Different Performance Management Systems - still far from enabling performance

Efficiency has always been at the heart of human enterprise. Humanity’s obsession with efficiency isn’t accidental. It’s deeply rooted in survival, psychology, economics, and even culture.  Survival instincts, resource scarcity and economic incentives made early people to follow this aspect over any other reason. It is ‘efficiency’ that delivers higher margins. ‘Competitiveness’ and ‘Sustainability’ have taken birth out of efficiency. Efficiency is the only factor that drives ‘Innovation’. Summarily, profitability, competitiveness, Sustainability & Innovation are driven by efficiency to fulfill the desire to excel.

It can convincingly be said that most of the Business and HR processes are rooted in the factor of Efficiency. Performance Appraisal is not an exception.

Performance appraisals started as sporadic evaluations during World War I, mainly to measure efficiency. It never meant to consider employee growth.

As the time passed by many new dimensions were tried to be added to PMS with a view to make this process better and robust, so as the process can deliver to new needs of both the business and employees. But, on the focused scrutiny of the present status, the reality is far from the pleasant. I see a seesaw between fulfilling the objectives of the business versus satisfying the needs of employees. Organizations and scientists in their own ways are making attempts to bring in some sort of balance between the two but in reality, failing to achieve even the one.

Starting a business and making it run sustainably was, is and will remain a humongous task. And I foresee that it will become even more fierce in coming days as product swapping and new product availability will see new trends. Resource scarcity will increase. Time will be running out to innovate, and the last sustainability will be in solutions and not in products. Making the situation more complex will be a paradigm shift from ‘Efficiency to Competitiveness to Sustainability that was once considered a virtuous cycle to its unacceptance in totality. Efficiency when is pursued obsessively, it can undermine sustainability and destroy competitiveness by eroding trust, ecosystems, and human dignity. In this sense, business risks becoming “lethal” - not just to rivals, but to society and the environment itself. It thus means, organizations should have a mechanism by which they can make a balance between the Business objectives and that of the society, as a whole.

With the change in the business perspective, different Performance Management Systems have evolved. MBO to Balanced Score Card to OKR – mostly in the second half of the 20^th century. They evolved as responses to the challenges of their times. They might have given solutions to their early users but by far, they are far from meeting the needs of the business.

In the changing & fierce business environment, organizations now have to bring in all the factors which are required for sustainability. Any miss on their parts of essential business drivers may lead to their death, eventually.  Time has gone when one department was considered as support and the mere expectation from them was to support other Primary Business Functions. The time has come when every department and each individual has to contribute to the sustainability of the organizations.

On the part of organizations, they should not appreciate only direct contribution but even indirect contribution to their success by every single individual.

Business models on careful assessment say that every ‘For Profit’ organization aims to achieve, continuous Growth and Profitability.  It therefore means these are direct ‘Business Drivers’. In other words, if any department or an individual is able to contribute through their actions directly in achieving higher growth or profit, meaning thereby that they are adding value directly. No where the concept of Primary or Secondary Functions comes in. Differentiation is not made among departments or employees’ basis their ability to generate direct economic value but on how much value each contribute to the twin objectives directly irrespective of the department one belongs to.

Another important facet in the business to remember is that it is not always the direct actions that brings success, even the indirect actions are as critical as direct. Any failure to promote and appreciate of indirect actions of employees may lead to poor growth or less profit.

Success to organizations can only be ensured if they successfully bring all the employees together in driving growth and profitability. Available business models either come exclusively in support for higher profits or growth. Not a single propels for both together; primarily they were enforcing efficiency. Changing business needs are forcing organizations to focus equally on growth & profits.

Hindsight, the verticalization of departments was so strong that departments were expected to deliver only on given responsibilities. And perhaps this was the reason that the synchronization among functions weas missing altogether. Separate attempts were made by organizations to bring different functions together.

Strategy, Goals & Review [SGR]

A concept that renovating the entire Performance Management System

In the changing environment, each individual of every function need to contribute directly or indirectly to growth and profits through their specific functional responsibilities.  It runs as per the accepted principle of that “growth is the function of effectiveness and that of profitability a function of efficiency”.

This very concept has been brought in the Performance Management System of SGR. The term SGR stands for Strategy, Growth & Review.

The concept of ‘Business Drivers under SGR’ namely Growth, Profit, Effectiveness and Efficiency is copyrighted by Rajesh Tripathi and provides the very basis of SGR performance management system.

With the advent of SGR, pitfalls of early performance management systems like over Compliance, lagging indicators, weak linkages to strategy and failed to ignite engagement among employees are well dealt with successfully.

A robust Performance Management System binds all other HR processes. It is the process that is at the center of actions. It is therefore absolutely essential for organizations that they move to SGR - that clearly and comprehensively supports every single business actor and enables them to achieve business results. SGR doesn’t only lay down a robust business-oriented process but even helps in guiding actors towards business growth and profit – the ultimate objectives of any business.

SGR provides a platform for effective renovation of the PMS that makes the process effective and widespread in its acceptance as mentioned below:

1. Perfect Goal Alignment and Clarity

• Employees can see themselves the goal alignment with their superiors and can have the utmost clarity & alignment with business drivers.
• Removes all confusion, improves quality of efforts, and increases productivity.

2. Reduces Bias and Subjectivity

• With KRAs been perfectly aligned with different business drivers, there are minimal chances of action-disarray.
• Managers can see alignment and therefore ratings cannot be influenced unnecessarily by managerial bias, favoritism, or personal perceptions.

3. Made for frequent or effective Feedback

• Continuity of business largely depends on aligned & continuous actions from employees under the guidance of their managers.
• Keeping in view business needs, organizations can choose the intervals of guidance and assessments.
• Employees are engaged when they see their contribution as meaningful.

4. Business Strategy Clarity and Employee Engagement

• Performance Management Systems do not provide any direction to employees, rather they are seen as mechanisms to find faults and punishments, leading to disengagement.
• Every single employee is aware of overall business strategy of the company as seen from the importance attached to business drivers.
• When employees feel the system does support their growth, morale and retention improves significantly.

5. Adapting to Workforce Diversity

• Global organizations can easily move to SGR that helps in designing systems that respect cultural differences, generational expectations, and hybrid work models.

6. Managerial Capability

• SGR doesn’t require any sort of training to understand and adopt it. It is not as cumbersome as BSC or as ambiguous as OKRs. Simple & straightforward in its discipline and results. Managers love it for its simplicity and business centric outlook.
• Managers do not require any training and skills to conduct effective performance conversations.

7. Treat for HR

• No more HR time for training and handholding employees & managers for ensuring the quality of KRAs set and their alignment with business strategy
• HR effectiveness soars multifold due to significant improvement in the length & breadth of the entire PMS process, starting from the KRAs setting, assessments & improved employee engagement.

SGR is on its way to overwhelm the entire business community by its business-centric approach, employee-centric reliefs, manager-centric remedies and top of everything, HR -centric organizations. Making HR, Primary!