- Introduce mid-year performance reviews. The move is aimed at making managers and employees more accountable.
- The mid-year review should not be about ratings but geared towards reviewing and providing guidance to the employees, bringing them back on the path of growth, in case they have strayed.
- Hold structured review meetings every quarter / six months as per the needs, to keep the employees on track. The year-end process, on the other hand, should focus more on assessment and involve feedback. This will add a lot of value to the whole process of performance evaluation with the objective of helping in course correction, with an aim to give positive feedback.
- Make the performance requirements more objective so that they are easy to understand and implement. This is based on a research that shows that people to whom the performance objectives are communicated well perform 25% better.
- Put in place a workforce performance management system that ties reward, recognition, compensation, and/or incentives to the achievement of performance objectives. Match the compensation and recognition systems to the work necessary for organizational success.
- Introduce compensation and recognition approaches like rewarding exemplary team or unit performance, and links to customer-satisfaction and loyalty measures, achievement of organizational strategic objectives, or other essential organizational objectives.
- Conduct Employee Satisfaction Survey once in every 6 months by an external organization. The feedbacks from the employees to be considered while taking future policy decisions thus getting them engaged with the organization.
Sunday, December 28, 2014
Below is a fictionalized case study that presents dilemma faced in real organizations. And written by me is the recommended solution to the problem. This has been published in Business Manager Magazine January 2015 edition.
Kaveri Boilers Private Limited is a medium-sized company engaged in the production of industrial boilders for the past 40 years. It has 5,800 employees. It is basically a non-unionized company with traditional HR policies and practices. The performance management (PM) policy of this company primarily focused on rewarding efficiency and chastising incompetence. The company attached immense weight age to its annual performance evaluation practice and treated it as a major event in the organization. Even though the outcome of the performance evaluation process often formed the basis for compensation fixation, promotion, transfer, and disciplinary actions, many employees viewed it as a mere fault-finding exercise without any performance improvement initiative. The PM system of Kaveri worked as follows.
When an employee's performance declines beyond the permissible levels, a warning is issued to him and he is usually asked to explain the reason for the decline. In the absence of any convincing reply or significant improvement in his performance within a reasonable time-frame, the company resorts to lateral transfers and the poor performer is normally shifted out of his present department and moved to another. However, the same appraisal system is continued there too and the employee is monitored closely. If the employee still continues to fare poorly, his services are terminated after due notice. This practice goes will with the over-all objective of the company's performance management system, which focuses on quality sustenance at all levels without making any compromise even while preserving the morale of the performing employees by quickly recognising their talents and rewarding them rightly.
Although the current performance management system has succeeded in maintaining the quantity and quality of the products at barely satisfactory levels, the response of the employees to this kind of evaluation has been far from encouraging. The employees have a grudge that the appraisal system has always been keeping them on tenterhooks. To make matters worse, the indifferent attitude and low morale of those employees who have been transferred as part of the penalty has made the situation uneasy and caused anxiety among other employees. The HR manager is a mystified man and has no clues as to why the current system has not been able to produce the desired results of optimum productivity and adequate patronage of employees. Now, the challenge before the HR manager and his team is to pin-point the real reason for the problems of the organization on the labour front and then decide whether to continue with the existing evaluation system after making necessary modifications or replace it with some other system that will be more acceptable to one and all.
Questions for discussions & solutions:
1. Can we blame the existing performance management system for all the problem of the company? Are there any HR issues other than performance appraisal involved? If yes, what are they?
The objective of the annual PMS at Kaveri Boilers focused on rewarding efficiency and reprimand incompetence. The outcome of the PMS process formed the basis for compensation raise, promotion, transfer and resignations / terminations. This PMS process was not viewed favorably by the employees who merely saw it as a fault-finding exercise without any concrete performance improvement initiatives arising out of it. This led to indifference in attitudes of the employees and decline in their morale. The PMS process seemed to create a negative experience for the employees and a stressful environment overall. All of this ultimately affected work productivity for Kaveri Boilers which could not achieve optimum production output that had the HR Manager baffled.
Performance appraisals are only as good as the performance management system it operates within. Organizations that only do performance appraisals for the sake of doing them are wasting their time. Annual appraisals are carried out in order to recognize the achievement and recommendations for promotions. However this was not the scenario existing at Kaveri Boilers.
It is to be noted that during annual appraisals, most recent accomplishments and disappointments may get noticed as these are fresh in the memory while the events which date back a few quarters could go unnoticed. This is an issue with the annual appraisal system which may very well be happening at Kaveri Boilers also. One year is too long a time to wait to appraise people and get their feedback.
The existing PMS cannot be blamed for all the problems of the company. The problem lies in the work environment at Kaveri Boilers that does not seem to focus on accomplishing organizational objectives, improve performance, and attain vision. The employees at Kaveri Boilers seem to be disengaged.
There seems to be lack of initiatives to foster an open culture, open communication, and engaged employees that would otherwise help create a stronger bond between employees at all levels in the organization thereby inculcating a sense of ownership in them.
There also seems to be an issue with respect to the organization’s values and with that of the supervisors, managers, and workers throughout the organization. It is the responsibility of the top leadership at Kaveri Boilers and not of the HR Manager to ensure that organization’s values and their own actions actually guide the behavior of the entire workforce of the organization. To enhance performance the right values must be adopted.
2. If you were to be the HR manager, what will you do to resolve the crisis?
The following steps would be initiated to change the existing PMS at Kaveri Boilers and thus aim to resolve the crisis:
Monday, December 1, 2014
Below is a fictionalized case study that presents dilemma faced in real organizations. And written by me is the recommended solution to the problem. This has been published in Business Manager Magazine December 2014 edition.
Akhil Vikas International is a top fast-moving consumer goods (FMCG) category company in India. It has quite a few well-known branded products which offer beauty, health and wellness solutions. It also keeps several popular brands of home care products, food and beverages.
The company considers product differentiation as its main and successful marketing strategy. To achieve product differentiation, it adopts the TQM approach production process. Though the total strength of its work-force is 12,100, it enjoyed fairly good industrial relations so far. The unique HR policies and practices of the company were largely responsible for the cordial relationship between the superiors and the subordinates. There was a clear demarcation of duties and responsibilities between the supervisors and the workers, and this prevented possible conflicts and strains in the relationships.
However, the situation changed dramatically in the recent period after the company went in for the modernization of its plant. As part of its modernization programme, it recruited a big chunk of knowledge workers recently to operate high tech machines. These workers were assigned to supervisors in different production units after undergoing orientation. Contrary to expectations, the management observed some unease in the relationship between the supervisors and the newly appointed subordinates. There were frequent complaints of ill-treatment from the subordinates and of disrespect from the supervisors. Consequently, tension began to build between these two groups in the organization, leading to declining employee morale, quality levels and performance efficiency.
The management of Akhil Vikas was vexed over the development in the organization and decided to utilize the services of IDEA - an external OD agency to resolve the issues of the organization. The IDEA team, in coordination with the HR department, conducted an OD survey to identify the cause of the frequent disputes between the supervisors and the subordinates. At the end of the survey, the team identified assertive and independent behaviour of the newly appointed high-tech workers as the cause of the disputes. The supervisors apparently perceived a direct challenge to their authority from these subordinates. Thus, there was clear distrust between the supervisors and the new subordinates. However, these very supervisors maintained normal and cordial relationships with the older subordinates.
The external experts attributed the crisis to the absence of any training for the supervisors in team-building and leadership. They also found the orientation and socialization provided to the new employees as grossly inadequate. Finally, the HR department, in collaboration with the IDEA team, organized a series of training programmes for the supervisors on topics like interpersonal skill training, emotional intelligence, team building, cross-cultural understanding, motivation, personality-type training and conflict management. The HR department also increased the duration of the orientation programme for the new employees by making it more extensive and relevant. The management is now fairly optimistic about the outcome of its efforts.
Questions for discussions & solutions
1. According to you, who is to be blamed for the problems of Akhil Vikas International?
- Akhil Vikas International is a top Indian FMCG Company having a workforce of over 12000. The company follows TQM production process, it’s unique HR practices like clearly defined job responsibilities enabled cordial relations between supervisors and subordinates.
- The company recently modernized its plant operations and recruited new age knowledge workers to operate the machines. However problems started brewing between the old supervisors and the newly recruited workers inspite of the latter having undergone induction training and orientation. All of this ultimately adversely affected the company’s performance and productivity.
- The problems for Akhil Vikas International started right from the time the company decided to modernize its plant operations. These were signs of changes to come in the company which is the most difficult thing to deal with. Then came recruitment of new workers to run the machines. Usually in any organization when one is used to a certain style of working and is set and then suddenly somebody new comes into the system, it becomes difficult for the existing person to accept the new one. Reasons could be perceived job insecurity, someone new in the system having more knowledge, doing things in a new, better way, etc…
- The culture at the company seemed to be that supervisors expected the subordinates to do as per their instructions whereas they felt that since they had far better knowledge than them, they knew what to do & how to do it. There seemed to be a conflict of interest.
- It is the management of the company who is to be blamed for this scenario and not the HR dept. since it will only carry out the duties as instructed by the management. However the onus is also on the HR dept. to advise company management on the right thing to be done. Training should have been given separately to the supervisors also on the changes taking place and new people coming in the system. The supervisors should have been sensitized and trained to handle them. New sets of duties & responsibilities could have been spelt out. An outbound team – building training programme at the outset that includes both the supervisors and subordinates could have helped ease the relationships.
2. How do you assess the efficiency of the human resource department in carrying out the OD intervention programs in general?
- Management of the company perplexed by the situation in the company hired IDEA – an external OD agency to resolve the issue. The agency in co-ordination with HR dept. carried out a survey and identified various causes like lack of leadership and team-building skills with the supervisors, independent working style and assertive behavior of the workers and also process related issues like inadequate coverage during the training programme of the newly recruited workers.
- The solution to this issue was that the extensive training programs were carried for both supervisors and the workers in order to bring them all together. However this is a classic example of just-in-case training identified as a solution to a problem. Training should be linked to work requirements. Hence if the results of the survey identified leadership and team building for the supervisors, the same should have been part of the annual training calendar for them so that it is reinforced on the job regularly.
- Although the management of the company is fairly optimistic about the outcome of its efforts, the HR dept. needs to collect feedback on the appropriateness of the training. It should systematically evaluate training effectiveness on the job, collect performance data on individuals and groups trained at all levels to assess the impact of the training and periodically report to management.
- Supervisory support for the use of training on the job could be tracked and used to improve future training content, training delivery and instructional effectiveness. The failure to evaluate and improve the effectiveness of training will make it difficult to optimize individual or company-wide performance. Ineffective or inefficient training and education waste resources directly (cost of training as observed in this case analysis here - various trainings as a result of OD Intervention Survey) and indirectly (cost of lost opportunity and productivity while the workers and supervisors are receiving the training).
- Lastly, the HR dept. should periodically (e.g. once in 6 months) assess its employee engagement via various formal and informal methods. Failure to consider employee engagement and satisfaction data such as absenteeism, grievances, etc…may prevent a problem from being identified and corrected. Having already identified a problem and taken measures to correct it, the HR dept. should now ensure that it does not recur again i.e. take Corrective Action by way of employee engagement and satisfaction surveys.
3. What will be the possible outcome of the joint efforts of the HR department and IDEA in terms of organizational development and change management?
The possible outcome of the joint efforts of HR Dept. and IDEA – external organizational development (OD) agency could be as follows:
- Create a supportive work environment between the supervisors and the workers (subordinates). An environment of mutual trust and work stability will be in place.
- The employees will be more personally engaged, and demonstrate high energy in discharging their daily functions as a consequence of the training programs and OD interventions
- There will be feeling of being valued by supervisors and involvement by the subordinates.
- Improvement in knowledge, skills and abilities, everyone will work for their general betterment and the company as a whole.