Sunday, December 7, 2014

Greed and OD

Greed and OD: Redefining the Values of Organization Development
T. V. Rao
Key note address to be delivered at the NATIONAL SEMINAR
On
“ORGANIZATION DEVELOPMENT (OD) & OD INTERVENTIONS: CHALLENGES & OPPORTUNITIES”
Organized By
THE DEPARTMENT OF PSYCHOLOGY
FACULTY OF EDUCATION & PSYCHOLOGY
 THE M.S. UNIVERSITY OF BARODA

Why do OD efforts in India do not give any visible results? Why is it after so many years of OD work neither OD interventions nor OD specialists seem to be widely acknowledged? Does OD result in any thing substantial or does it lead to anything at all apart from occupying the time and lives of a few people? Has it become a “time pass” activity when there is nothing else to do? These are some of the questions that are bothering me. These have bothered me for long and have begun to bother me more  as I see that sixty three years after independence and sixty years after the Indian republic was formed we seem to be nowhere near Nation building.
Divisiveness continues. It spreads from caste and religion based divisiveness, to political divisiveness to linguistic, regional, colour, education, health, batch, sector, section, department etc everywhere. Some divisiveness for improving the disadvantaged is fine but divisiveness leading to self destruction of a large part including that of the Nation is not acceptable.
We seem to live today in a scam driven world. Every day morning you wake up to hear what new scam has been unearthed. Starting with Satyam in the corporate world to CWG, 2G, Adarsh Housing, Mining and Land grab to everywhere. The nation’s time is taken away for protesting MPS,  MLAs and various other agents who should be spending their time in Nation Building.
Are the Indian corporations saved from this?  Has OD brought in certain amount of integrative outlook in our corporations?  In a world where organizations are built and developed to  sell than to build more, has OD done some good?  Organizations built by the sweat capital of many people suddenly get sold and the employees discover that they belong to a new management and a new organization that they have not heard before and they need to learn a new culture. . This has become the world order and Iida is no exception. Sometimes it appears that we are truly in the business of business and not that of service. In the past organizations used to be set up to serve others and in the process make some money to sustain themselves and grow. Today it appears that some organizations are being set up to make money and money alone. Even hospitals performance is being measured by the numbers in monetary measures  rather than patients served and benefits to society.  Government performance is also being measured by the numbers of schools and hospitals set up rather than what they are doing after they are set up.  
In other words short term orientation emerging out of greed has become the order of the day. The concept of service to society and working for larger cause is being forgotten except occasional when we talk of corporate social responsibility. Even this CSR gets reduced to projects to take care of the neighbourhood rather than getting integrated into everything that w e do in our corporations.
What are the implications of all this to OD today? Should OD change its course? I have chosen to present a few extracts on this occasion from our forthcoming book on “ Organization Development: Accelerating learning and Transformation” edited by Prof. S. Ramnaraayn of ISB and T. V Rao to be published by Sage response books this year. As a part of this book which contains about 37 chapters on various issues, my colleague Prof. Ramnarayan interviewed a few OD practitioners in India. I take this opportunity to present some extracts from these interviews and my own views and experiences of OD.    These experincecs indicate that OD is a lot more successful than what it has been widely known. However it has not reached all the sections and sectors it ahs to reach. We have a long way to go and perhaps we need to revisit and redefine its values or at least add to the list a core value of “Extension”.
Extracts from Interviews With Prof. S Ramnaraayn from the forthcoming book on OD (Ramnarayan and Rao, 2011)
Santrupt Misra on OD in Birla Group in an interview to Prof. Ramnarayan:
“Some of the interventions were extremely powerful for the organization. Every intervention communicated multiple messages to the organization.  For instance, the Chairman and the top managers started participating in the 360 degree feedback. It was an intervention that changed the cultural norm – the junior could also provide feedback to the senior. It created a sense of trust and transparency. It has prepared the top management of organization to receive and discuss feedback openly by sitting together. That was a powerful intervention.
There were interventions at the lower levels of the organization. High quality personnel were hired from leading management and engineering schools. They were paid competitive compensation in tune with the market rates. This was an intervention which communicated the importance of merit / competence to attract the younger generation with new skills like IT. It changed the paradigm of competence that the organization required. That was another powerful one.
We carried out an organization health study which was an important intervention. The feedback on how people perceived the organization was shared with the employees. Then, certain questions such as: “Do you want to do something? Do you want change? How do you change? What can you as an individual do to contribute to this change? What can organization do?” were posed to the employees.
Similarly, several team building exercises were introduced across functions to support structural changes as we moved from functional to SBU structure and also created global structures.
In doing all of these interventions, we used various resources and range of expertise from Indian, international, firms, individuals, teams, and so on. A number of consultants helped us carry out those interventions.
The emphasis was on churning the organization and creating new ideas and frameworks, and holding mirrors to help critical questioning and introspection, say through 360 degree feedback, survey feedback and numerous such approaches.
Are there some OD concepts that have outlived the utility?
The whole concept of the team needs to be revisited because today you have virtual teams. You have quick-set teams that come together for a purpose and break apart. They are not working together as teams over a longer period of time. So, the stability of team concept has changed. The entire issues around team interventions need to be revisited.

Extracts the Interview with Yogi Shriram of L&T
How do you think we should create and nurture OD practitioners?
It is important to think about this issue particularly when there are no formal courses. There are disparate small courses and certification, but I believe OD practitioners should be accredited by an institution. This should be based on practice and theory. It should be based on an actual OD change that the person has done in one or two years or even shorter duration in an organization and not on a project. The work should be examined and recognized by a set of practitioners. I would feel that the interns should be technically very sound and understand the literature. They may focus on one or two narrow areas of specialization, say appreciative inquiry, process consultation or coaching. I think it is very important to start a comprehensive OD course led by very senior people with a set of ethics with possibly collaboration with a reputed school abroad with a strong track record in OD.
The other key issue is that HR practitioners are scant in the leadership positions. Most HR practitioners are uncomfortable in discussing the business part and the conceptual part. Just as we need equal emphasis on both academic rigor and practice, we need equal attention to business issues and people issues.
P. M. Kumar of GMR on his experiences of OD and recommendations for future:
What would be your advice for learning and development professionals and young professionals getting to change and OD?
Have good networks, be resourceful to be able to connect with the right people and bring the most value based people in to work. 
Most importantly, you have to constantly ask yourself, is there any self interest that you are doing this in. Once the answer is ‘yes’ drop it like a hot potato. If you are ready as a practitioner, if it is in collective interest, then go. That’s my call. Timing and governance have to be made by every practitioner.  Fortunately, we have people across. And also, one more thing helped me right through my career. I have been versatile. I did process work, lab work, systemic job evaluation work, strategy and HR work, industrial relations, unions, settlement, and facilitation. Fortunately, when I look back, this has been an excellent exposure. I believe versatility is important for trust worthiness. Otherwise, you say that I have one hammer and everything looks like a nail. There are practitioners today for whom there is one answer for everything. They will not be accepted. They will only play a very marginal role. You need versatility, openness and see a wide range of possibilities.
Warner Burke in conversation with John R. Schermerhorn Jr. ( see Ramnarayan and Rao, 2011)
Are there certain competencies that all OD specialists should have?
Too much specialization in OD can be unproductive. An OD consultant must be a generalist. If a high degree of specialization is needed for a certain change effort then the OD consultant brings in this specialist for the job. For example, OD consultants are typically not compensation specialists but on occasion such expertise is needed. This need is only an occasional one and not in general. In other words, an OD consultant does not need to be a specialist in compensation even though changing some aspect of the reward system is often required for an overall successful change effort. I have suggested a set of competencies (see Table 2) that all OD specialists should have (Burke, 1994) which include such abilities as tolerance for ambiguity, ability to confront difficult issues, self awareness, and abilities to conceptualize and teach.
What are the most important cross-cultural issues and considerations for those interested in global applications of OD, say in India?
I have some but limited experience with the culture of India. I first was there in 1972 when I spent part of the summer as a visiting professor with the Indian Institute of Management, and traveled around much of the country. Change in India today is occurring at an unprecedented rate, and OD can be very helpful with the process, that is, helping organizations to plan, change instead of change merely happening to them. Indians have been interested in and practising OD well before 1972 when I was there, and my presentations then were well received. So, there is much history, and I do not see major cross-cultural issues with the US way of practicing OD in India. It has always been my understanding that OD practitioners in India respect theory and research, and work to apply behavioural science knowledge. The differences cross-culturally are there for sure, but not that easy to see immediately (after all, Indians speak English very well). We, Americans, must be diligent, however, about understanding subtle yet real differences, for example, how the dynamics of power and politics are manifested.
Dr. S. Chandrasekhar of IBM to Ramnarayan
Based on your OD experiences – those that have worked well or not so well – what are a few key lessons for OD practitioners?
Leaders cannot “outsource” change related work to some OD consultant - external or internal. It won’t work. They have to lead change personally .Too much jargon and conceptual models alienate people. Initiatives started well and not sustained create huge credibility gap. It is not very useful to use workshops and people assessments to “fix’ the trouble makers.  The business case for the change being sought needs to be very strong and explained very transparently. Else people will not be with you.

In an era of Global Competitiveness, Mega Projects, Community pressures, and Mergers & Acquisitions, what role do you think OD will play?
OD will continue to play a critical role in delivering change. Understanding competitors and doing things better than them needs deep organizational change. Executing Mega projects needs building alignment, rapid learning and capability building. Most times, OD has been relatively inwardly focused on the internal organization.  Dealing with communities, harnessing the eco-system around the organization and taking the OD plans into the larger community are important next steps. In M&A situation, OD programs must enable the combined entities to benefit by the synergies of the two organizations and not let one ‘dominate’ over the other.
What advice would you give to budding OD Practitioners? What are the key Do's and Don'ts?
Be passionate about OD. It is essentially an inter-disciplinary subject. So learn eclectically across sciences and arts. Learn to link your OD interventions with predictable and desirable business outcomes. Measure to improve. Avoid jargon. Communicate authentically. Enlist others and enroll support. Stay humble and maintain low profile. Work across generations and leverage diversity. We cannot be world-class if we always have an excuse, ‘oh this won’t work in India’. Be truly global and bring best practices from all over the world.
T. V. Rao’s views and comments (unedited from Ramnarayan and Rao, 2011)
Q: What do you conclude from Various OD in this part of the world?

TVR: OD as a planned change with long term involvement of OD facilitator has become a trend of the past. There have been many success experiences of the past. For example Dr. Udai Pareek, Dr. Abad Ahmed, Somnath Chattopadhyay, Dharni Sinha, Ishwar Dayal and Suresh Srivastava and such NTL trained OD facilitators worked with Organizations like the L7T, LIC, Medical Mission Sisters, ICI, State Bank of India etc. now a days you rarely find this work perhaps organizations like Tata Chemicals is an exception. As Dr. Santrupt Misra mentioned today OD has come to be short-term, quick and multiple intervention based. Specialization has gone up. So a variety of consultants are used. Some of assessment centers, other for 360 a few for executive coaching and the like. With enhancement of tendering process in PSUs, Component tendering process in PSUs, Component tendering has gone up rather than integrated development and planned and guided change. These have been successful with short-term gains. While they may cumulatively do some good for the organization, and integrated approach is still welcome. I have a feeling corporation like GE still continue to have long term engagement of the OD consultants.

Q: What do you consider as some of the success experiences in your own OD work?

TVR: The HRD work we had done both at L&T and State Bank of India is a success experience during that period. Recent work with Steel Authority of India and Bharat Electronics and Aditya Birla Group on Leadership Development using 360 Degree Feedback based interventions are another two examples of successful OD.

Everything is time bound. What is successful today may lay foundation for tomorrow. Once it is done the corporation grows and may not even remember that someone laid the foundation. For example strong foundations were laid in SBI through its training system in initial years. Later Udai and I worked for integrated HRD between 1975 and 1985. There was a sustained effort and hard work. It was successful. However it has gone to the background due to intensive dialogues with officers associations, change of leadership both at top level and in HRD. I re-entered along with Prof. S K Chakravarthy in mid nineties for specific task of a subsystem change. It was not continued beyond 5 years due to change of leadership both at the SBI top level and at Government level the Secretaries handling banking. They brought in new experts who did not have a clue of the history. For them it became a year to year event than planned change.

This is not to say short-term OD interventions don’t work. The HRD audit as a self-renewal mechanism, the 360 Degree Feedback as a change promoting intervention and Assessment Centers has worked well. As mentioned by Santrupt we were involved almost for a 5 year period with 360 DF in Birla Group. It was a great success as are of the inputs. In BEL we are involved in Leadership Development over the last seven years. A lot of change is taking place. A review of the work indicated both short and long term changes. For example short term it resulted in vision formulation, new product innovations and problems solving. Long term is resulted in increased openness and transparency.

A two day self-renewal workshop in XIM resulted in increased focus on Vision and deciding future course of action besides faculty involvement. A diagnostic study followed by a one day feedback workshop presenting the findings resulted in consolidation and increased focus on future strategies. So was the case of survey feedback in Bharat Petroleum, Cochin Refineries and the like. In Bharat Petroleum it was used to consolidate the gains of restructuring. After restructuring was done an employee satisfaction survey was conducted. The feedback communicated to employee revalidated the gains of restructuring and pointed the gaps in HR policies and helped BPCL to initiate new HR activities. Gati is a great example of sustained work coming out of top management commitment. There 360 DF has become of regular part of self renewal. Again a quick diagnosis of the Institutional concerns and a presentation to the entire team of the findings and with Aga Khan Foundation has become a stepping stone for consolidating gains and taking the Foundation in the direction its Founders have envisaged under the leadership of Dr Abad Ahmad is a success story of how short term interventions can lay foundation to facilitate the change process.

Q: What are some of the challenges OD and OD practitioners face today?


TVR: Execution is the major issue. Organizations seem to be highly short term result driven. They profess culture and values as important dimensions but focus extraordinarily on results and short term targets. This creates enormous difficulty for OD practitioners who like to work on long term and sustainable change.

Second mergers and acquisitions have become very common. In one company the executives told me that four years ago they belonged to a different company, two years ago to a different company and since the last six months he is working for a different company. In a four year period his organization has gone through three changes. While this may be a little uncommon most organizations live with certain amount of uncertainty. Ironically when mergers and acquisitions take place that is the best time for process work as it calls for adjustments and cultural change. Under uncertainties sustained focus on values, culture and long term thinking becomes difficult. OD becomes a short term quick fix problem solving exercise than a planned change for long term.

Appreciation for behavioral science based interventions and behavioral scientists ahs not in any way gone up while appreciation for specific techniques and technologies has gone up. For example the top management seems to appreciate the use of assessment cents for a specific group of people and at a given point of time. For example when they need to develop a group of high fliers or when they find shortage of tenant rather than making it a continuous process to upgrade talent or as a talent development tool. Same way survey feedback or 360 degree feedback, or outbound training becomes a onetime exercise to bring in process sensitivity than a continuous effort.

On the positive side many technologies are being sued. The OD filed has expanded to include a variety of techniques and methods.

HRD and OD have come face to face. Two decades ago there used to be issues like whether OD is part of HRD or HRD is a part of OD. Today the content is not so much as what it is part of what but more on which technology or intervention works better and under what circumstances. Some organizations are using LSIP technologies and others role based interventions and while some others use Assessment centers and 360 Degree feedback and a few others HRD audit, survey feedback and vision mission exercises etc. What is being undertaken is a technology based OD rather than a change oriented value driven process sensitive OD.

OD specialists as class is on the decline and specialization has gone up so much like in medicine rather than general practitioners today e see Executive Coaches, Assessment Center experts, survey feedback experts and performance management specialists. Sub system specialization has gone up.

Training focus remained and continues to remain the same as before and so are the concerns.

Q: What do you think is the Future of OD and what Direction it is taking and it should take?

TVR: I think OD as discipline and science deserves more attention than what it has commanded so far.  Process sensitivity and Behavioral science knowledge provides the base for good OD work. We need to understand people in different settings as individuals, role holders, dyads, teams or subsystem members and organizational members and multiple role holders and mute-organizational stake holders besides citizens of a nation or products of a culture. In Asian region people are highly talented and are products of complex interactions of history, culture, families, heritage and other dynamic factors. Modern organizations and competitive world adds to this complexity. Unlike in the west where people tend to be systems driven and norm respecting in this part of the world there is no one norm or no one system to follow. People seem to respect one another perhaps a lot more than they respect systems. Given these complexities of human nature, we need to study people in their current and changing contexts more deeply before we can plan and carry out interventions for change. Unfortunately such a systematic and scientific study of people is lacking. Psychologists in this part of the world have not enhanced our insights about human beings and their motivational patterns, learning styles etc. We are still dependent on the past knowledge and knowledge from the west. It is only in the recent past attempts to learn from our Vedic culture about the nature of human being has gone up. Even this is limited to a set of hypotheses of fitting ancient wisdom into the modern organizations.
What is needed in future is a systematic and scientific study of the human being and his nature in the current organizational contexts.
Change and drivers of change and success stories and failure of change are required in large quantities and with more perspectives- psychological, sociological and anthropological and organizational. Only when such studies are conducted can a body of knowledge develop. The future therefore ahs to focus on more systematic research to discover he fundamental nature of the human being in the context of modern organizations and enhance our ability to predict behavior.
Therefore there is a need for scientific base for OD. More researches need to be trained in OD.
Institutions like the ISABS have got reduced some times to social networks without any scientific rigor and research base. The involvement of Institutions like the IIMA that used to happen in seventies has tremendously come down. As a result the teams of Applied Behavioral scientists that get trained or certified from these institutions have become at best factories for conducting training programs with limited knowledge. The future has to be research driven and should lay more foundation for scientific knowledge. If this does not happen OD will die its natural death and at best will be handled by a few people who lack depth and get called as OD Facilitators mainly on the basis of a few programs they attended than out of scientific study and affecting change.

We need to revisit the values of OD and underline those that have to do with short term orientation and greed.
Warrick (2005) from his research on OD identified the following 13 characteristics and 15 values of OD:
Characteristics of OD (Warrick, 2005)
  1. Recognizes what you change and how you change as equally important and emphasizes health, effectiveness, and adaptability of an organization.
  2. OD can be used with all sizes of organizations and at all levels of an organization.
  3. Recognizes the dynamic process of change and that change takes time and quick fix solutions rarely last.
  4. Approaches change from systems or big picture perspective and considers interrelatedness of various systems and components.
  5. OD is an interdisciplinary approach and draws heavily from behavioural science knowledge.
  6. OD is data driven.
  7. OD uses action research process and involves key stake holders.
  8. OD is typically facilitated by professionally trained change agents who believe in helping others to discover solutions to their own issues than dictating what should be done.
  9. OD is a value driven approach that seeks to instil values and build cultures that bring out the best in people.
  10. OD is collaborative top down and bottom up process.
  11. OD is an education based strategy.
  12. OD is committed to transference of knowledge and skills
  13. OD emphasizes the importance of reliable feedback in monitoring and managing the change process.

OD values

1.      Development
2.      Professionalism
3.      Helping people and organizations
4.      Respect to all individuals
5.      Inclusion, collaboration and participation
6.      Open , honest and candid communications
7.      Authenticity
8.      Inquiry
9.      Community
10.  Diversity
11.  Personal and organization awareness, growth and learning
12.  Experimentation
13.  Creating a realistic hope
14.  Integrity
15.  Confidentiality

Udai Pareek’s eight values as OD values OCTAPACE seem to take care of most of these values. (Openness, Collaboration, Trust, Authenticity, Proactivity, Autonomy, Confrontation, and experimentation). It is time to add to this list  Extension Value coming out of Udai Pareek’s concept of  Extension Motivation. Extension value is a value of extending oneself to others in the larger society or working for a larger cause. It is further defined as having a larger and long term orientation for the good of the “People and Society; making sacrifices for larger good and not being greedy ( a strong and selfish desire for personal possessions, personal wealth or personal power  beyond limits,  for their own sake and at the cost of deriving others in the society and an inability to use them for the larger good not using them for serving others). This is in tune with large amount of professed concern of the country and its leaders for sustainability, environment,  saving the earth, reducing pollution, conserving energy and building for the future.

References:
Ramnarayan, S and Rao, T. V. (editors)  Organizational development for Learning and transformation: New Delhi: Sage India, Response Books Forthcoming, 2011
Rao, T. V. Organization Development Experiences – A case for enriching HRD through OD: Ahmedabad: IIMA Working Papers, 2009.
Warrick, D. D. (2005) Organization development from the view of the Experts, in Rothwell, W J and Sullivan, Roland (cited below pages 164-186).

Worley, C. G, Rothwell, W J and Sullivan, Roland. (2005) Competencies of OD practitioners, in Rothwell and Sullivan (editors, cited earlier, 2005 pages 135-163)


Dr. T. V. Rao is Chairman, TVRLS and Adjunct Professor at IIM, Ahmedabad. He could be contacted at : raotalam@gmail.com or tvrao@tvrao.com; Web site: www.tvrls.com 

OD Approach to Performance Management

A New Look at Performance Management Systems for Organization Development
Paper presented at the Summit on Globalization of Human Resources, 2010, Taipei, World Trade Center, Nangang Exhibition Center, Taipei, Taiwan, September 24-25, 2010 
                                                                   T. V. Rao
Chairman, TVRLS
Adjunct Professor, Indian Institute of Management Ahmedabad, India

Performance Management System (PMS) as a HRD tool if designed and implemented properly gives rise to multiple advantages. This presentation focuses on PMS as a talent management tool. This presentation explains the multiple dimensions of PMS in promoting a performance culture, besides a discipline of planning, talent utilization, upward learning, human capital building, on-boarding, integration and assimilation and OD. The presentation outlines the essential elements a PMS should have to serve as an OD and change management tool. The session draws from various contemporary experiences of Indian corporations in various sectors. Some metrics for scoring and enhancing the value of PMS also are highlighted.

Learning Objectives.

  1. To understand the hitherto unexplored dimensions in the design of Performance Management Systems that meets multiple objectives of Organization Development and Talent Management.
  2. To share the experiences of various organizations and draw lessons for effective implementation of PMS.


Most performance appraisal and management systems across the world seem to have one or more of the following components:
1.    Performance Planning through Key Performance Areas (KPAs) or Key Result Areas (KRAs)
2.    Competencies and competency definitions
3.    Rating scales for assessment
4.    Performance Review Discussion (PRD) or Performance Coaching
5.    Identification of Developmental Needs
6.    Performance Analysis
7.    Self appraisal
8.    Appraisal or assessment by Seniors or Su[revising Managers
9.    Potential assessment
10. Recommendations for Recognition and rewards


One of the reasons for failure of performance appraisal systems across the world is an overemphasis on them as objective performance measurement tools. A deep look into the theory of numbers and the theory of scaling indicates that measuring performance of managers and supervisors using numbers and treating them as following properties of an interval scale (additive, multiplicative and subtractive and divisive) has a serious flaw. When two departmental managers are assessing their juniors, each one of them are using their own frame of reference and the circumstances under which each manager or employee functioned are not often comparable by virtue of the function and other things associated with the work. For example the circumstances in which a Research and development Manager is performing in pharmaceutical organizations are entirely different than the circumstances under which a Personnel manager or a Marketing Manager function. Yet we try to compare the ratings in distributing the incentives and attempt to apply normal probability curve etc.

No two numbers are comparable in appraisals. The numbers in performance appraisals don’t follow any rules except the rules of the nominal scales. How so ever the firm may try to promote objectivity it should be recognized that at best the numbers assigned by each appraiser follow “Ordinal scales”. We cannot say with confidence a rating of four assigned on a five point scale by a Production Chief is indicative of the same performance level as a rating of four assigned by the Marketing Chief. Or for that matter two marketing Chiefs operating in two regions for their juniors. The ratings depend on so many factors: the supervisor or rater, his previous background, his personality, expectations, the performer (assessee) and  his own background, the way the goals are set, the level of the goals, expectations of the assessor from the performer, the chemistry with which they started setting goals, the culture of the organization, etc. No two numbers are comparable. We cannot say the a person who gets a 68 rating on a 100 point system is definitely superior to another who gets a rating of 64 and specially the 64 is from a setting where the performer had a lot of odds to face (including that of his supervisor himself perhaps?). Yet we treat them as sacred and use them to fit into normal probability, add, subtract, multiply and calculate incentives etc. I think this is a fundamentally wrong attempt to fit qualities in to quantities and use them for anything beyond a discussion or analysis.

From a reflection on this and various other experiences in my work on performance appraisals I like to suggest the following:

  1. Ratings in appraisals are notional and at best should be used for discussion to integrate performance on a number of non-additive parameters (like adding for a regional sales executive his achievement of sales targets, and the percentage increase in customer base, with how well he has developed his juniors, and how much he followed the various systems). They can’t and should not be used to force fit into normal curve blindly or determine incentives mathematically. At best they could be used for discussion and review of performance. Ratings are poison but they may be inevitable side products of the performance process. They should not become the primary pre-occupation of appraisals.

  1. Performance should be assessed against expectations and expectations could be changed during the course of performance with the availability of new information, data and challenges. Expectation sharing and reviewing is the most important part of performance management.


  1. It is high time we drop the term appraisal and use the terms “Management”. Management is broader and encompasses many things for a system. It includes planning, development, improvements, recognitions etc. Those who prefer to be even more focused can use terms like: PMS - Performance Management Systems, PDS- Performance Development System,  PIP- Performance Improvement Program etc. (see for a comparison between PAS and PMS  Rao, 2003)

  1. Merely changing the title does not help but the spirit needs to be promoted. It can be promoted by having a new look at the potential of PMS and by using PMS for objectives other than appraisals and generating numbers in percentages etc.

  1. Good performance should be rewarded. But what is good performance should be understood from the beginning by each individual and there should be a shared understanding of what is rewardable performance and what is not by the performer and his superiors alike. This understanding should be there at the beginning of the performance period and not at the time of deciding the rewards.


  1. Small rewards and recognitions should be encouraged to be followed and each supervisor should have a good degree of autonomy to recognize and reward the performance of his or her performing employees and this may constitute a significant part of the compensation (say 5% to 10%) of juniors. Recognition should take place all through the performance period and should not be limited to the annual stock taking or performance reviews.

  1. Annual reviews of performance should be conducted using innovative methods and should become a part of life. Such reviews need not necessarily result in assigning numbers to individuals.

Multiple Objectives of PMS

Performance management systems can have multiple objectives. These include the following:
  1. Continuous performance improvements among each of the employees
  2. Developing a discipline of planning work and managing one’s time and talent
  3. Ensuring role clarity
  4. Recognition of strengths and areas needing improvement in relations to performance - Identification of development needs for performance enhancements
  5. Competence building among individuals, teams and the organization as a whole
  6. Data base for rewards, promotions, recognition and motivation
  7. Insights into self as high self awareness is essential for better leadership and managerial effectiveness
  8. Developing mutuality and respect for each other among each senior-junior or boss-subordinate pair
  9. Developing problem solving capabilities among employee
  10. Inculcating a learning culture
  11. Enabling seniors to learn from juniors and vice versa
  12. To provide mentoring and coaching support to employees and effect performance improvements
  13. To prepare employees for competition and continuous change
  14. To arrive at objective assessment of performance by each employee and generate data about employee for various HR decisions like rewards, rotation, recognition, higher responsibilities etc
  15. To integrate and align the work of individuals and their teams with the organizational goals and tasks


These are not mutually exclusive and could be overlapping. However organizations have often tended to emphasize the non essentials and stressed the short term to long term very understandably. Often in the objectives there is an undue stress on objectivity and rewards as though employees work all the year round for annual rewards and recognition only. By linking PMS with rewards and recognition most organizations have undervalued individual’s interest in work and created new politics in organizations. In fact PMS seem to create some times politics and de-motivation or the reverse of what it is intended to create. This happens by selectively rewarding  a few and ignoring many and making the rewards once an year than continuous and asking away the power and authority from the supervising line managers and concentrating it in the hands of a few including the HR manager s and the top management. This has done the biggest damage to the cause of Good PMS.

I have come to the conclusion that the most important objectives of the PMS should be the following:

To enable each individual employee to plan his/her work for the entire year (or a part of it as is possible in an organization), to ensure that he/she undertakes productive activities, utilizing his/her competencies in the best possible manner and contributing to the achievement of departmental or organizational goals and results, while at the same time constantly learning and developing one’s own capabilities and enjoying work.

The most important parts of this objective are the following:
  1. Work planning and accountability. If you plan your work you will be more accountable to your work. You are also likely to enjoy your work out of a sense of accomplishments. Work planning also ensures alignment with organizational goals as every individual plans his work in the context of organizational priorities.
  2. Competency utilization. You are able to undertake work or at least give adequate opportunities for yourself to utilize your competencies.
  3. Work place learning as this becomes a tool of continuous learning and development. This is the greatest reward you can get from your work When you learn and grow your competencies get built and you enhance your own brand value. If you grow beyond your role and if the organization cannot accommodate you can always find other opportunities.
  4. Building mutuality, team work and work satisfaction or motivation and self respect.
The process of implementing the PMS may also ensure additional objectives to be met. The processes should include the following:
    • Participative planning
    • Periodic planning and review
    • Periodic analysis of the performance blocks and opportunities
    • Collective planning
    • Collective ownership where required.
    • Promotion of competencies, values and desired culture by making it a part of planning
    • Participative review and learning from each other
    • Mechanism of monitoring performance and implementation plans and ensuring organizational support

Thus PMS can be great tool if designed comprehensively and implemented in all earnestness. It should have little place for politics and manipulation.

Performance Planning

Invest Twenty and Direct 2000 to 20,000 Program: Recently I was working on their PMS for a company outside India. I was asked to help them implement a new system they have just designed. It is a infrastructure company with many General Managers and Senior GMs at the helm. I asked 25 of them attending the workshop to answer the following four questions:

·         To what extent did you have clearly set work plan for the last six months?
·         To what extent did your seniors with whom you work shared the same understanding of your work plan and priorities in the last six months?
·         To what extent are you able to put to use most of your capabilities in the last six months?
·         To what extent are you clear about the work plan and priorities for the next six months?

They were asked to use the following scale: 100% = fully, 75% = Mostly, 50% = somewhat, 25% = A Little, 0% = Not at all. Their responses are presented in Table 1 below.



Table 1: Responses of 25 general Managers (Top Management team) for performance related questions

Question
Number of participating responding (N = 25)
100%
75%
50%
25%
0%
1. To what extent did you have clearly set work plan for the last six months?
3
18
4
0
0
2. To what extent did your seniors with whom you work shared the same understanding of your work plan and priorities in the last six months?

7
10
5
3
0
3. To what extent are you able to put to use most of your capabilities in the last six months?

2
15
7
1
0
4. To what extent are you clear about the work plan and priorities for the next six months?

9
13
3
0
0

Responses to question 1 in table above reveals that the average percentage of the extent to which there is clearly set work plan for the top management of this company is  74% . If we consider unplanned work as a wastage it is about 26% in this company. If the CTC of all the 25 top level managers is about two million US dollars, there is a waste of half a million US dollars that year due to unplanned work and the opportunity cost may be much more. Such unplanned work gets passed down the hierarchy and multiplies. Hence the solution is to reduce this wastage by planning work. PMS can therefore be a good tool to reduce wastage through proper performance planning. 

Responses to the item “to what extent did your seniors with whom you work shared the same understanding of your work plan and priorities in the last six months?” reveals the extent to which shared understanding exists is 71% . If PMS is effective this shared understanding can be improved. Shared understanding between the performer and his senior is indicative of interpersonal competence, role clarity, focused work and good interpersonal competence and mutual support and a number of other positive outcomes.

Answers to item 3 indicate the average of the extent to which capabilities are being used in the last six months is 68%. This indicates that there is a 32% of talent wastage.

The next item indicates that average of the extent to which clarity exists about work plans and priorities is 80%. There is a 20% potential wastage of top management Time. 

Simple questions and analysis like this have brought to focus the need for better utilization of talent though planning work, having a shared understanding of the work. A good PMS can reduce the wastage of time, talent and ensure better utilization of human resources.

The scope for the same is indicated by the answers provided by a number of managers from Multi National Corporations and Family owned businesses and professionally managed companies in India and outside (see for details Rao, 2008).

It is these insights that have given rise to the a program we have designed at TVRLS which is now called as “Invest Twenty and Direct 2,000 to 20,000 ™”.  I have been propagating this by communicating to line managers and top management that their managers can learn to direct 2000 hours of their performance time to 20,000 hours of their junior’s performance time by merely investing 20 hours of their time for planning their and their juniors work. So Invest 20 and Direct 2,000 to 20,000. We have helped many senior managers to cost the value of their time and showed benefits of such planning. Executives can be demonstrated to affect savings in their own time and get a better ROI on their time investments. In other words organizational performance, resource utilization including talent utilization which is becoming expensive day by day goes up and cost reductions take place with better planning.


Talent Utilization
When the Steel Authority of India (SAIL) a public sector giant in India decided changed its performance management system in 2007 it has decided leadership development as one of the objectives the new system should facilitate. It has decided to have the following as objectives of the system:
  1. To enable employees to plan their work, utilize their capabilities and maximize their contributions.
  2. To create a performance culture through continuous performance improvements of individual employees, teams and the organization.
  3. To identify and develop leadership talent for future.

Accordingly the components envisaged were:
1.    Goal alignment cascade workshops for Performance & Development Planning.
  1. On-line System for Performance Management
  2. Assessing and Developing Competencies for the future
  3. Performance Review and Assessment
  4. Final Performance categorization of Ratings by Performance Management Committee (PMC)
  5. Separate grading for performance and potential
  6. Transparency through communication of Performance Rating to the executives
  7. Assessment of Assessors
  8. Audit of PMS.
  9. Leadership development and Competency building through 360 Degrees and Assessment and Development Centers (ADCs)
The following list of competencies, potential factors and values were also intended to be developed:
1.    Technical/Functional competencies
2.    Commercial acumen
3.    Interpersonal skills and team work
4.    Proactive Problem solving and Initiative
5.    Communication skills (listening, clarity of thought and expression, written and oral)
6.    Positive attitude (viewing things positively and with optimism and not being critical or cynical of everything; ability to look at brighter side of change and various other decisions, policies and innovations etc., and not being over critical or all the time critical of people and events, etc.)
These competencies are assumed to be important for performing well on any job in the organization.
Potential factors are the qualities that become increasingly critical for senior management positions and are meant to prepare executives for handling higher roles as they grow in the organization. These are their ability to handle higher responsibilities including the following or more:
1.            Vision and Leadership
2.            Ability to assume responsibility and take decisions
3.            Execution ability
4.            Change Management (openness to change, initiate and manage change)
5.            Creativity
The values include beliefs, behaviours and actions that are to be exhibited by every executive:
1.        Customer focus
2.        Consistent Quality
3.        Commitment to excellence
4.        Concern for people
5.        “Integrity and Character

Most importantly SAIL decided to have special projects to be undertaken as a part of the performance planning to demonstrate and utilise the talent of managers.
SAIL has been able to ensure a good degree of human capital utilisation through this approach.

Upward learning
Most Pharmaceutical organizations employ Medical representatives (MRs) to sell their drugs to Doctors and to make sure adequate supplies are available to drug stores. Normally an MR is required to introduce to physicians and others, medical products of his company and to explain their merits. He is required to follow up his visits to ascertain the views regarding the products of his company and induce clients to prescribe his company's products to customers. He is required to maintain proper record of receipt and distribution of samples which is open for inspection by his Area Manager. He offers credit facilities, commissions, etc: to the customers as authorized by his company. He books orders and forwards them to the controlling office for compliance.

Imagine a pharmaceutical company having over a thousand MRs. They report to Area Sales managers and there are 60 of them working for Cedilla a Pharma company. Cedilla has recently decided to introduce a performance Management system in which each area manager is required to meet his MRs in a team and take their experiences from the Doctors and pharmacists they met in the previous quarter. They are to have a one to one discussion for short periods of time with a their Area Manager once in six months. In the Performance review discussion the Area Manager is required to actively listen and ask questions to learn more about the circumstances under which the MR is working, the kind of comments made by their clients on the products of his company and the comments made on the products of competitor companies, the experiences shared by the pharmacists, and any other information he gathers that will have implications for  the Drug Development and R&D departments, supply chain department and others. The Area Manager in turn is expected to consolidate his learning and share it with his seniors in the Head office whenever they have their quarterly or half yearly performance review discussion.
This way there is a significant upward learning. Cedilla Pharma after a series of programs on their Performance Management system recognized the significance of PMS if facilitating upward learning. The performer eventually is also going to be assessed besides on target achievement also on the amount of useful information he gathered and shared with his seniors.

In a pyramidal structure the field staff is constantly in touch with customers and ground realities. Normally senior at top level believe and behave as though they are direction and information givers. The information they give normally deals with organizational vision, mission, goals, targets, work practices and so one and rarely can they give customer related information as they are not in touch with customers. Yet the success of an organization depends on how well it has understood the customer needs and requirements and serviced them. In the past performance management systems have done little to encouraged upward learning.
A well designed PMS that facilitates upward learning can be a great tool to develop a customer sensitive, employee sensitive learning organization. Imaging he amount of knowledge that will be available to Cadilla Pharma to give directions to its R&D, supply chain, pricing, marketing and other activities!      


On-boarding, Integration and assimilation

Ketan Mehta Vice President of MHMC (a Mobile Handsets Manufacturing Company resigned.  He was instrumental in doubling the samples and increasing the market share of the company in the last few years significantly. He is considered a very high performer. The company was also planning to expand to other countries and found a good scope for expansion especially to South Africa. After a few weeks of Ketan leaving MHMC recruited Mr. Harry, a Harvard MBA with experience of working in African Countries. Being an Ex-pat he was offered double the salary Ketan was getting at the time he left. Eight weeks after harry joined, MHMCs Management Consultant met him to enquire how he was finding the company and the job. Harry remarked that he is trying to understand various departments and also the way his own department functioned, their interrelationships etc. Four months later the consultant met him and got the same answer. It is only in the third encounter with the consultant Harry said that he has now a good understanding of the situation, his colleagues, and the way the company worked. He also has now a hand of what the company expects from him and is ready to perform.

This experience clearly indicates that MHMC has not given adequate thought to induct its senior level persons properly. It should not take six months for a top level manager to understand his colleagues, juniors, seniors, and the company’s expectations from, its working styles. What if the new Vice-president decides that he is a misfit in the company after six months and decides to leave? The company suffers for another six months.

If only MHMC thought of the detailed performance plan made by Ketan Mehta for the year of his work, and the company took care to get a suggested performance plan for the new comer and even put Harry in touch with Ketan Mehta as well as his role set members in the first week itself? The entire induction and integration process for new recruits at senior levels can be better and faster through a well managed PMS. The author has been promoting in many Indian companies a system of passing on the performance plans and has dialogues with role set embers (juniors, seniors, internal and external customers) of the new recruit as a socialisation and induction process. It has been found that assimilation and integration processes become faster and effective through the use of a well designed PMS.




OD

Performance Analysis consists of analysing the performance of a given performer at the end of a year or a six monthly period to identify the factors that facilitated him to achieve whatever he has achieved and factors that have hindered him from doing better. The factors further classified into the Competencies or ability related, motivation related and organizational support related. Sometimes these are further classified as those that are to be addressed by the performer and those that need to be addressed by his boss or seniors, department or the organization.

Consider the following tabulation of factors arising out of performance analysis of the performance of   30 Branch Managers of a Bank. The HR department collected these from the Performance analysis done by the Branch managers. The analysis is a useful starting point for initiating OD activities to improve branch performance. This process can be a good is an Organization development intervention. The OD facilitators (internal or external) can work to enhance the competency base of the Branch Managers as required by the numbers indicated in the brackets, or work with the Regional office to improve manpower planning, branch premises management, decision making improvements etc.
Illustrative list of facilitating and Hindering factors identified by a group of Branch managers as a part of their PMS
Facilitating Factors Attributable to the Performer (number mentioning it given in brackets)
1.    Patience and willingness to listen to all the problems of the staff and customers first and then work out a solution to the problem (7)
2.    Perseverance (5)
3.    Soberness and tact (5)
4.    Goodwill and fellow-feeling towards others (4)
5.    Keen desire to help customers by giving them one's personal attention (5)
6.    Interest in Bank's work (5)
7.    Ability to motivate staff (8)
8.    Specialization in Advances at the training programmes attended and in his career till date (7)
9.    Quick decision-making (6)
10. Adequate delegation (4)
Facilitating Factors attributable to others (Organizational support)
1.    Full and timely support from controlling authority and his office (11)
2.    Sincere and hard-working branch staff (14)
3.    Good work conditions premises (6)
4.    A Regional Manager who is really appreciative of good work done (5)
5.    Good potential for business in the area of operation (2)
Hindering Factors Attributable to the performer
1.    Softness or lack of aggressive selling (6)
2.    Oversensitive/over emotional get upset easily (4)
3.    Poor health (3)
4.    Inadequate job knowledge, particularly relating to small scale business (6)
5.    Lack of confidence while dealing with aggressive staff (5)
6.    Difficulty in motivating staff (5)
Hindering Factor attributable to others (Organizational support)
1.    Shortage of staff (9)
2.    Poor infrastructure branch premises (4)
3.    Branch located very far from most residential areas (3)
4.    Competitors (Companies, Cooperative Banks, etc.) tactics (4)
5.    Inadequate potential for business in the area of operation (3)
6.    Delay in decision-making at the Local Head Office (10)
7.    Competency gaps of staff (4)

  Human capital building

In conclusion it can be said that a well designed Performance Management system is a good way to build human capital in an organization. Competencies of employees can be multiplied, organizational capabilities deal with various issues can be built and problems as well as opportunities for growth and impact via customers can also be studied and appropriate strategies made.

A well designed and executed PMS can be the most potential tool to enhance human and intellectual capital of a corporation.

References

Corporate Leadership Council (2002), Building the High-Performance Workforce
A Quantitative Analysis of the Effectiveness of Performance Management Strategies, Corporate Leadership Council, 2000 Pennsylvania Avenue NW, Washington, DC 20006,

Corporate Leadership Council, (2003), Benchmarking the High-Performance Organization: A Quantitative Analysis of the Implementation of High-Impact Performance Management Strategies, Corporate Leadership Council, 2000 Pennsylvania Avenue NW, Washington, DC 20006,

Rao, T. V. Performance Management and appraisal systems: HR Tools for global Competitiveness, New Delhi: Sage, Response Books, 2004.

Rao, T. V. Lessons from experience: A New look at performance management systems, Vikalpa, 33(3), July-September 2008, 1-15




Job aid paper
Key Points

·         You can make your Performance Management System (PMS) a change management tool and high performance work culture development tool by redesigning it as learning and development system than as a personnel administration tool.
·         As a first step identify the extent to which it is facilitating work planning and competency building at the employee level, among his seniors and in the team.
·         Redesign the PMS to include performance planning, performance analysis, and participative learning as integral parts.
·         Performance planning should include a listing of all key activities along with time in hours taken for the entire period of performance (year or half year or a quarter year).
·         The plans should also outline priorities of activities with weightages.
·         The plan should be discussed with the supervisor or seniors to whom you report so as to ensure mutuality and understanding. PMS works as a role clarification and mutuality building tool.
·         It should be designed to include scope or every employee to apply his/her key competencies in select projects
·         The performance review sessions should be used as upward learning sessions than as mere performance improvement discussions sessions. The focus of such reviews should shift from performance enhancement of the performer to the learning upliftment of his senior. A good performance review should enhance learning of seniors from their juniors
·         The performance review session also should focus on identifying the factors contributing to the individual performance through an analysis of the performance and preparation of action plans
·         The performance analysis details collected from groups and team of employees should be consolidated and used for initiating organizational improvements through OD facilitators
·         PMS thus if redesigned and implemented well gives rise to enhanced human capacity utilization, competency building and enhance human capital value of an organizing.