Performance management is the process of reviewing an employee’s performance during the preceding year or cycle and deciding where he or she stands as far as their peers in the same band are concerned. The process of reviewing results, arriving at a rating and then deciding upon the bonus or salary hike is what performance management is all about. This is when it becomes a nightmare for HR professionals.
The constant nightmares of performance management starts a month or two before the appraisal cycle ends. The appraisal cycle can be half-yearly or yearly depending upon the policies of the organisation. Further, the appraisal cycle can be based on the calendar year or the financial year i.e. it can run from April to March of the following year or January to December of the same year. In the same vein, it can be half-yearly as well.
This process sometimes can be also compared to an interesting game, more like this organisational championship which takes place in 2 rounds.
- Round 1: The people who participate in an employee’s appraisal are the employee and his or her manager. In this round, the manager gives a frank assessment of the employee’s performance after giving a chance to the employee to self-assess.
- Round 2: Here the players would be the manager and their manager. This round is mostly about deciding the band in which the employee falls post the rating and in comparison with his or her peers.
Some organisations opt for a 3rd round.
- Round 3: This process of rationalising the employee’s performance with others is called ‘normalisation’. This involves the organisational umpire, the HR manager. In any case, the ratings cannot be decided without the HR manager’s assent to the same. Once these rounds are over, the bonus level or the salary hike are decided.
This would be the basic ground plan for this game but can differ from organisation and industry. Surveys and studies have found that the majority of employee’s who quit organisations do so because of differences over their ratings. In other words, attrition is in many cases a direct consequence of the way in which the performance management process is managed.
The question as to why this happens can be best understood if we understand the dynamics inherent in the process. For instance, despite exhortations from HR professionals and experts about letting personal biases and prejudices affect the process, in many cases, if the manager and the employee do not see eye to eye on many issues, the appraisal and the ratings are the place where this difference of opinion comes out into the open.
Further, the organisations are themselves to blame in some cases as the process of “normalisation” means a “winner takes all” approach which leaves the moderate performers bracketed with the poor performers.
The point here is not to dismiss the competitive environment that is the reason for this. On the other contrary, what is needed is a more holistic approach towards performance management that takes into account the varying needs of employee’s and a broader appreciation of differing working styles and motivations.