Dividing Limited Resources Appropriately!

How do we react to limited resources/win-lose scenarios?

Performance bell curve is a classic limited resource example. 

There are only a few slots for top performers- usually a manager wants just a tad bit more slots for his/her top performers and a tad bit less slots for his/her low performers.

What are different ways of dealing with this situation? Two obvious ways are:

• ·         Give limited resources proportionately to each team – everyone gains or loses equally.

• ·         Give limited resources appropriately to each team – some teams may get more than others.

Usually a leaders´ decision (1^st line of authority that both/multiple teams report up to) is required to drive non-proportionate/appropriate division of resources amongst different teams.

What happens when a leadership decision is not possible ?–maybe because leader isn´t there.  Is only solution to delegate decision higher up in hierarchy?

I would place responsibility on manager of each team. They have to come together and discuss allocation of resources. 

What are imperatives in such a process?:

• HR is facilitator in this process. I might be asked to recommend appropriate division of resources. But that makes it easy for managers to abdicate responsibility for decision taken. I would put responsibility squarely back on shoulders of managers – it´s your teams and you have to take a decision.

• Before we start discussion division of resources, managers have to debate and agree on principles on basis of which resources would be divided appropriately.  When there´s no principle, it´s difficult to find agreement.

But what does a facilitator do when he finds managers not willing to come on table and discuss?

• First, it´s a symptom of managers behaving ´territorially´.

• In such a case, discussion needs to be taken a notch higher. Discussion is no more about merits of coming to table and discussing.  Discussion should be about exploring with each manager ´why is s/he not coming on table and how might s/he being perceived because of that´. That is not an easy discussion but is certainly a necessary one. A Type A (go getter) person might respond to this process. Would a Type B person respond to this kind of a process? I think discussion with a Type B person would be about what is right thing to do.

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Sourav

Intentions!

Some time back I was watching webcast about launch of Annual Performance Review process.

Head of HR was addressing Managers. She took a lot of time to explain the ´intention´ - single line message - behind the shape of curve and review process.

 

Like many others, I was struck by power of her words.

I have been wondering what happened. What did she do that left it´s mark?

 

I have heard many a times objective or metrics of a process but I´ve never found an objective/metric/goal so powerful.

 

First, I think word ´intention´ has more elements of a verb than words objective/metric/goal. It makes me realize that I am the executioner of the intent.

 

Second we associate a value judgment with intentions. ´If my intention isn´t in place, then either something´s wrong with me or I’m at wrong place!´ We mayn´t associate such judgments with other 3 words.

 

I´m sold on figuring out the intention behind the HR processes we manage. Let me illustrate. What´s intention behind:

·         recruitment/selection processes? Some options are – to make any participant a brand ambassador, to reinforce uniqueness of working here, to find a role/culture fit, etc.

·         compensation processes? Some options are – we´re best paymasters & we´ll do everything to retain you; you´re best judge of your money (take it in whatever way you want), etc.

·         learning processes? Some options are – you´re a ´talent´, it´s your responsibility to identity and drive learning needs; we value role based learning & personal development is your concern, etc.

·         role designs? Some options are- we value specialization/generalization; empowerment/centralization, etc.

I´m not sure if, in this post, I´ve chanced upon anything new. But I do feel I´ve found a way to see existing processes more powerfully.

 

What do you think?

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Sourav

Performance Decisions

Over the last year I have seen two cycles of rating moderation discussion and have had the opportunity to chart out the rating distribution for a fairly large team over a bell curve.

There are a few questions which I have been actively trying to find answers to:

• Bell curve is relative by nature. What is the process one should follow when proposing a rating for an individual?
• What is the process one should follow in a moderation discussion to modify the rating of an individual?

I might have found some tentative answers.

First proposed rating

The 1^st proposed rating should be on absolute scale. But for that to happen one first needs to have the parameters for performance measurement in place. Let me elaborate. Let us assume that we have a 5 point rating scale (P1,P2,P3,P4,P5), with P5 as the highest rating and P1 as the lowest rating. You should first decide what performance would correspond to what rating on an absolute scale. One possible set of parameters can be:

• P5 – Significantly exceeds expectations on all Performance Indicators (PIs);
• P4 – Significantly exceeds expectations on critical PIs and meets expectations on other PIs;
• P3 – meets expectations on all PIs;
• P2 – meets expectations on critical PIs but falls short of expectations on other PIs ;
• P1 – unacceptable performance

This understanding of the parameters for performance measurement should be shared by all members who would be present for a moderation meeting. This would then become a common language people would share in the room.

Deadlock

Let us assume that there arises a situation where a rating needs to be moderated. On what basis would the ratings be moderated? I can think of only 2 possible reasons:

• Similar levels of performance but varying degrees of difficulty of the environment within which the performance was achieved.
• A higher level of results by 1 individual as compared to the other. E.g. – if we have a deadlock for a P5 rating (both individuals have significantly exceeded expectations and under similar environmental conditions), “Who has achieved higher results?” would be the differentiator.

Efforts or Environmental Understanding?

What about the effort an individual has put in? Should not that be factored in?

Efforts are taken in a certain context. These efforts should be factored into the evaluation of the environment within which results were achieved. Efforts by themselves would not provide you actionable data.

Let me elaborate. Let us say there are 2 individuals who have similar levels of performance, under comparable difficulty of environmental conditions but one individual has put in more effort than the other. Can we say that the individual who has put in lesser effort should be given a lower rating? I don’t think so. I can’t penalize him for finding a smarter way of doing work. On the other hand can we say that the individual who has put in higher effort should be given a lower rating? I don’t think so too. I can’t penalize him for doing his work in a less smarter way when he is got comparable results.

Hence the conditions/environment within which results have been achieved are a factor for decision making, but efforts by themselves are not.

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Sourav

About Performance Systems

A few months back I, along with a colleague, were facilitating a session for a group of around 30 employees. My colleague was trying to explain our performance system to this group. The participants expressed heartburns about the bell curve and its impact on individuals. I felt it was important to explore along with the participants the origin and objectives of a performance system, and what options we could look at.

The contents of the discussion, in retrospect, have cleared a few of my fundamentals about Performance Management:

• Why do we need a Performance Management system? What objectives does it serve? Can we do without it?
• Is it possible for anyone to be happy as an outcome of the Performance Management System?
• Can we do without a Bell Curve?

When I asked the first set of questions, I got a stoic silence for a reply. The first few answers I gathered were “You obviously require it”, “ How can you do without it?”. …Ah! Hmm! Err!!! , etc, etc.

A Performance Management System serves 3 purposes:

• Mutual expectation setting exercise - Its an exercise for setting of mutually accepted goals and tracking progress against it.
• It’s a work planning exercise – what will get done, when, how and by whom? What resources would be required and how would they be got?
• It’s a mechanism through which how rewards would be shared is decided.

You need a performance management system because you need a system to set goals, plan for how will they get done, and periodically track progress against it. The problem comes with linking rewards to it – that’s where the bone of contention lies!

Now the organization has 2 choices:

• To reward differentially
• Not to reward differentially – in this case you would not need an individual rating system.

People want differentiation because it gives them a chance to benefit from it but at the same time they don’t like it when they are at the receiving end of it (a premier B school alumnus would talk of the lack of a performance oriented culture when he finds his vertical growth is limited to certain time boundaries but ask him if he would like it if his junior from campus were to become his boss, and he usually would fumble for answers). On the other hand, if you have a system in which there is no performance based differentiation, then employees say it’s akin to a government organization.

Hence it’s a question of choosing the less worse of the 2 bad option. Rather because people want differentiation; we seem to go for it.

But what happens when you have differentiation? The guy who gets the highest rating feels there is not enough differentiation between him and the guy who has got an average rating. On the other hand, the guy who has got an average rating feels that the guy who has got the highest rating did not really deserve it. Hence people at either end of the bell curve are not really happy. What options does one in such cases?

I am reminded of Stacy Adam’s equity theory. In performance management there can be no distributive justice, one can aim only for procedural justice. Hence the need for focus on goal setting, work planning, and reviews.

The other source for heartburn is “the impossibility of knowing what standard of performance would guarantee me a highest rating”. When the goals are set for an individual, they are set on an absolute scale but when the rewards are to be decided then relative performance is taken into consideration. Hence there would be a sense of powerlessness which an individual would feel (both the boss and the subordinate). Does anyone like to feel powerless? What possible reactions can play out in such cases? A boss might go ahead and blame the system which HR has put into place and his subordinate would believe him, it not lose respect in his boss’s leadership.

Can we do without a bell curve? Bell curve is about relative rating – we can do without it but then employees would say that there is no performance based differentiation. The only way we can do without a bell curve is if we could provide differentiation without having a bell curve – but how do you do that? I don’t have an answer presently. The things you can play around with are the rating scale, the %age distribution across the bell curve, and how the rating would affect different salary components. But even then distributive justice would be elusive.

To end with, here are a few other thoughts/observations:

• Sometimes I feel individuals attach too much importance to ratings. Should I take my rating as an evaluation of me, or as evaluation of my performance for a particular year – calculated to determine the reward that I would get for that year?
• An obvious outcome of linking the reward system to performance management seems to be that the major parameter against which success is measured today in our world is the amount of money one has.
• I was having a discussion with a friend a few months back. He was not happy with his performance rating at work– he had got an average rating. He said that when he gets an average rating he feels he has underperformed. I was surprised and asked him to elaborate. He said “I come from a family whose members are known for their intellectual meritocracy (true of a number of Indian families). In my family, being average is akin to underperforming. It makes me feel ashamed” The measure of success seems to be whether my performance is above average or not! J

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Sourav