Is this your Performance Management System? – Deepak Dhawan, CEO & Founder | Talentonic

Performance Management Systems have gone through a silent revolution in the last 5-6 years.

Talentonic’s work in the area has exposed certain universal trends and insights.

  1. It’s a Compensation Management System. Not a Performance Management System. Organizations are obsessed with consequence management and the need to roll out compensation plans that are considered fair and equitable. They have lowered their expectation from what can be delivered out of the millions of hours in a year that is spent on the PMS.

It’s become a year-end event!

Most employees are disengaged and consider it a chore.

It has very little to do with how to manage the performance of the team or utilizing this high touch process to change the organizations’ narrative.

  1. The handshake between business planning and performance planning is weak.

Organizations are good at producing a budget and some produce a good understanding of strategic initiatives backing the budget. While a financial budget helps to manage the leadership at the very top, it’s a pointless document for managing the rest of the organization.

We have actually seen employees write KRAs at the year-end assessment!! HR Functions philosophically settle to this with a resigned sigh!

KRAs are scattered, poor quality and when you put all these pearls together, they don’t look like the pretty necklace that the business plan promised.

  1. There are strong biases despite claims of objectivity. Here is a tentative list of common biases, even in great and large organizations.
  2. “Line of sight bias”- Corporate Offices have the best ratings. Ratings increase as you go up the grade. Ratings increase with the length of service. Theoretically, your worst performers are sitting at the bottom of the pyramid. Many of them are smart young people recently hired!
  3. “Promotion bias”-In company after company, ratings peek in the promotion year and drop in the year before and after.
  4. Business disconnect- Try and draw a correlation between the performance of the business and that of the people. In some cases, it points in different directions.

HR and Business Managers try hard to give all kinds of reasons to defend the bias but ultimately crack into a grin “we are very clever…we know how to beat the system. “

Well, you don’t need to beat the system. The system should be designed to be an expression of your views.

  1. Competency systems. – There is no wind in this sail.  Poorly drafted and insufficiently implemented.

Only 30% of the challenge is defining the competency set. 70% of the challenge is in putting it to good use- Training, Calibration, Benchmarks, YOY progress. Like a good wine, it takes time to mature. The more you use it, the better it gets.

Foundationally weak competency systems are being used for compensation management with bell curving on competency data, thus putting a cap on competency building in the organization! “We only want 5% of the people in the organization to master the art of execution excellence!” Really?

  1. Culture and capability are finally making a comeback.Process or technology is an insufficient answer to the capability gap that organizations face in creating a high-performance organization.

Process and technology were required to scale up efficiently, but CEOs are beginning to ask questions about the disempowerment of mid-management, the lack of contribution to people management objectives and the insufficient contribution to creating a learning organization.

Migration from process to capability

As the organization goes through its hoops and is buffeted by a choppy marketplace, do we really know how to manage and upgrade the performance of our people?  That’s not the job of technology, it’s a leadership function.

It’s our call how we want to treat the performance management system. It’s either a totem pole at the center of the corporate village, visible & relevant, or it’s an old cycle in the shed. Take it out once in a year, dust it, ride it around the block and put it back in the shed.

It has the capability to become whatever you want it to be!

Author: Deepak Dhawan/ Talentonic HR Solutions

Source: The Hunt Report Vol.14

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