Look at who got promoted. It will reveal the culture and priorities of the Organization.
The financial year is coming to an end. Many companies will be completing their performance review in April. It would be followed by goal setting for the next year. Thus, April is a month of turmoil. There are a few happy faces and many discontented ones.
Most of the performance management systems suffer from the following flaws:
- Over-emphasis on annual review with a sole focus on the financial goals. What the employee has done in the full year is ignored. What she did in the last quarter tilts the decision.
- It is difficult to codify and measure performance in factors like teamwork, leadership, and communication skills. Therefore, they either are ignored in the process or have a very low weightage. Furthermore, biases like gender, age, or ethnicity can undermine the fairness and accuracy of performance evaluations.
- The system rewards lone wolfs. Thereby, it destroys team culture and promotes politics.
- The lack of technology-driven solutions can impede the efficiency, accuracy, and accessibility of performance data.
- The focus of the performance review system is mostly on deciding promotions, bonuses, increments, and incentives. The absence of non-monetary rewards, such as public recognition, career advancement opportunities, or meaningful feedback, diminishes employee morale and motivation.
If the rate of change in the external world is not reflected in the internal dynamics of an organization, the enterprise is on its way to obsolescence.
I suggest an alternate Performance Management System. It includes the following factors:
Performance: (Weight: 5)
High-performing employees should be incentivized and rewarded accordingly to drive continued excellence.
Market Competitiveness: (Weight: 4)
To attract and retain top talent, it's essential to offer competitive compensation packages relative to industry standards.
Organizational Performance: (Weight: 4)
Recognizing and rewarding employees based on organizational success reinforces a culture of accountability and collective achievement.
Cost of Living Adjustment: (Weight: 3)
Adjusting compensation to reflect changes in the cost of living helps maintain employees' standard of living and morale.
Tenure: (Weight: 2)
Recognizing tenure acknowledges employees' dedication and commitment while fostering a sense of loyalty and stability within the workforce.
Skill and Expertise: (Weight 3)
Recognizing and rewarding employees based on their skills and expertise incentivizes professional development and supports succession planning efforts.
The periodic review system's age is over. We need to switch to more frequent reviews before ideally switching to a continuous review mechanism.
Subodh
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