licies and right HR people as well as how well line managers use them to execute their responsibilities, thus sustaining the culture, behaviour and skills.
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| The essence of managing performance, however, in the best employers is in ensuring that people performance in turn delivers business results. Successful organisations are realising that no performance management system can exist successfully if it is not integrated with the overall HR strategy which in turn delivers on the business strategy. |
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| Essentially an incisive performance measurement system can exist if it is supported by all the other HR programmes that endorse the same culture, behaviour and skills. |
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| The HR strategy identifies the desired mindset/ culture, leadership/ supervisor/ workforce behaviour and skills and competencies that will help deliver the business results. These elements of the workforce should be delivered through robust yet simple HR design with effective line and HR partnership. |
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| A robust performance management system will have typically four main objectives: pay, organisation planning, training and career development, and identifying key and poor performers. |
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| There is no standard system that is prevalent in the business world. And there's of course no 'off the shelf' prescription. Building a meaningful, comprehensive performance management system to meet an organisation's goals and fit its culture consumes time and energy. |
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| In performance management, experience suggests that dialogue and relationships with managers are what drive results, and not creating the perfect format. To ensure consistent results, keep the documentation simple. This makes it easier to train workers on the importance of performance management. |
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| Experience supports the idea of strictly limiting performance management systems to assess goals that were met, and how they were met. By focusing on those two variables (using key performance indicators, or KPIs), organisations will be able to make reward decisions-based. |
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| Data gathered from competency scores drives training and career-development programmes. Combining competencies and KPI achievements segregates key performers from poor performers and aids organisational planning. |
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| Above all, this approach keeps the performance dialogue focused on the two variables. Forward looking companies further use the competencies to determine their 'A', 'B' or 'C' players and endeavour to place them in the respective positions ('A' players in 'A' positions) as well as develop them accordingly. |
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| Forced distribution has been followed extensively by organisations in the past. However, in recent years major organisations such as Microsoft and Ford have discontinued its use. |
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| First, consider what your organisation wishes to accomplish and what forced rankings/ distributions can do. Forced ranking ranks individuals from best to worst. Forced distribution buckets people, typically in a bell-curve, and limits how many fall into each category. |
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| I have seen progressive companies use either of the methods for promotion, termination, workforce planning and pay decisions. Usually, they use either of the methods to supplement the existing performance management system. |
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| Common situations where this occurs is when an organisation wishes to compare employees in a narrow range of performance. Using these methods, differentiation can be identified in their qualities or competencies. |
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| Forced ranking/ distribution is a blunt instrument best used either to help determine decisions related to identifying deadwood or high-potential employees. It's important to look at your organisation's goals and what it wants to accomplish via a performance management system. |
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| Forced ranking/ distribution has its time and place if the goal is to prune or promote. If the goal is to guide the performance of the organisation to a higher level, I would advise you to find another approach. |
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The author is Associate Director, PricewaterhouseCoopers.
This column will appear once in four weeks, and readers may address their queries to: powerzone@business-standard.com . The answers will appear in the next instalment. |
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