Performance Appraisal of the Performance Appraisal System

         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