Opinion
The yin and yang method of improving employees' performance
Summary
- Performance management processes in most organisations, including the best, seldom contribute to improving performance. There’s a solution to this
Organisations that are consistently rated as the best places to work edge their bottom-ranked counterparts seven times over in lifetime shareholder returns. This underscores the advantages that companies gain from a workforce that is engaged and committed to perform better. Don’t get us wrong – contrary to popular belief, not-so-great places to work often survive and, for brief periods, even thrive. But rarely do they create the same value that the list-toppers do in the long-term. Human engagement and performance fuel growth while disengagement and mediocrity stem it.
Yet, performance management processes in most organisations, including the best, seldom contribute to improving performance. Employees, managers, executives and HR teams are kept busy entering data, filling up evaluation forms, calibrating annual ratings, and ensuring they stick to the schedule when they should instead be setting ambitious targets, conducting frequent reviews, giving and receiving feedback, ensuring functional goals are aligned with organisational ambitions, and facilitating a dynamic performance improvement process.
Organisations need to view performance management as a set of processes and tools to improve and drive individual and team outputs – what we call a makeover – and not a mere tool to distribute wealth equitably among employees at the end of the year. To do this, organisations will need to redefine the yin and yang of performance management.
The yin and yang of performance makeovers
The evolution of the HR performance management ecosystem cannot be merely hard or soft. It should encompass both aspects – the yin and the yang. The yin depicts fostering the right culture for performance to flourish, with a focus on helping leaders and employees engage in a dialogue. The dialogue helps set ambitious goals, encourages periodic conversations about progress and shortfalls, leverages expertise to create and implement recovery strategies, critically evaluate performance, celebrate wins, and assess failures. This requires extensive leadership-enablement initiatives.
The yang exhorts HR managers to create tools and processes that can supply real-time data to support these performance dialogues. This includes accessing in-depth and updated data on performance, using performance comparison indicators such as historical figures, average numbers and market data, studying drivers of performance and analytics, and comparing rankings from similar functions. The bottom line is that while the soft and the hard aspects of performance management transformation are seemingly at odds, they are in fact interdependent and can together orchestrate positive outcomes for the organisation.
Implementing optimal performance management systems
Once the yin and yang are integrated into HR parlance, the next goal should be to implement the new performance management system. In most organisations, performance measurement is a blind spot since it is only conducted at the end of the year. Considering that employee performance is key to organisational success, it should be more dynamic and agile. Key factors to consider when creating a robust performance management system include:
A robust role and key result areas (KRA) library: Google Maps is a great driving tool. It offers more than just a sense of direction, keeping you on the right path. The roles and KRAs that are assigned to employees should be similar. They should ideally reflect the specific job that an employee performs, and be easy to measure and seamlessly link to the system. Prior to an implementation we executed for a leading Indian bank, only about 7% of the existing job profiles were measurable, with most work evaluation metrics bordering on the highly subjective. There was limited visibility beyond key banking roles and little linkage with other HR interventions. Post implementation, about 80% of the roles became measurable, resulting in increased visibility.
Optimal application of granular market data in target-setting: Often, employees are saddled with unrealistic targets or uninspiring ones. At most companies, business targets are still decided using an Excel-based model, with subjective judgement and limited data to set goals. Through performance dashboards, HR can create differentiated and scientific targets via data analytics involving market and peer groups. Every employee can see 70% of their performance score directly from the system, enhancing transparency and reducing bias. The system can also offer guidance, gleaned from market and historical trends, on how to perform better. With generative AI, this could even translate into an individual performance coach!
Institutionalised performance culture: At the end of the day, an organisation’s performance culture is its biggest growth driver. One must recognize that the person leveraging the system is human. Generally, soft skills are more challenging to embrace than hard skills. However, employees and leaders must strive to imbibe the ‘X’ factor that sets great leaders apart. How to set quality and stretch goals? How to measure performance based on evidence and cite specific examples when providing feedback? How to differentiate incentives and rewards based on merit and unique circumstances? The answers lie in empowering leaders through the right type of coaching and support at the right leadership moment.
There is no doubt that a transformation of the HR function can increase employee engagement and unlock positive outcomes. All organisations have shown a strong affinity to performance management solutions involving the aforementioned practices. Considering the ubiquity of data and its availability in traditionally data-challenged industries, this method can be used universally. With digital disruptions on the rise, the onus now lies on HR leaders to ensure that workforces are well equipped to navigate the transforming workstyles while driving optimal outcomes on the personal and professional front.
Neetu Chitkara is managing director and partner, leader people and organisation practice - India, BCG. Himanshu Priyadarshi is associate director, people strategy, BCG. Shweta Singh is senior knowledge analyst, people and organisation practice, BCG. Views are personal.
