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Posted: Sun, Apr 20 2008. = 11:55 PM=20 IST

Judging Performance | = Appraisal=20 methods take centre stage

With revenues and = profitability so=20 dependent on the quality of human resources, it has become important to = measure=20 this in a scientific and unambiguous way. Companies are now beginning to = look at=20 performance management strategically and are modifying systems to suit = business=20 needs

By Rajeshwari = Sharma

As human resources become increasingly critical to the growth of=20 businesses, measuring human capital, identifying, developing, rewarding = and=20 managing employee performance is being looked at more strategically than = ever=20 before. With investors and other stakeholders evaluating company = performance on=20 a quarterly basis, appraisal systems are being tweaked regularly to suit = changing business needs.

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Illustration by = Jayachandran/=20 MINT

Beverages firm Coca-Cola India, for instance, = recently=20 replaced its five-point rating system with a four-point grading = methodology to=20 force reviewing managers to take that tough call on rating appraisees, = and not=20 take a median approach. =E2=80=9CWe found out, in many cases, that the = appraiser would=20 take the easy way out and assign a score of 2.5 or 2.7, rather than = making the=20 difficult choice of giving 2 or 3,=E2=80=9D says Nalin Garg, = vice-president, human=20 resources, Coca-Cola India.

Five months ago, business process outsourcing company vCustomer=20 Corp. went online with its performance management system. The = company broke=20 down quarterly reviews into monthly objectives, and put in place = informal=20 feedback sessions every month to avoid any surprises, both for the = employee and=20 the employer, at the end of the quarter.

At Jindal Stainless Ltd, raises and promotions of managers = will now=20 depend more on tangible deliverables. All managerial staff at the steel = firm is=20 evaluated on the basis of current performance=E2=80=94measured by = supervisors (40%=20 weightage), and an outside agency, which assesses the leadership = potential of=20 the appraisee, weighted at 40%, while 20% weightage is given to the = assessment=20 made by cross-functional teams (for all-round feedback). =E2=80=9CAlong = with a sharpened=20 focus on deliverables, this year, we plan to increase the variable = component=20 from 15% of the gross salary to 20%,=E2=80=9D says S.K. Jain, senior = vice-president,=20 human resources, Jindal Stainless.

Like Jindal Stainless, electrical distribution company Schneider = Electric India Pvt. Ltd has made it mandatory for reviewing managers = to=20 evaluate appraisees according to the specific levels and bands they fall = under,=20 and not in clustered groups. For example, regional managers in sales = teams will=20 be compared with each other or employees in similar job roles. = =E2=80=9CThe idea is to=20 compare apples with apples,=E2=80=9D says Robin Singh, director, human = resources,=20 Schneider Electric.

From this year, data analytics and customized process solutions = provider=20 eClerx Services Ltd has linked part of the bonus given to = managers to=20 competency-based development. For instance, a manager who is found = lacking in=20 soft skills is sent for training to fill that gap. =E2=80=9CWe made this = change to make=20 sure managers take training and development to fill competency gaps = seriously,=E2=80=9D=20 says Kishore Poduri, head of human resources at eClerx.

Through these changes, eClerx and others are aiming at a = performance-driven=20 culture=E2=80=94among the first few to do so.

For, says Ganesh Shermon, head of human capital advisory service at = consultant KPMG India : =E2=80=9CMost companies in India still = have basic, ad hoc=20 models that have neither clear objectives set out nor the recognition of = the=20 criticality of a performance management system.=E2=80=9D

Increasingly, however, companies are moving from a traditional = performance=20 management approach to the balanced scorecard=E2=80=94a framework = developed by Robert=20 Kaplan and David Norton in the 1990s, which aligns business activities = to the=20 vision and strategy of the organization, and monitors the performance of = the=20 organization against strategic goals.

Interestingly, there is an increasing amount of scrutiny on quality = of=20 work, with companies placing significant importance on qualitative = measures. =E2=80=9CIt=20 is no longer only about numbers and meeting targets. The means to the = end=20 (goals) has become very important,=E2=80=9D says Shermon. = =E2=80=9CCompanies want to know how=20 employees are meeting their key performance areas. Is there a strategy = and=20 ethics involved in it?=E2=80=9D says Shermon. =E2=80=9CIt is often seen = that an employee may=20 have met targets but also diluted a bit of the organization=E2=80=99s = brand.=E2=80=9D

=E2=80=9CAppraisal is also about competencies or manifestation of = the corporate=20 behaviour an employee deploys while achieving goals and targets, in = conformity=20 with approved behaviour,=E2=80=9D adds Shermon.

Some companies that have adopted balanced scorecards or other = performance=20 management methodologies=E2=80=94such as KPMG=E2=80=99s value-based = management, Arthur=20 Andersen=E2=80=99s value dynamics, Stern Stewart EVA=E2=80=94include = Coca-Cola India,PepsiCo=20 India Holdings Pvt. Ltd, Godrej and Boyce Manufacturing Co. = Ltd,=20 Syngenta India Ltd, Cargill India Pvt. Ltd, eClerx, HCL = Technologies Ltd, Satyam Computer Services Ltd, Toyota = Kirloskar=20 Motors Ltd, Samsung India Electronics Pvt. Ltd, and public = sector=20 firms such as Indian Oil Corp. Ltd and Bharat Petroleum Corp.=20 Ltd.

Explaining the rationale of changing appraisal systems, Sanjay = Bali,=20 vice-president of human resources, Samsung India, says: = =E2=80=9CMeasuring the quality=20 of human resources on changing performance parameters in a scientific = and=20 unambiguous way is critical since revenues and profitability are so = dependent on=20 it.=E2=80=9D

Thus, companies are adding and/or modifying more variants, metrics = and key=20 result areas to the performance measurement system to bring in = objectivity and=20 align individual goals with those of the organization. For example, a = sales=20 executive is now evaluated on parameters such as leadership skills and=20 initiative, teamwork and cooperation, people skills and contribution to = the=20 overall corporate brand, in addition to key result areas such as sales=20 generated, customer retention and acquisition. The definition of key = performance=20 areas is better articulated now and these have become more measurable = than=20 before.

For instance, all employees at PepsiCo get rated on business and = people=20 results, with 50% weightage on each parameter. People results comprise = four key=20 areas=E2=80=94values-based culture, inclusion and diversity, talent = management and=20 personal development. PepsiCo India executive director of human = resources, Pavan=20 Bhatia, reasons, =E2=80=9CThe kind of business we are in, it is = important that all=20 employees, starting from the frontline staff to the business head, focus = on=20 people results.=E2=80=9D He adds, =E2=80=9CAlong with business results, = building the capability=20 of the next line of employees is very important.=E2=80=9D

The appraisal system, which was put in place in 2006 by PepsiCo = India, is=20 now being adopted across the beverages company=E2=80=99s offices = worldwide.

As organizations move from the concept of individual business units = to=20 entrepreneurial business units, where entrepreneurial capabilities are = applied=20 within an organization, people management and leadership skills are = becoming key=20 performance areas, even for junior employees. Companies are driving the=20 leadership objective right from the lowest level in an = organization.

K.K. Swamy, deputy managing director at Toyota Kirloskar Motors, = says:=20 =E2=80=9CEmployees across levels are measured on leadership = competencies, only the=20 weightage on leadership skills increases from junior to senior = levels.=E2=80=9D

Human resource consultants say the orientation to performance = management=20 has changed over the last several years=E2=80=94appraisal systems now = play a far greater=20 role in an organization=E2=80=99s overall strategy. =E2=80=9CCompanies = want to get it right not=20 just in terms of measuring current performance, but also measuring an = employee=E2=80=99s=20 potential,=E2=80=9D says Anita Belani, country head, Watson Wyatt = India Pvt. Ltd,=20 a global human resource consulting firm.

Human resource managers say that while it is important to have = measures in=20 place, an unbiased, transparent measure mechanism is necessary. While = PepsiCo=20 India=E2=80=99s Bhatia has put in place a survey called Connect that = tracks whether=20 people results are being fulfilled, Schneider Electric=E2=80=99s Singh = has made it known=20 that an appraisal report will not be considered complete till the = appraisee and=20 the reviewing manager=E2=80=99s manager, who is often the chief = executive, send their=20 comments on the appraisal.

Singh says objectivity is not easily achieved since, culturally, = employees=20 in India are not geared to deal with performance rating = professionally.

But, it is essential. =E2=80=9CPerformance management is the big = picture of a=20 company=E2=80=99s vision, and (of) how the contribution of individuals, = teams, divisions=20 and, ultimately, the organization as a whole can help realize = it,=E2=80=9D says Navyug=20 Mohnot, chief executive officer of QAI India Ltd, a consulting = firm that=20 deploys process improvement and quality initiatives in=20 organizations.