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PERFORMANCE ASSESSMENTPERFORMANCE ASSESSMENT

Sunirmal SenHCL Technologies

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Managing talentManaging talentand developing anand developing an

employee value proposition employee value proposition

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Companies must therefore make talent Companies must therefore make talent management a top priority - create and management a top priority - create and

continuously refine their employee value continuously refine their employee value proposition, and source and develop proposition, and source and develop

talent systematically.talent systematically.

- - McKinsey & Co.McKinsey & Co.

The war for talent is on.

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Big-ticket salaries, stock options and perks Big-ticket salaries, stock options and perks like concierge services, flexible schedules, like concierge services, flexible schedules, sabbaticals, mortgage payments, even an sabbaticals, mortgage payments, even an

interesting careerinteresting careerpath and a fun environment…path and a fun environment…

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……are no longer good enoughare no longer good enoughfor young people!for young people!

Source: Stanford Business School Magazine

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So, what makes employees tick,So, what makes employees tick,and how to develop anand how to develop an

employee value proposition? employee value proposition?

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Few Challenges…….Few Challenges…….

• The changing workplace

• The ethical dimension

• Creating a retentive organisation

• An understanding of employee behaviour– What do they seek?– What makes them stick? What makes them leave?

• Developing an employee value proposition

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The changing workplace and the The changing workplace and the need for newer communitiesneed for newer communities

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Some beginnings…Some beginnings…

• Infosys has a rock band that plays at their amphitheatre and at outside concerts

• Organisations have started initiatives like – Film clubs that hold screenings every month, – Knowledge sharing forums– Job referral programmes such Frito Lays’ ‘Bring a Friend

to Work’– Blogs

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The implication…The implication…

• The firm of the future has an opportunity to be the nexus of communities of practice that attract the best human capital, and to create an environment in which they build superior knowledge assets

• This can give it a competitive edge vis-à-vis the talent market, both internal and external

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A post-Enron world and the A post-Enron world and the importance of being good importance of being good

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Ethical is sexyEthical is sexy

• The fall of Enron, WorldCom, Arthur Andersen and travails of others like the Interpublic Group, has brought the issue of ethics in business to the fore

• In a Stanford-conducted survey of 800 MBAs from 11 leading business schools in the US and Europe, ethics figured third most important criteria for the choice of an employer, after intellectual challenge and financial package

• As many as 97% respondents were willing to take an average cut of 14% in compensation, to work for a company with a good reputation for ethics and CSR

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‘‘WeGen’ is the new GenNextWeGen’ is the new GenNext

• A recent Newsweek study has shown that the youth across Asia is increasingly motivated by a desire to make a difference rather than just make money

• It talks about a generation that’s far more inclusive and socially conscious than its individualistic predecessor

• It’s a marked change from the ‘I-Me-Myself’ image of youth commonly stereotyped in media

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Creating a powerful ethics-driven Creating a powerful ethics-driven corporate brandcorporate brand

• Infosys has consistently been rated as one of the most respected companies and sought-after employer

• While its rapid growth and stellar performance is part of the reason for this perception, its differentiator is clearly its ethical, caring reputation

• From the image of its leader, to the many stories that surround the company (e.g. how the income tax officials accept tax returns from the company without even checking them) contributes to this image

• Tatas or Wipro also enjoy an ethical image, but it’s Infosys that scores a top-of-mind association on this parameter

• The learning is clear – it is not just sufficient being principled; one must be seen to be principled by the concerned publics

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The implication…The implication…

• It’s clear that for a company to be attractive to potential employees, as also for it to give a sense of pride to its existing employees, it has to have ethics at its core

• It is not just about compliance, but issues such as a concern for its stakeholders, commitment to environment sustainability, making of products and services that are ethically sound

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UnderstandingUnderstandingLoyalty Vs. AttritionLoyalty Vs. Attrition

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What does young talent seek?What does young talent seek?

• The new age workforce mostly comprises knowledge workers, who are techno-savvy, aware of market realities, are materially focussed and have higher propensity to switch jobs

• They prefer to experiment and explore new opportunities, are high risk takers with high aspirations and expectations

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• “I want to work only with start ups with a good business model”

• “In deciding whether to join this company, I used the late-night office test - did I want to be working with these guys at the office at 11 at night?"

• “I want a job with real impact”

• “I like it here because they appreciate my different-ness”

What does young talent seek?What does young talent seek?

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What makes employees stay?What makes employees stay?

• The company’s brand image

• Compensation package

• Role and position

• Quality of colleagues

• Scope for growth and professional development

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What makes them leave?What makes them leave?

• Anxieties and apprehensions arising from – Restructuring, movements, change of boss, change of

tasks and responsibilities– Marginalisation, power politics– Mergers and acquisitions

• Better opportunities outside

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• Although most people tell HR they are leaving for more money or a better opportunity, 88% change jobs because of negative factors in their current workplace, ranging from sub-par people management to toxic culture

What makes them leave?What makes them leave?

Source: McKinsey & Co.

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If If managing retentionmanaging retention in the past was akin in the past was akin to tending a dam, today it is more like managing a river. to tending a dam, today it is more like managing a river.

The object is not to stop water from flowing but to control The object is not to stop water from flowing but to control its direction and speed. its direction and speed.

- - McKinsey & Co.McKinsey & Co.

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E D U C A T E

E D

U C

A T

E

Star Employees :Convert to

PowerChange Agents

1. Solid PROsInvest & Encourage

Change

C H A N G E

Invest to classify1. Can be Changed

2. Can’t be changed

ATTRITION

Mitigate :Retention /Recruitment

Policies

P O T E N T I A L

P E

R F

O R

M A

N C

E

WelcomeAttrition

WelcomeAttrition

Different strokes for different folksDifferent strokes for different folks

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Retention needs managingRetention needs managinginternal forcesinternal forces

Minimise

Maximise

Source: TCS study

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An employee value proposition is a An employee value proposition is a carefully configured mix of multiple carefully configured mix of multiple factorsfactors

Source: TCS

Culturalfactors

Transactional factors

Transformationalfactors

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• Assessing Performance / Potential

• Determination of Bonus / Merit Payments

• Promotion decisions

• Setting work Objectives

• Transfer Decisions

• Feedback on Performance & Self Development

• Workforce Succession / Career Planning

• Identification of Training Needs

• Legal purposes

• Review / update job description

• Validation of HR Practices

• Communication of Organisation Objectives and / or Values

Performance AssessmentPerformance Assessment – What does it do conventionallyWhat does it do conventionally

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• Any Change in Nature increases ENTROPY

• Antidote to ENTROPY

• Arrest disorderly behaviour

Performance AssessmentPerformance Assessment – What should it doWhat should it do

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Performance AssessmentPerformance Assessment – What should it doWhat should it do To ensure seamless integration betweennsure seamless integration between

• PeoplePeople– Expectations– Competence– Attitude– Potential / Creativity– Performance

• ProcessProcess– Business Processes– Employee Processes– Customer Service– Vendor Management

• TechnologyTechnology– Communication– Manufacturing– Transportation– Others

In order to meet Organisation Vision, Mission & ObjectivesIn order to meet Organisation Vision, Mission & Objectives

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Performance Assessment – ObjectivesPerformance Assessment – Objectives

• Assessing Impact of Change in the OrganisationAssessing Impact of Change in the Organisation– People– Process– Technology

• Planning Planning work and setting Goals & Targets Goals & Targets– Drill Down Expectations– Drill Down Goals & Targets

• Continuously MonitoringMonitoring performance– Measuring Competence, Performance– Ongoing Feedback

• Developing Developing capabilities & competence of people to perform

– Education– Training– Job Enrichment

• Continuously Assessing / Rating Assessing / Rating performance

– Assess– Record– Feedback

• RecognisingRecognising & Rewarding Rewarding good performance

– Star Performers– Recognition

• PruningPruning– Dead Woods

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Performance Assessment – ObjectivesPerformance Assessment – Objectives

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Performance Assessment is not Annual Performance Assessment is not Annual Appraisal AloneAppraisal Alone

The process of creating & sustaining a work environment in which people are enabled to perform to their fullest potential. Performance Appraisal is only a part of it.

INCLUDESINCLUDES

• Developing precise role / responsibility expectation for the position• Selecting the right people with appropriate skills & competencies• Negotiating accomplishments-based performance standards, outcomes and measures• Providing effective orientation about company, products, processes & customers• Providing on-going coaching and feedback• Identifying developmental needs & extending appropriate education & training• Conducting performance & potential assessment• Rewarding contribution of people through appropriate compensation & recognition• Enhancing career development opportunities

• In the era of knowledge work and knowledge worker, where work is information based and working is a mental activity, the task of management is to enable and elicit employee contribution of value to the organisation. To continue with a system designed to extract and enforce compliance is a folly.

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Performance Assessment applies not Performance Assessment applies not only to Employeesonly to Employees

Simultaneously focuses onSimultaneously focuses on

• Organisation

• Department [ Sales, Manufacturing, HR ]

• Teams or Work Groups to accomplish a result

• Projects [ Setting up a new plant ]

• Products or Services to external & internal Customers

• Programs [ implementing a new incentive plan ]

• Processes [ Budgeting, Product development ]

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Setting Goals the SMART WAYSetting Goals the SMART WAY

Set SMART GoalsSet SMART Goals

• S – Specific. Also Stretch, systematic, synergistic,significant & solid • M – Measurable. Also meaningful, memorable, motivating & magical• A – Achievable. Also agreed-upon, accountable & action-oriented• R – Relevant. Also realistic, reasonable, result-oriented & rewarding• T – Time-based. Also target-oriented, tangible & thoughtful

Tips on Goal SettingTips on Goal Setting

• Deeply desire your goal• Own your goal, it is yours’• Base your goals on your values• Believe you can accomplish your goal• Be committed to the achievement of your goal• Develop an action plan for achievement of your goal• Share your goal with people who are important to you• Periodically revisit your goal and realign, if necessary• Identify & eliminate obstacles in accomplishment of your goal

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Methods & Tools Of EvaluationMethods & Tools Of Evaluation

PRINCIPLESPRINCIPLES

• View evaluation of performance & potential as a valuable management tool • Ensure acceptance of the evaluation concept & process, irrespective of the

evaluation method/tool used• Evaluate what is important & relevant – Not what is easy to measure• Develop an evaluation system/method which is flexible & alive to changes in the

context & environment• Multiple methods of evaluation/assessment provides an overall & comprehensive

perspective of performance

TYPES OF ASSESSMENTTYPES OF ASSESSMENT

• Annual Performance Appraisal - Pre-confirmation Assessment• One-to-One Review Discussion - On the Job Observation/Assessment• Skill or Job-related Tests - Review of specific Assignment/Project• Balance Score Card - 360 Degree Assessment• Assessment Centres (group exercises, psychometric tests, presentations etc)• Human Resource Review • Self Appraisal

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Balance Score CardBalance Score Card

Complexity of managing business organisations today requires managers to view & assess performance simultaneously in different perspectives => Measurement of both process & results

Balanced Score Card is a management system that converts an organisation’s vision & strategy into a comprehensive set of

performance and action measures towards achieving strategic objectives

Perspective Measures

Financial EVA, ROI

Customer Perception, Satisfaction, Retention, Market, Response time

Internal Quality, Quantity, Cost, New Products/Services

Employee Satisfaction, Growth & Learning

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Developmental Perspective Of Developmental Perspective Of Performance AssessmentPerformance Assessment

When the assessed / appraised performance does not meet the desired Performance standards, Developmental Plans prepared to address the Gaps in performance

• A Developmental Plan can be initiated to address following situations:

– Gap in meeting the performance standards set– Gap in competencies to meet the growth aspirations of people– Gap in competencies to meet the growth plans of the

organisation– Part of Succession Planning to help employees to acquire

required competencies

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Performance Assessment : Performance Assessment : What do we achieveWhat do we achieve

• Aligns organisational activities & processes to the mission & vision

• Continuously focuses on results, rather than behaviour and activities thus depersonalises

• Supports internal communication through on-going feedback & dialogue

• Performance Assessment seen as on-going process , rather than periodic snapshot event

• Provokes focus on customers, whether internal or external

• Produces specificity in commitment & resources

• Provides specificity for direction & planning

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Newton’s First Law of Motion :Newton’s First Law of Motion :

“Everybody continues in its state of rest or of uniform motion

in a straight line until & unless compelled by an externally

impressed force to change that state”

Performance AssessmentPerformance Assessment

1. Creates the Motion

2. Generates Acceleration

3. Sets the Direction

4. Validates Processes

Performance Assessment : Performance Assessment : What do we achieveWhat do we achieve

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Challenges Of Performance AssessmentChallenges Of Performance Assessment

• Believe that PA is NOT HR’s ‘Baby’

• More & more emphasis on ‘HOW’ than ‘WHAT’

• Align the System with changing market demands

• Define unambiguous CSFs & KPIs

• Make it a Continuous Process rather than a Periodical Ritual

• Define appropriate measurement criteria to ensure elimination of subjectivity

• Develop Action Plan based on the outcome of the Exercise

• Review & Revise the Process, as & when required