, and speculations. Rather, appraisals can happen on an ongoing basis based on the frequency of the KPIs. Moreover, everyone’s appraisal does not have to happen at the same time and hence, there is no appraisal season across the organization!
HR Team can facilitate a developmental conversation between the employee and the manager to focus on topics like career plan, potential and growth opportunities; help the employee develop an individual development plan. They can hold workshops periodically to help people hold such conversations meaningfully. This is a critical investment for an organization to strengthen its ability to face uncertainties and continually transform.
Appraisal conversations can be a lot more focused on the future than bickering about the past. Review of the past gets accomplished by the regular feedback from the manager, the system-generated summary of all feedbacks and scorecards. Salary hikes can be linked to these scorecards and industry trends.
The key to the success of this system lies in the ability to define the KPIs, set targets, change them when needed and drive implementation of the system on a regular basis. Leaders at the helm have to draw the performance reports from the system and take actions based on the same. That’s the new performance management system for us!