MANAGEMENT/ HR SPECIAL.......................... Cos Innovate, Go beyond The Fixed Script on Appraisals

Cos Innovate, Go beyond The Fixed Script on Appraisals 

Performance appraisal systems are taking on a whole new meaning. Meaningful conversations, balanced constructive feedback at regular intervals and a vision plan for the employee are gradually replacing the traditional format. The best part is it's all leading to higher productivity and better engagement

    Traditional processes are in a makeover mode as organisations such as InMobi, Godrej Industries, KPMG and the RPG Group revamp and redesign their existing performance appraisal systems to make them more transparent, more inclusive and more agile. Over the past year, these companies, among others, have been overhauling their appraisal processes, looking to drive better performance and engagement among employees.
Mobile network firm InMobi opted for changes when it started feeling that the quarterly reviews just weren’t doing enough. “What are individuals passionate about? What will give them that 10x multiplier? Those conversations just weren’t happening,” said Monisha Tambay, vice president, HR, at InMobi.
So, appraisal templates were done away with and meaningful conversations were encouraged instead, with an annual meeting to streamline them all. For every employee in a nonsales function, InMobi converted the variable pay to fixed pay to do away with the carrot-and-stick approach. Employees discussed their aspirations and ‘big opportunity’ goals with their managers, and were encouraged to become the drivers of their own growth and development. At the end of the year, each manager had to deliver a one-page report on the employee that encompassed everything from their contribution to areas that didn’t work well and the manager’s growth plan for the individual.
“Excitement levels have gone up, employees know the organisation is genuinely invested in their development. People are energised, they are driving the development agenda themselves,” says Tambay. “It’s driving a behavioural change, a culture change.”
A Gallup analysis of more than 50,000 Indian employees working in 10 major industry sectors in 22 global companies shows more than half of the employees (54%) feel that their company’s performance management system (PMS) is not effective. According to them, an effective performance management system starts with a thorough goal-setting process, followed by regular feedback and reviews/appraisals. It also identifies employees’ developmental needs, includes robust reward and recognition practices and encourages collaboration, teamwork and communication.
“Given that negative perception about performance appraisal process can breed demotivation, feelings of anguish and frustration that can ultimately impact performance, companies are trying to change the way performance appraisals are done. While the process itself is important in the PMS, the human element is the most important component in whether the employees perceive the system as effective or not,” says Paresh Rajgarhia, senior consultant, Gallup India. Employee expectations have changed and today’s performance management needs to be more developmental, coaching-based and agile. In line with that, organisations now expect managers to provide guidance, balanced constructive feedback at regular intervals and outline a vision plan for the employee.
Not surprisingly, organisations are spending time training both managers and employees on having these performance-related conversations. KPMG, for instance, has come up with a training module called ‘having difficult conversations’ for its performance managers.
“Vague phrases like ‘your performance is not up-to-themark’ don’t work. You need to give granular feedback, define the benchmark,” says Shalini Pillay, head (people), performance and culture, KPMG in India. The company, which follows a 5-point ratings system, with 1 being the highest, has introduced a performance improvement plan for those getting a 4 rating.
Another change at KPMG has been in the performance tool itself. Called MyPD, it has been launched globally and provides for a lot more qualitative feedback. For a particular business or team, it links goals and priorities to targets and cascades them to different levels. “The new system also allows spontaneous feedback throughout the year as opposed to HR-driven checkpoints from both performance and engagement managers as well as colleagues on particular projects,” says Pillay, who is in the process of relaunching a 360-degree feedback in the coming year.
In some organisations, the most critical changes are happening at the senior leadership level. Last year, Godrej Industries introduced the People Asset Scorecard, applicable to all Godrej Leadership Forum (GLF) members, who are vice-presidents and above across businesses. It is designed to measure how well each leader is managing people processes applicable to his or her team. “We use a 5-point scale. Ensuring base levels are met on people processes counts as a 3. You become eligible to be rated a 4 or a 5 if you play a larger and more active role in building the talent pipeline or as a brand ambassador for Godrej,” explains Sumit Mitra, head –group HR and corporate services, Godrej Industries and Associate Companies.
“When people down the order see senior leaders take a lot more interest in the overall process, it has a trickle-down effect in terms of overall engagement. We plan to cascade it down one level in the coming year,” says Mitra.
The RPG Group last year introduced a system when the company goals become the goals of the MD/CEO and his means to achieve the goals become the goals of his next level. The system advises employees to have a minimum of five and a maximum of seven goals with the weightage of each at a minimum of 10 and maximum of 40 out of 100. One goal must be on people development. The idea is to have clear focussed goals and adequate weightage in each goal.
HCL, on its part, has substantially differentiated in the distribution of the reward by staggering the quantum and the timing of reward. This aims at bringing about greater ownership among employees to know their goals, define performance standards and strive higher. Based on periodic feedback, HCL works with individuals rated lower in performance in shaping a development and improvement plan over the next performance period.
SREERADHA D BASU MUMBAI ET140411