March
end is nearing and its time for Appraisals. All eyes are focussed on the one
most important thing ‘Appraisals’ and ‘Increments’. To an HR professional,
these two words have distinguished definitions. But, to a layman Appraisals
mean Increments and Increments mean Appraisals.
For
all those who still think they mean the same, here’s the dictionary meaning for
both:
- Appraisal - an assessment or estimation of the worth, value, or quality of a person or thing
- Increment - The process of increasing in number, size, quantity, or extent.
These
two terms are related, but not the same. However, in a typically traditionally managed,
family owned business, there may be not be much of a practical difference
between the two, but in larger organisations Appraisals and Increments have a larger
system in place called the Performance Management System.
There
is much ado about effective Performance Management Systems (PMS) and a lot many
theories have been conceptualised for building a robust PMS. The most popular
amongst these are the 360 degrees, 180 degrees, Management by Objectives (MBO),
Ratings Scale methods.
Organisations
invest a great deal of money, time and efforts in formulating a PMS system that
suits their organisational needs, culture and business plans. The effectiveness
of any PMS depends on many factors from Goal Setting Process to the Evaluation
Methodology and the Feedback Mechanism, but the major factor that influences the
success of an organisation’s PMS is the ‘buy-in’ from the top management.
When
you talk of Appraisals, employees imagine a herculean task coming forward i.e. of
filling up pages and booklets of information. Amidst targets and deadlines,
employees struggle to manage recollecting and providing information not only about
their own performance, but also for their colleagues as in the 360 degree
approach. What do companies do with all this download of information? Are the
companies effectively utilising the data generated for the benefit of the
employees and the organisation? Do companies review the Performance Appraisal
Systems viz-a-viz the results it generates?
In a
webinar on "Designing an Effective Performance Management System"
hosted by SHRM India; the speaker Aniruddha
Limaye, an Independent Consultant, pointed out indicators that we need to be
sniffing for, to understand when to start instituting a new PMS or get rid of the
existing one altogether. According to his theory, the key indicators that we
need to look at are:
Employee related issues – unfavourable feedback from employees on PMS,
increase in employee attrition linked to appraisal cycle
Performance related issues – low ownership by line managers that requires tremendous follow up by HR,
lack of team work / turf mentality, organisation struggling to achieve goals,
difficulty in implementing any new decisions /changes / initiatives
In
most companies, Performance Assessment becomes just an HR or Admin process. HR does
play a role in setting up of the process, coordinating the execution, and for
normalisation. But Forced Ranking, Bell Curve Method, Jack Welch’s 20-70-10
principle come into picture as regularisation methods, which might prove to be
de-motivating for many employees. “By implementing a forced ranking procedure,
organizations guarantee that managers will differentiate
talent”, says Dick Grote in his book ‘Forced Ranking: Making Performance
Management Work’. Does forced Ranking mean appraisal of the manager’s ability to appraise
his subordinates?
If
PMS does not have the status of a ‘Business Process’ the organisation should
think of scrapping it rather than redesigning it. PMS is not an HR process, but
should come as a buy-in from the top management. Without an objective Goal-Setting process and a strong &
positive Feedback Mechanism, performance
cannot be reinforced. Hence, if an organisation’s PMS lacks these two important
requisites, it is always advisable to scrap it rather than having a negative impact
on employee’s expectations from the system.
As
quoted by Limaye, “You need to catch someone doing something right and then
reinforce it!”
When
in spite of incessant initiatives of reviving the Appraisal System, there is still
demand / need for change, performance appraisal systems could be eliminated
with no harm done. No Performance Assessment System will work until the organisation
is completely ready for the change it desires to bring in with the system.
All
in all, performance review is a daily activity, and not an annual ritual led by
the HR delegates.
- VAISHALI PARGAONKAR
