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Performance Management or Employee Development? Is there a Way to Merge Both?


If you ask an employee on what a performance management is, he or she will mention that it is nothing but the annual appraisal of his or her performance followed by salary revisions. Employees also tend to view performance management process with a lot of skepticism, as generally they are not happy with the subjective appraisals and get dis-satisfied with their salary revisions.

An effective performance management system should not stop with just once a year performance appraisals and salary revisions. It should be much more comprehensive, and one of the key goals of such an effective performance management system should be to develop employees.

What is employee development?

Employee development consists of activities that are initiated by an organization that would help in the overall development of an employee. An effective performance management system is one which gives high priority for employee development. Employee development encompasses the following activities:

1) Identify and conduct necessary training for employees. Proper planned training programs would help employees to acquire the necessary competencies needed for the job.

2) Give enough opportunities to employees by recognizing their talent and giving them more responsibilities. This will help employees to grow to leadership positions in their organizations.

3) Identify poor performing employees and put them under a performance improvement plan so that they can be effectively guided and groomed to become good performers.

4) Identify any other reasons for non-performance of an employee, like non-availability of tools to perform their job or other external factors and remove those obstacles so that employees are in a position to perform their job well.

Benefits of employee development

When a performance management system focusses on employee development as well, the return of investment from such a system would be good due to the following reasons:

1) Well trained employees become more competent and execute their responsibilities productively. They easily achieve the goals that are set for them under performance planning activity.

2) Employees become happy as their development is taken as the prime focus. This will lead to better employee engagement and reduces attrition.

3) When leaders are groomed within the organization, it helps in succession planning and reduces the associate costs and risks in hiring a new employee.

4) When facilities are created for employees to do their job effectively and obstacles are removed, it ensures that organization goals are met.

How do you convert your Performance Management System to Employee Development System?

Most companies do performance appraisals once a year and use performance management software for streamlining the process (self-evaluation, 360 degree feedback, manager’s feedback & rating, recommendation, etc.).  Due to the volume of the work and stress associated with this process, the process stops with the salary revisions.  Ideally, the HRs and managers should extend this process to identify the training needs, strengths & weaknesses of the people/organization, people development needs and put a clear roadmap for addressing them.

When the feedback obtained is used to address the ways to improve the performance and capabilities of individuals, the system starts moving towards the development management system.  Conduct the feedback process periodically (eg. Every quarter or month), in this way it is lot easier to obtain/provide feedbackto the team members.  Managers need not hold on to providing appreciations or weaknesses for yearly appraisals.

And, best is to move onto continuous feedback and provide them then and there.  When this process is done on regular and close intervals, the performance appraisal system starts to become a Development Management System.  Continuous mapping of performance, competencies and aspirations clubbed with actions are the key.  Following are the steps:

1.      Empower the managers to do the feedback cycles minimally, every quarter.

2.      Managers should provide feedback to their team members, review the status of goals accomplished, listen to the team member’s feedback and derive specific action items.  These action items could be sending the team member for any specific training, equipping the team member with necessary skill sets, etc.

3.      Department manager should be able to collate the feedback across all the people and make sure that the action items are in place & acted upon.

4.      Maintain the scores in each cycle and use these cycle and finding should be used in annual performance appraisal.  (Theoretically, annual performance appraisal score should be just an average of the scores obtained during monthly/quarterly feedback cycles).

By doing the above, the amount of stress is reduced respectively during the appraisal process.  And, this process will really help managers, HRs and employees as they really see true value of doing the above.  That is when “Pay for Performance” comes.

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