Eliminating HR – Performance Management

So now that we are done with analyzing the Recruitment function, let us come to the next sub-function in the HR domain. Let us take a look at the Performance Management function this time.

Performance Management as a term has been much abused in HR parlance. When an HR person talks of this, he might mean only the annual appraisal process or he might be talking of something as broad as the managing the entire time spent by an employee right from on-boarding till the exit process.

I will stick to the Performance appraisal process for the purpose of this article.

So what are the broad steps that go into a typical Performance appraisal process :

1) Goal/Objective Setting: This step entails the setting of goals for the financial year on the basis of which the appraisal would be done at the end of the year. This may be an informal discussion between the subordinate and the manager. Or this may be a structured process where there are defined KPIs (Key Performance Indicators) cascading from the functional objectives for the year. The end objective is to have a list of goals/KPIs that are to be achieved by the end of the year. However, we were referring to an ideal world here. In most organizations, the process for objective setting goes on and on and on AND ON!!! Typically, we find that around the months of September / October, HR people are running around the managers / function heads to close the goal sheets / KPIs for the team members.

2) Quarterly / Mid-year review: A review, which could be done mid-year, quarterly or even monthly in certain cases, is the typical next step. This is something that is not done by all organizations and in some cases this is done only for a few specific functions. The basic objective of this step is to track the progress towards achievement of the targets. There might have been changes in the business environment which might elicit a change in the KPIs / Goals for the individual. This review provides a formal platform to discuss any issue that the employee might be facing.

3) Appraisal: This is the most dreaded time for most employees and you will find them at their best behaviour towards the end of the appraisal cycle. Again, this process might be a very basic finalization of a final rating by the manager. Or it might be an elaborate 360 degree process consisting of the self appraisal, manager appraisal, subordinate and peer appraisal or any of the parts thereof.

4) Normalization and Communication of Rating: Normalization is the process where the ratings are scaled down/up depending on the perceptions and relative ranking of employees by the Heads of Functions / CEOs of firms. A critical input here is the amount of money that the organization wants to disburse among employees. Some companies have a fixed % of payout depending on the rating you get while others come up with a new % every year depending on how well they have done for the year. This is followed by the communication to the employee of the final rating through a discussion / e-mail.

Now let us see the value adding role played by the HR team and see if we can afford to do away with it:

1) Goal/Objective Setting: The HR team initiates the process on the system and gives ‘tight’ deadlines within which the process has to be completed. Business managers understand how tight these deadlines are and this process spills on towards the last quarter. If every business team took upon themselves that they do not need a follow-up team to see if they can finalize goals for themselves, we would not need an HR team for this process. A simple tweak in the IT system would absolve the HR department of this step.

2) Quarterly / Mid-year review: This is not a step that is conducted in all organizations. HR plays only the role of a facilitator and while the HR team might be involved in the discussions that happen, they have a very limited role to play as an overseer and ensure that the process happens smoothly. It is anybody’s guess as to the “value adding” role of HR here.

3) Appraisal: This step is mostly conducted by the direct managers with HR playing the role of follow-up and compilation of data and results. HR initiates the process, sets the timelines and keeps sending mails until the appraisal process is complete. While there is no “strategic” aspect involved here, the administrative aspect can be handled by anyone.

4) Normalization and Communication of Rating: This is mainly a political exercise with employees being force-fitted into the “bell curve” in the organization. How effective that process is, I have already opined in one of my previous blog posts.

So that’s another critical process for the HR team where we do not need the HR team. Then why waste your resources on hiring and maintaining an entire team for this.