Covid-19 impact : Re-engineering the performance appraisal system

Even as vaccination drives across India gather steam, Covid19 continues to impact corporate work culture and decision-making. In many ways, last year’s pandemic has expedited much needed changes within the corporate structure and management. Performance management systems across industries have been under the radar for long time. Remote working, greater use of technology and an influx of new generation employees are challenging the established order of business. Time seems ripe to re-engineer this age-old appraisal system. As the yearly ritual of performance evaluation comes up next month, we look at various ways in which HR should accommodate the new normal.

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Data points: In place of having a ratings-based system for the entire team, one would do well to reserve this system for top performers and laggards only. Not surprisingly, majority of the team falls in between these extremes. Instead of ‘wasting time & efforts’ ranking miniscule deviations, HR must focus on developing core strengths of this corpus. Similarly, companies should move towards an ‘outcome-based’ approach instead of scrutinizing the processes. Adopting an outcome-oriented Objective & Key Results (OKR) based performance system provides more autonomy to employees working remotely while holding them accountable for their performances.

Agility: Over the years, managers have followed the annual ‘set it forget it’ goals as a mechanism for performance management. These goals being vague in nature find little connect with the employees’ day-to-day activities. Ironically, most employees are still unable to distinguish appraisals from increments. The pandemic has put to test the rigidity of such processes. Companies should link employee’s objectives to their business priorities and introduce a periodic review of these objectives by business managers against changing nature of businesses. Agility is the keyword.

Driving Growth: Thanks to the pandemic, companies have learnt to put greater trust in their employees. Be it work autonomy, accountability or purpose. The relation between an organization and an employee has strengthened by leaps & bounds in past ten months. Surprisingly, most successful organizations had already implemented this model. They did so by involving their employees in the company’s growth trajectory. Employees had flexible working hours, an office culture that fostered innovation, a healthy work-life balance etc. Such organizations aligned employee performance with growth of the organization. Companies should seriously consider rewarding bonus share options to its employees on basis of company’s growth. A competitive base salary and discretionary increments to truly outstanding performers creates enough motivation for everyone to give their best.

Mentorship Culture: Off late we have seen a spike in hiring of coaches for CXO executives. It is high time companies invest in building coaching and managerial skills for managers lower in the hierarchy. In fact, mentoring, collaboration & feedback between managers and their subordinates should be a continuous process across corporate teams. A commendable implementation of adaptive coaching would translate into clarity of goals for employees and drive forth the need to improve one’s skills as a necessity to build autonomy.

Utilizing these uncertain times to transition from an age-old annual ratings system into a new-age agile model will bring further appreciation to the HR team who have spent most of last year firefighting. The new performance model should offer employees freedom to innovate, adapt and motivate themselves in order to realize their true potential.

Author is Nilesh Gaikwad - Country Manager at EDHEC Business School, France.