Outcomes

The other day I was reading a book by Peter Drucker. He made a point about ‘efforts’ v/s ‘outcomes’. ‘Efforts’ are only thing that exist within an organization. On other hand, 'outcomes' lie outside organization.  Outcomes matter and we need to hold people accountable for outcomes.

 

Ensuring focus on ‘outcomes’ is easier said than done. Every outcome can be seen as a mean to some other outcome/end. So how do you decide a particular 'outcome' is actually an outcome and not just a mean?

 

I think you can’t decide this post facto. The only way to ensure that correct outcomes are being targeted and met is through ‘goal setting’ rout – ensuring goal setting focuses on outcomes and performance progress is assessed against agreed upon outcomes.

 

Similarly, there needs to be a very definite linkage between outcome achievement and reward allocation.

 

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Sourav

 

 

Why do we need a performance management system?

This month I continue with my series of articles, aimed at grassroots organizations, on need for and basic structures of different HR processes.

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Two common terms used in organizations are 'Performance based cultures' and 'Performance management system'.

What do these terms mean? How are they relevant for your organization? Does your organization need an 'off the shelf' or a 'customized' solution?

I will draw an analogy with a business planning exercise, where we decide firm’s objectives and lay out periodic milestones.

Similarly, a performance management system ensures such an objective and milestone setting exercise at team and individual level.

Outcomes of business planning exercise are cascaded down to performance management system. Objective setting is an important but not only key component of a performance management system. Periodic reviews and linkage to rewards are other two key components.

If you refer to motivation theories you will find that these 3 components cover 4 important individual motivation aspects:

1) We need 'goal clarity'

2) We need periodic feedback

3) We need to feel differentiated

4) We need money to sustain our hygiene needs.

What kind of a performance management system does your organization need? What are choices you want to make for each of 4 motivational aspects mentioned above?

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Sourav

Equivalence of Goals & Rewards!

What´s most important step in performance Management? Goal setting – obviously!  You get goal setting process wrong, and all subsequent process steps possibly can´t correct damage done.

Should incumbents of similar jobs have equivalent difficulty of goals? 

Well! This situation might lead to one employee having a better chance of making an impact compared to another employee, & consequently get a better rating.

So what do we do? We have to be fair to employees!

I see 2 possible ways of addressing such a situation.

•  We could have a manager playing moderator role – ensuring equivalent (comparable) jobs having equivalent difficulty of goals.   
• We could also let imbalance in goals exist.

o  But then we have to ensure that the process is not deemed unfair. A significant portion of fairness/unfairness lies in allocation of rewards on basis of performance -  what is the rating used for  - how it impacts compensation/next year´s assignments/career moves also needs to be taken care of.  Since goals are for year, hence differentiation of rewards on basis of performance should also be short term (e.g. – bonus for the year, merit increase for the year, etc) and not long term (e.g. –career moves, succession plans,  etc).

But then,  I feel that non-equivalence of goals can be a by-product (something that happens because of changes in environmental conditions in year).  

At goal setting stage, equivalence of goals should be attempted, and that is a managerial prerogative.  This is important, because as humans we always strive for an equal chance to be unequals- and we trust our managers to provide that equal chance.

It is possible that even after this equal chance, the results across equivalent level employees vary dramatically (in terms of business impact) for equal levels of effort.  Environmental changes might significantly tilt the playing ground towards one/some employees.

Again, as managers, we can either moderate the results (factoring in environmental difficulty) or rewards in terms of business impact.

In later case, linkage of rewards system to performance system has to be tweaked. Since the performance is for the year, we should also reward (on basis of performance) for the year – a reward that at most has an impact for a year´s time!

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Sourav

Bell Curves!

I had drafted this post a little more than a week back. 

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I have been neck deep into moderations (fitting employees in bell curve) over last half a week. I managed to complete the exercise by the end of the working week too. There was this sense of exaltation when I completed the exercise.

Over weekend, I have been wondering 'Moderation exercise has been completed successfully. But  has that ensured in better performance management?'

This question led me to another question 'Why do we have performance management systems? Why are they required?'.

The following are my answers. A good performance management system would have 4 elements effectively incorporated:

• Goals- clarity, mutual acceptance (SMART is one way of defining characteristics of effective goals), etc.
• Work planning- it's important that along with the 'what' the 'how' also gets captured. The 'How' is largely company specific.
• Review/feedback- an individual needs to know whether s/he is headed in right direction; and what changes in 'what' and 'how' need to be made.
• Rewards- employees must experience rewards process to be procedurally and distributively just.

What I experienced over last week was only distribution part of 'rewards' piece in the performance management framework.

I am eager to see what is the quality of discussions between a manager and his/her reporting employee at goals, work planning, and review/feedback stages.

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Sourav