Among many confusions amid the challenges in corporates is the chaos around performance evaluation. We have almost finished another financial year. Organisations must be reviewing their performance regarding last year.
Despite the continuity of economic challenges, a system should be in place to properly evaluate employee performance in a sustained manner. Obviously, when the expected results do not materialise due to external reasons, the employees should not be penalised. At the same time, employees should not be complacent taking external issues as excuses. It is an opportune time to reflect on employee performance evaluation.
Performance matters
Performance has always been a buzz word in business circles. It matters for both private and public sectors alike. What is performance? The dictionary meaning is that it is the execution or accomplishment of work. Moving beyond, it can also be regarded as achieving a planned set of objectives utilising the available resources in an efficient and effective manner.
Performance can happen at three levels in a typical organisation. I would call them triple Is.
Individual Level
This is the core where a person should deliver what he/she is expected.
Interactive Team Level
This is the spillover from the core. When performing individuals collaborate, the interactive team becomes a performing team.
Institutional Level
When such collaborative teams perform, that impacts the organisation. Hence, the institution becomes a performing one.
There is one solid “I” needed to link the above three Is. That is integration. I have seen individuals getting rewarded for their performance, while the institution is not performing well. Also, the institution may do extremely well, yet depriving the rewards for individual performance. Both these cases highlight the lack of integration. The solution is to have a properly designed performance management system, with the needed inputs from all involved.
Performance management system
Performance management can be regarded as a systematic process of doing few things. They are:
• Planning work and setting expectations
• Continually monitoring performance,
• Developing the capacity to perform,
• Periodically rating performance in a summary fashion, and
• Rewarding good performance
Planning is the starting point. In an effective organisation, work is planned out in advance. Planning means setting performance expectations for groups and individuals to channel their efforts toward achieving organisational objectives. Getting employees involved in the planning process will help them understand the goals of the organisation, what needs to be done, why it needs to be done, and how well it should be done. Monitoring well means consistently measuring performance and providing ongoing feedback to employees and work groups on their progress toward reaching their goals. This should be a vital component of performance management.
Developing begins with the identification of needs. Employee developmental needs should be evaluated and addressed, to manage their performance. Developing in this instance means increasing the capacity to perform through training, giving assignments that introduce new skills or higher levels of responsibility, improving work processes, or other methods. Providing employees with training and developmental opportunities encourages good performance, strengthens job-related competencies, and helps employees keep up with changes in the workplace, such as the introduction of new technology.
Rating is the critical juncture. From time to time, organisations find it useful to summarise employee performance. Such a course of action helps with comparing performance over time or across a set of employees. Organisations need to know who their best performers are. Within the context of formal performance appraisal requirements, rating means evaluating employee or team performance against the elements and standards in an employee’s performance plan and assigning a summary rating of record.
The rating of record is assigned according to procedures included in the organisation’s appraisal program. It is based on work performed during an entire appraisal period. Rewarding is a thorny task. Employee satisfaction or dissatisfaction largely depends on how rewards are linked to performance. Rewarding means recognising employees, individually and as teams, for their performance. Rewards do not need to be monetary always.
Good managers do not wait for their organisation to solicit nominations for formal awards before recognising good performance. Recognition is an ongoing, natural part of day-to-day experience. A lot of the actions that reward good performance—like saying “Thank you”—do not require specific regulations.
Essentials of EPE
Performance is all about delivering results, fulfilling expectations. A performance management system of an organisation should answer what, why and how aspects of organisational performance. My focus today is on employee performance, particularlyon how it is evaluated. Employee performance evaluation (EPE) can be a treasure, or a torture based on a variety of contributing factors.
They can be institutional as well as individual. Performance oriented culture where employees are clearly aware of what they are supposed to do to achieve organisational objectives, is one such example.
“Are you satisfied with your performance evaluation?” I have been posting this question to numerous groups representing a wide cross-section of Sri Lankan business community. The majority give the diplomatic answer of “to some extent.”
According to research done by Larson and Callahan (1990), 65 percent of the companies are dissatisfied with their performance management system. Based on much other recent research, the worldwide situation with this regard has not changed much.
What could be possible reasons? Let me propose five fallacies of EPE that would address the key issues.
1. Form filling vs. fact finding.
Rather sadly, EPE has become a form filling ritual in some of the organisations. I have personally seen how some senior administrators give blank sheets for their subordinates to sign saying that “this will help you to get your increment.” The vital link between EPE and organisational performance is alarmingly lacking.
In refuting this fallacy, what should happen is the proper fact finding. The appraiser should have a clear understanding of the employee’s actual performance, based on factual evidence. It cannot be done overnight unless a manager carefully observes and takes notes throughout the year.
2. Fast judgment vs. fare assessment
Everyone is pressed for time. Managers resort to rushing through a large pile of appraisals and inevitably giving a fast judgment. Why it is not OK in most cases is that an over-reliance on your memory, without considering the strengths and shortcomings of the individual in detail. It may be argued as a case for efficiency, but effectiveness in achieving the expected results is far more important. Therefore, the only way to overcome this fallacy is to have a fare assessment. That demands the investment of your time. It is doing justice to someone’s future by accurately assessing the past performance.
3. Fun praise vs. focal points
There is a temptation among managers to be popular. They resist giving bad news or negative feedback to their subordinates. I recall once, a Production Manager telling a HR professional that he will sign and deliver the increment letter, but the warning letters or disciplinary letters should be signed by HR. The danger of this approach is that a manager might divert to the extreme of giving “fun praise.”
According to Jack Welsh, the biggest injustice against an employee is the deprivation of his/her right to know how exactly he/she is performing. We have the typical Asian culture emerging here. Rather than telling upfront, if someone is underperforming, we tend to say, “not bad,” “you are OK,” “do not worry”. The employee is getting a false signal that he/she is doing well, which might not be the reality.
One sure cure to move away from this fallacy is to have focal points for performance discussion. Your feedback to the team member should be focused on specific behavioral aspects, backed by real examples.
4. False opinion vs. full observation
In management, we have a high regard for the MBO approach which means “management by objectives.” Unfortunately, we have another MBO in Sri Lanka. That is “management by opinions.”We tend to jump to conclusions based on what someone has told us about a particular individual, without proper fact finding. One reason for such a tendency could be the lack of time for a superior to observe his/ her team members and assess how they are going ahead in achieving their objectives. Instead, trusting the “grape wine” too much, or relying on others input on an individual will often lead to false opinion. Why this is damaging is that the respective individual is not getting an opportunity to share his/her side of the story.
In overcoming this fallacy, the only way possible is the regular observation. Maintaining a logbook where you note down the plusses and minuses with respect to the behaviours of your teammates. It can be in soft copy involving any good program or a traditional notebook.
5. Futile accusation vs. frank discussion
This is another common issue with managers lacking empathy. Reaching one sided judgment without looking at both sides of an issue. Take a behavioural issue such as indiscipline for an example.
The supervisor can make a firm accusation that the particular team member is not following his instructions. Instead, having a frank discussion and giving specific feedback will heal the wounds.
A frank discussion will pave way to a genuine two-way process in ironing out differences between a team leader and a team member. It should be an integral part of the EPE. Fallacy of futile accusation can be nullified only by engaging in such a process. Rather than cluttering your mind with negative perceptions of an employee, going with an open mind, and verifying the doubts through a discussion is the tested and proven method for performance enhancement.
Forward path beyond Five Fs
The above five fallacies of EPE are interrelated and influence an individual to take an incorrect decision about another individual. That is where institutional mechanisms can add value. Developing the capabilities of conducting EPE through training is one such example. Ensuring transparency of the EPE process, with HR department acting as an auditor is another possible initiative. As the world is marching ahead amid post-pandemic conflicts, we need to ensure consistent performance on all fronts as individuals and institutions alike.
