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Read about the latest trends in HR under one umbrella

Blogs

Read about the latest trends in HR under one umbrella

Performance Management: Will Continuous Feedback supplement or supplant Annual Performance Review?

The other day while being immersed in "Dreamers and Unicorns" (authored by Abhijit Bhaduri), a current bestseller in HRTech circles I came across the mention – "Performance Management generates a lot of heat but rarely sheds light."

That got me thinking. Being from the HR Tech community, I spoke to our dyed-in-wool delivery management team. The common refrain was that the HRMS functional module most sensitive to implement is Payroll followed closely by Performance Management.

It is well known that poor Performance Management could adversely impact the organization and with people being the biggest organizational asset, the impact multiplies.

Since 2016 the buzz in HR circles has been on Continuous Feedback for Managing Performance (CFMP). It has been suggested as a game changer. The fillip was provided when leading Fortune 500 companies like GE, Adobe, ConAgra becoming torchbearers. Concepts like Objectives and Key Results (OKR), Check-Ins got introduced into the HRMS vocabulary. Enterprise HRMS platforms and point applications catering to this frequency led performance management system got introduced. Software analyst companies came up with reviews and ranking of the same. The buzz is heading mainstream.

The benefits of continuous feedback are not hard to find. The premise being appraisals should not be a judgment delivered on the final output but should be with the purpose of providing timely and actionable feedback periodically to improve collaboratively and bring in better results.

The burden of the discussion here is, does this mean that the hitherto multi-page Annual Performance Review (APR) would be replaced with the higher frequency based Continuous Feedback based Performance Management?

As a few practical views on the topic will be shared through the lens of an HR Tech practitioner. While the merits of CFMP are well known, the spotlight is on the keys to success for an implementation of an organization wide initiative. The importance of creating the ground work through an effective change management initiative cannot be over emphasized.

The biggest challenge associated with the APR is that it lacks candour and empathy and contributed to employee disengagement as it is seen more as a judgment delivered. It becomes a once in a year ritual equally dreaded by the appraisee and the appraiser. While the stated goal of these meetings is to provide feedback on the performance, most of the time it gets relegated to being a formality where the appraisee is made aware of the performance and the discussion gravitates to the possible impact on the raise and the career.

CFMP conceptually addresses what ails APR.It encourages frequent interactions (Check-Ins) with employees, bringing in the corollary- improved employee engagement. The feedback provided is near real time and the corrective actions are discussed in a collaborative spirit. The early movers saw significant and encouraging upsides with respect to reduced attrition and improved performance through enhanced engagement.

A few tips are shared below for a successful implementation of CFMP based on the experience.

Organization:

  1. Creating a culture of continuous feedback is time taking. Patience and drive are needed so that it becomes self-sustaining. A core team with the right reporting structure, authority and responsibility should lead this.
  2. With the hybrid, distributed and remote work force which seems to be the norm in organizations, with multiple generations of employees in the workforce, deployment across the organization needs to be planned in the right phased wise manner through employee buy-ins across the layers and starting small.
  3. This organization wide program should be supported through effective communication with complete support from the leadership. Business Process:
  4. With continuous feedback, frequency of Check Ins would be 3 to 4 times in a year. Creating measurable goals (through Objectives and Key Results) would be key.
  5. An over-reach in frequency could bring in costly mis-representation of data. Hence the frequency should be decided in advance and the data aggregation needs to be well defined and structured. Feedback-Fatigue or Checking the Box mindset should be avoided and this could take time.
  6. Coaching has to be provided. Line function-oriented activities like Sales, distribution could work through OKRs with ease. For staff functions like finance, administration the OKRs could be defined through guidance and direction to remove ambiguities. Defining positive and actionable feedback across functions is imperative.
  7. The material conclusion of performance management would be compensation. A frequent review process could provide overwhelming number of data points to compute the raise unlike the APR where the "year worth of contribution" is easy to compute. This would require coaching to bring in this change in approach.
  8. Responding to and analyzing feedback could be an uncalled-for overhead, which could be avoided through a well-designed OKR.

Application/Tool Selection:

  1. There are tools which are stand alone and a number of enterprise level HR system s have PMS redesigned for CFMP. Installation of the stand-alone tools could be simple but there may be difficulties in integrating with HRM systems.
  2. With the frequency of feedback, recording, documentation and scheduling would be the key features of the selected tool.
  3. Data could be qualitative and hence need to be prepared for advanced analytics.

Application/ Tool Deployment

  1. Duplication of data across multiple systems is a possibility, could increase the burden of the HR team and needs to be avoided through a well-defined implementation process.
  2. Initiation should be with the building of the single dashboard that allows easy inputting of data, searching, reviewing and sorting of the feedback requested and delivered.

Technology adoption and ensuring the new systems function as intended should be not the be all and end all of CFMP. Sharing of feedback must remain uniquely as a human endeavour. This would require detailing the feedback with empathy, camaraderie and collaboration. Deployment would be as good as the inputs provided to get the best benefits.

We are in the 5th year since the concept of Continuous Feedback was launched. While there is no denying the merits, the key lies in its execution. We have seen that HR leaders are seeking systems that produce comprehensive performance data aggregated from sources, platforms with advanced analytics and, mobile accessibility, to track check-in conversations, performance against goals, skill assessment and gaps and training needs. However, organizations still prefer to use traditional performance ratings to fit in the compensation. Hence the mapping of the CFMP tool’s aggregated results with adjustable formulas to determine the compensation will hold the key. Various reports on the adoption of CFMP from venerated member organizations like SHRM corroborate this experience.

So, the CFMP would supplement the APR for a duration till the art of seamlessness in compensation pay-outs is perfected, given that is the significant outcome of PMS. Continuous Feedback mechanism will lay the path of employee empowerment and engagement and appraisal will not be seen as a dreaded ritual.

Before long, Performance Management will generate light and not heat!

Somjit Amrit