The Hindu Business Line : Measuring performance and capability

EVERY THIRD client meeting I attend inevitably veers around to the subject of performance planning or reviews. The context is either the ensuing performance cycle, a recently-concluded employee survey or a couple of resignations after the last review cycle.

Anxious to find a quick solution to the problem, a variety of ideas are tossed around — better "pre-appraisal training", "expectation management sessions", "complete change of the system", "better managerial skills" and so on. After listening to all the issues and ideas, I come back feeling quite humble at the realisation that we have such trouble making this most central and simple human resource process really work!

After significant reflection and synthesis, I have now come to realise (rather reluctantly) is that many of our solutions cause as much harm as the problems themselves! In our obsession with wanting to make performance more and more measurable (and, therefore fair, transparent and objective) we have ignored the human element — the process of assessing capabilities.

Before sharing my hypothesis, it would be important to clarify why this discussion is relevant today.

The number of employees Indian industry has added to its workforce in the last 10 years is not just the largest-ever net addition but also the most rapid.

Telecommunications, banking, insurance, retail, infrastructure, IT and ITeS together have contributed to a huge additional workforce.

The members of this workforce are young. They hold valuable degrees and diplomas. Most important, while many of them might be in roles that are blue collar by definition, they all are truly white collar in their aspirations.

In this context, the performance management outcomes play a crucial role in determining whether these young employees will get what they want. There is just too much at stake in the performance management process!

At another level, we are also seeing the looming danger of one of the most acute skills shortage situations in our country. Any hope of remedying this situation depends on our ability to get our employees to focus on their skill development through a regular dialogue process.

This is the contextual setting which makes the ensuing discussion compelling.

Let me restate my hypothesis and belief — our excessive focus on measuring performance outcomes to the exclusion, or the neglect, of measuring capabilities has actually led to more problems than we had intended.

Organisations have been under pressure to improve their performance measurement systems for a variety of reasons:

Employee surveys invariably point to the lack of objectivity in the process.

The management of rewards linked to performance ratings puts pressure on organisations to make the system very measurable - objective.

The ever shrinking age at which people are assuming people management responsibilities further forces organisations to take all subjectivity out of the system and keep it as simple as possible.

These have in effect been the drivers towards the so-called "objective appraisal era". Nothing terribly wrong, one might say.

To achieve this, organisations have introduced various forms of goal setting processes.

More important, they have removed the assessment of capabilities (or the behaviours that influence performance) from the system.

This stems from a long-held belief that capability assessments are subjective and end up diluting the otherwise "outcome-oriented" performance assessment process. This is where the trouble starts.

I would like to first present a case for moving away from outcome measures in appraisals, especially at frontline positions.

I would then like to present a case for a rigorous capability assessment process for young employees.

Let me start with the first.

I start by arguing that for many of the new age jobs, performance measurement is actually built into the job design and the work system. Measurement is, in fact, integral to the way work is assigned, monitored and measured.

Take the case of a sales person, a machine operator, a software developer, a sewing machine operator, a call centre agent ora business process analyst. Measurement of work output is completely integrated into their work systems.

Given the time-critical nature of work that these employees perform, organisations have fairly sophisticated systems to monitor and measure performance and also share them with employees, on-line and real time.

In this context, therefore, a separate process of setting performance measures and evaluating them may seem superfluous.

There is another aspect of job design that must be understood. Today's emphasis on process orientation, deskilling and in abstracting complexity to higher levels has meant that achieving one's performance goals or measures is actually basic and fundamental to staying employed.

It does not earn one any bonus points! Against this context, evaluating and rating such an employee as having "achieved" and using that measure to take all administrative decisions would, therefore, be too short-sighted besides giving the employee the wrong expectations about rewards.

I, therefore, conclude that in today's context, doing one's job is basic and fundamental to staying employed and rating that as "achieved" may only give the young employees the wrong impression.

Let us now look at the case for a rigorous capability assessment process.

If we were to ask ourselves what differentiates one of these frontline employees from another, the answer is quite clearly their capabilities — what they bring to their jobs. What should influence their progression to becoming a supervisor, a team lead or a manager is not their task accomplishment but their potential for that role as demonstrated through their capabilities. This is where most organisations get into trouble today. For ease of measurement and objectivity, they depend excessively on task accomplishment measures and completely overlook capability assessment. When the employee turns around and demands rewards on this basis, organisations have trouble meeting those expectations.

Look at it this way — is it all right for a good telephone linesman who has achieved his daily call target to expect to become the customer service manager?

Is it all right for the retail clerk whose billing accuracy is 100 per cent to expect to become the store manager?

Is it all right for a call centre agent or a business process analyst who has met his or her daily goals to aspire to become a team lead? Obviously not. However, to be able to say so, there are several preconditions:

You should have clearly communicated the prerequisites for progression and the importance of potential.

You should not have erroneously led the employee to believe that there are indeed abundant career opportunities for everyone to become everything.

You should have assessed and given feedback to the employee on his or her capabilities for the current and future role so that he or she has the opportunity do something about it or at the least to calibrate her self-image with what the reality is.

If, instead, managers merely evaluate the employee's task accomplishment (in the interest of objectivity) and give them an absolute rating, and then tell them that they are not ready for a promotion, they have neither been fair nor supportive. We are all familiar with the famous adage: What you measure, you improve. This is true of employee capabilities.

In fact, in the early and formative days of an employee's career, it is capability measures that should take precedence over task accomplishment measures. By emphasising on capabilities, we would have helped reinforce the right professional behaviour in him.

We would have persuaded him to focus on and develop the professional depth, rigour, pride and excellence that we all so often lament are missing.

If employees have the right capabilities, results will happen automatically. This is, in fact, most central to nurturing knowledge workers.

On the other hand, emphasising results over capabilities in the early days leads employees to adopt short-cuts, not follow the professional discipline and still somehow seem to be successful.

I would, in fact, recommend that for the first two or three years of the new employee's career, performance discussions must focus primarily on capabilities.

If we do not do this, they also end up believing that "there is nothing more to learn" out here (the organisation) and nurture misplaced career aspirations.

I must also emphasise that a certain level of subjectivity is a reality. The sign of a good manager is his ability to grapple with this subjectivity and transact it with responsibility. Let us not term all subjectivity as wrong, merely because we do not trust our or other's good judgment.

In closing, I would like to maintain that while the goals of fairness and transparency are laudable, the element of human endeavour which is so central to knowledge work cannot be taken away from the performance review process in the interest of upholding these goals.

Otherwise, as Harry Levinson said in his 1970 landmark article, we would miss the whole human point.

(The author is the founder and CEO of Totus Consulting, a strategic consulting firm that designs and implements HR systems and process for organisations across industries. He can be reached at ganesh@totusconsulting.com)

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