Part 1 -MyVu: Do I Believe in Performance Management System ?

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This what I read from Chartered Institute of Management Accountant, UK about Performance Target ;

"Performance targets will not serve as an effective management process unless managers make certain that their targets are:

1. clearly defined and communicated so everyone understands them;
2. neither too high nor too low;
3. allocated appropriately across individuals and teams;
4. consistent with each other, with the company’s economic and competitive environment and with business strategy;
5. based on rigorous data analysis that takes into consideration more than just past performance;
6. periodically reviewed;
7.owned’ and accepted by the individuals that have to attain them;
8. followed by a specific action plan;

Performance Target

I have been in and out of the Performance Management System for the past 12 years. I must admit that the system has evolved since then,  not so much of the essence or the substance of the system though, but rather the forms of the system. If you ask me how is it been in the system for past 12 years ? My reply will be as simple as " The system is as good as the people ". If you read the literature about the system, reading reports from the consultant or being briefed by the owner of the system [ in this case HR], it all lead to one i.e. to create a superior performing organization. It is all rosy and nice and soothing to our ears that the system is developed with the people development in mind. However, that is all truth in theory, but naked lie in the reality [ you may say I am in such a sulk mode] , but given a choice and opportunity, I would have done it differently of which I shall share with all my readers towards the end of this blogging series.

Let me relate my experience been in the system in support group. I am not be able to relate the core business group, as I have never been in any calibrations involving the other groups. When I mentioned support group, I make reference to Finance, Supply, HR, Legal, HSE, Planning  and Public Affairs. Just for clarity, in any organization set up, there are always "core business functions" and "support  functions" depending on the nature of the business of the organization. In organizations that I have worked before support functions refers to those mentioned earlier. 

In my observation, support functions always struggle to come out with a very concrete performance target and very often the performance target disconnects or off tangent from the company core business target i.e. lack of item "No. 4" as above. It is very subjective and vague. The deliberations always ended up ugly with lots and tonnes of dissatisfaction and grouses among the staff, especially who felt they are not being treated fairly and equally. They perceive , from the day the objectives and performance target is set up, they already know who will be rated and get what . 

Why factors that contribute to such a disappointment in the system ?

No. 1 - The people. 

The system is as good as the people. People is the core of the system. If the people "half heartedly believe in the system", it will result in many setback, defects during the implementation and it will be far more than perfect. It is lacking in components "No. 1 "," No. 7" and "No.8" so to speak. In this instance, I do not pointing into the system, but would rather point at the people - from the top management till the lowest rank in the organization. To make the situation worse, often people with power do take advantage of the system and find the loopholes in the system to benefits "certain group of quarters". This is especially so, when the organization really make a real distinctions between high performers and non-performers in terms of financial rewards. As a result of that , the objective and performance targets has become very academic for the sake of getting the system implemented.

A case worthy to mention and share that I know. 

Mr. A joined Company ABC in April 2009 as an analyst in support function. The performance management cycle ran from January-December 2009. The fact that Mr. A joined the organization before September 2009, Mr. A would be evaluated based on performance management cycle that was currently running. In June 2009, he sat down and agreed with his management on his performance target for the next 6 months based on  tool use by his company " Balance Scorecard" in setting up the performance target and objectives . 

Let us do the checklist based on the above criteria(s) ;

1. clearly defined and communicated so everyone understands them; YES
2. neither too high nor too low; YES
3. allocated appropriately across individuals and teams; YES
4. consistent with each other, with the company’s economic and competitive environment and with business strategy; UNCERTAIN
5. based on rigorous data analysis that takes into consideration more than just past performance; UNCERTAIN
6. periodically reviewed; YES
7.owned’ and accepted by the individuals that have to attain them; YES
8. followed by a specific action plan; YES

Mr. A delivered all the tasks assigned to him, superbly. Within 6 months, Mr. A became the key player in the accomplishment of his department objectives. In other words, if the management had asked him to run, Mr A responded with " how fast ?" If the management had asked him to jump, Mr. A responded with "how high ?" However, during the year there was a minor reorganization exercise took place and yet Mr. A performance target was no reviewed and amended accordingly, in line with the organizational change. During the performance evaluation cycle, after various calibration meetings Mr A final rating was just meeting the expectation of the company. Even though, on paper he had exceeded all this objectives very well still if compared with Mr. A peers, Mr A was rated as meet the requirement. Mr A asked the management on the reasons of the rating as he would like to improve it further, but the only explanation given to him, that Mr A was a new staff who had been with the company of less the 8 months.

Mr. A argued that the essence and spirit of the performance management system of the company is not based on seniority, but rather based on his performance during the period under review, the answer given to him still hold true, it it was based on "ranking system." Mr. A was new and the calibrators from other department did not or know little about you, so that have affected somehow your ranking. 

Mr A further asked for clarifications on how could one rank the staff with different objectives and performance target as a result of the reorganization exercise [ i.e. not comparing like-to-like or comparing apple -to-orange] . The answer that he got, it is based on quota system ! The % quota for excellent and very good have been met this year, and unfortunately Mr. A was part of the quota and those ranked above Mr. A did good job too and they are seniors in the organization.

So, do you think that ;

1. Mr. A was fairly being assessed ? Why ?

2. What psychological impact and perception that Mr. A would have in the system ?

3. As a result of this, what would be Mr. A strategy for the next performance appraisal ?

4. Do you think the system will change in the next performance cycle, given Mr A maintain its superb performance ?

5. What have gone wrong ?

To be continued ........................

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