08 Nov 2016 20:15 IST

What is performance management?

If used correctly, this horizontal, cross functional exercise can be a vehicle for design thinking

Many organisations make performance management a managerial responsibility that is shared by the line or functional managers and HR executives. Here is one definition of performance management:

“Performance management is a process by which managers and employees work together to plan, monitor and review an employee’s work objectives and overall contribution to the organisation. More than just an annual performance review, performance management is the continuous process of setting objectives, assessing progress and providing on-going coaching and feedback to ensure that employees are meeting their objectives and career goals.” (Source: HRcouncil.ca. Read the report here. )

Reviewing experiences

As mentioned above, organisations go through an elaborate exercise of planning, monitoring, and reviewing goals. This is cascaded from top layer of management down to individual job holders, working through many tiers in between. Here is what some managers have to say about their experiences.

General manager, sales: “One of the sales engineers told me during his performance review that he lost a sizeable order because he didn’t received support from his colleagues in other departments and engineering staff, to prepare a customised proposal for a pan-India customer. His reason was genuine and I rated him ‘Good’, although he didn’t meet the targeted sales figure. I fought for him when HR was carrying out a rationalisation of increment proposals across the organisation.”

HR head from another organisation: “The annual performance review is a big headache. Most managers don’t send their employees’ performance reviews on time, and when we do get them, we find a disconnect in the way managers rate their people. That is, it isn’t always not related to their achievements.

“When we question them, they justify, saying that the shortfalls were for reasons outside their control. Many rounds of discussions with top management and negotiations are needed before we announce the results. Finally, what we finally have are watered down versions of performance standards.”

An executive in operations: “We get orders in last week of the month and then we have to rush. This creates quality issues and affects our performance rating.”

Energy sapping

Performance management is often very complicated and an energy sapping exercise. The above accounts are, by no means, exceptions.

The problem is that performance is thought of more in terms of the result and less in terms of the actual work carried out. Results are, undoubtedly, important, but focusing solely on them can lead to many deficiencies in performance management systems.

When goals are set, they are either based on previous year’s (or quarter’s) results or on ambitious targets. The preparedness of those who are going to perform those tasks and who would achieve those goals is not assessed well.

If midterm reviews are conducted, the reasons for failures are discussed and this is followed by, “Let’s try harder, we must succeed!” exhortations. Cross-functional issues aren’t addressed properly.

Whether it is a midterm review or an end-of-year review, diagnosis of failures and prevention of underlying causes isn’t done thoroughly. The performance review system is a series of statements and tables fixing responsibilities, but with no diagnostic value.

Performance is a result of processes

An organisation’s performance is a result of how well its work processes are performed and how well various initiatives are executed. It depends on suitability of people performing the tasks as well. Peoples’ competence and attitudes determine how well they perform them. But the outcomes also depend on external environment.

An analogy of a musical concert is useful. Before the show starts, musicians tune their instruments — they check and get the sound system adjusted. They take their designated positions and practice a bit. There is a total emphasis on preparedness and methods. Can organisations view performance likewise?

Horizontal cross function

If an organisation’s performance is seen as a collection of processes and projects, it can help influence the outcome. Attention will then go to designing processes and smart planning of projects. Innovation or design thinking can be applied in this. (Read Thinking outside the box and The art of designing novel solutions )

Peoples’ training needs derived from work processes and projects will then be given the attention they deserve. Consequently, managers will also examine if the attitudes of those working match the tasks entrusted to them.

The performance management exercise will be then be a horizontal cross functional one mentored by senior managers and experts. People placement and training plans can be linked to it. Performance management can also be a vehicle for innovation and design thinking.