If an organization is spending 2 million hours of effort on measuring performance, an annual activity that’s doesn’t make sense to anyone, we have strong reason to relook at the cost and effort spent on this activity. The countless number of hours spent on filling self-reviews, manager review forms, meeting, arranging and collating performance data is certainly not justified.
During my corporate career, my team and I always expected two outcomes from performance review (mid-year and annual):
- Feedback from my manager on how I have done
- What will be the increment in my salary
While both the reasons are strong enough to hold my team’s and my interest in performance reviews, it was always disengaging. You have to follow up endlessly with people is a strong enough proof that people are not looking forward to this. A study by Willis Tower Waston says that only 20% of employers believes that merit pay is effective in driving higher levels of individual performance in their organizations. Here are the top 5 reasons of dis-engagement with performance review process:-
- Performance review process is not employee centric: The process and system are designed to get top 10, average 70 and bottom 20 percentile of people to facilitate C&B (Compensation & Benefit). In achieving that activity, organization and HR’s have lost focus on employees and managers (now day’s it’s also called as design thinking). As an employee, if I know that outcome of this activity is money, my projections about my performance will always be high. And the manager will be more focused on justifying the hike(and/or rating) rather than giving feedback on how a team member can improve the performance in future.
- Measurement on KRA/KPI/questioners which doesn’t make sense: KRA’s are static in nature; today’s business world is way too dynamic. Team’s priorities and targets keep changing on day to day, month to month and quarter to quarter basis. And team members are not able to correlate their day to day work with assigned KRA’s and KPI’s. And even if they are able to correlate, who much progress they have done to achieve that KPI cannot be measured quantitatively and qualitatively. Don’t believe me, ask your employees. At the end, the current process leaves the judgment of how well I have performed on the KRA/KPI to individual and then on the manager.
- Lack of clear communication on expectations and what should be done to grow: – When was the last time your organization has clearly communicated to your employee on competencies they need to excel in the current role. And which competencies they need to acquire to grow to next level. Team members often come up with an assumption that they are ready for next role, without realizing whether they are even ready for that or not. And managers don’t have enough wisdom and data to tell the team member that why they are not getting promote to the next level.
- Recency bias in evaluation: – How many times you have observed that when performance reviews and appraisals are approaching, team members suddenly become more proactive, disciplined, showcase best of their behaviors and start delivering things on time beyond expectations. I still remember one such incident: One of my team members who was sitting in different office location started sharing the status update on time without follow-ups, was calling me on regular basis to tell me how lucky she is being in this project and in this team. As a manager, you will tend to take the decision based on recent events and perceptions.
- No transparency: – Organizations lacks transparency in the entire performance review process with too much dependency on manager’s decision. While manager’s role cannot be denied in the process, it’s the employee peer’s who know how the team member has performed throughout the year and whether the team member was a good team player or not. Further to this, though increment has always been dependent on the how a company has performed and on macroeconomic conditions, managers give feedback to justifying the bell curve rating or to justify the rating communicated to her from the top down.
The way you measure performance defines the core culture of your organization and it will define how your people will perform in the future. In part 2 of this post, I will share how you can take the journey of moving your organization from performance measurement process to performance enablement process.