Performance Management needs to keep up with the times

A few days ago, the NASSCOM HR Forum hosted a very thought-provoking session on the changing face of performance management. The event, titled ‘Decoding Performance Management,’ had three speakers who brought an interesting mix of perspectives on the issue through an  HR leader, business leader and external consultants (Vivek Subramanian from Above N Beyond) point of view.

There was a healthy discussion with several divergent perspectives, but at the core was an understanding that as the industry evolves, performance management needs to evolve as well. There was also consensus that the traditional format of yearly goals and annual performance discussions just doesn’t cut it anymore for the following reasons.

  • Business has evolved: Business has become more agile, with product development cycles being shorter than ever. Also, with globally dispersed teams, the manager-employee relationship has evolved, because there is often very little face-to-face interaction between team members. Given all these changes, it makes absolute sense that performance management needs to align with the shift in business processes.
  • Society has evolved: The proliferation of the Internet has resulted in a distinct socio-cultural shift to a society where instant feedback is the norm. The workforce today tends to relate better to real-time feedback that they can work on, rather than waiting for the annual discussions.
  • The traditional PM process has scope to evolve: The traditional performance management process tends to focus too much on recent work, without placing due emphasis on overall annual achievements. Also, goal setting is delayed unnecessarily. The bell curve and ratings approach takes the focus away from development, and puts too much attention on just the monetary compensation aspect.

But of course, entirely doing away with the traditional metrics-based approach in favour of a qualitative system that relies too heavily on the judgement of one individual (the manager) is fraught with risks as well.

But having said that, there was agreement that in the contemporary setting, performance management needs to take the following aspects into consideration:

  • Expectations/goals that are outcome-based rather than task-based
  • Periodicity of reviews needs to move from a single high-stakes review to quarterly/more frequent check-ins
  • Ownership of the performance management process must be more manager-centric, rather than HR-centric. Of course, the managers to be empowered and equipped to handle this seamlessly

Needless to say, a one-size-fits-all approach simply doesn’t work in practice. Any performance management process must take into consideration factors such as the macro-economic indicators, sectoral peculiarities, local legal systems and cultural factors.

But whichever way you look at it, the time is ripe for the move to Performance Management 3.0!