India's Performance Management Problem: by Pooja Luthra and Mala Jain

India's Performance
Management Problem
by Pooja Luthra and Mala Jain
All systems for evaluating and rewarding employees fail if workers question those
systems' credibility
When evaluating their company's performance management system, managers and

executives must understand this: Any system will fail if employees doubt its credibility.
Indian employees need to establish an emotional connection with their superiors or
peers at work.
A system may appear to have all the right elements that encourage employees to
perform better in a team or that help a team perform better in the organization -communication, coaching, development, and recognition. Still, if employees lack faith in
the system, it will not achieve its intended purpose.
This is particularly true in India. Studies, such as those of well-known psychologist
Geert Hofstede, Ph.D., suggest that Indian employees need to establish an emotional
connection with their superiors or peers at work. Workers respect a company's need for
processes and procedures, but that respect is influenced by the personal trust among
the members of a workgroup.
This poses a challenge to any company with operations in India. Though processes are
extremely important in ensuring uniformity of a performance management system,
emotions play an equally important role in managing employee perceptions of those
systems.
Our analysis of the data shows that companies in India struggle because many
employees doubt whether a performance management system can actually identify
superior performance; they also question whether these systems effectively reward
good performance. These emotional responses affect employees' perceptions of how
robust the system is and whether it can distribute rewards fairly and effectively.
Perceptions of performance management systems

In 2010, Gallup asked employees in several different industries across India for their
opinions on various aspects of performance management systems. Gallup found that
Indian employees, especially those with three to 10 years of experience with an
organization, strongly feel that most performance management systems are not capable
of distinguishing superior performance.
Unfortunately for managers and executives, there is a strong relationship between this
perception and an employee's level of engagement in his or her workplace. Of
employees who strongly disagreed with the statement "The performance appraisal
system at [my company] clearly distinguishes superior performance," 51% were actively
disengaged. On the other hand, of the employees who strongly agreed, 2% were
actively disengaged.
Employees tend to have a similarly negative perception of how well performance
management systems distribute rewards. When asked to rate their level of agreement
with the statement "Good performers in [my company] are rewarded significantly better
than others," 41% of those who strongly disagreed were actively disengaged. In
contrast, 3% of the employees who strongly
agreed were actively disengaged.
Systems and emotions
Before delving into the underlying emotions
that surface in a performance management
system process, managers and executives
must make sure that the criteria used to
evaluate an employee's performance are
clear. Employees from India or anywhere else
want their appraisal rating to reflect their
output and achievements. Companies must
ensure that workers understand what is expected of them and how they will be rated on
meeting those expectations.
This approach returns some obvious benefits. Gallup's analysis found that of the
employees who strongly agreed with the statement "I am clear about the criteria by
which my performance is evaluated," 66% were engaged. In contrast, only 1% of
employees who strongly disagreed were engaged.
The emotions that underlie these opinions are just as common everywhere else as they
are in India. People tend to form opinions based on how easily supporting examples
come to mind. And as many studies have shown, negative examples are particularly
easy to recall. Furthermore, if employees perceive that their rewards are not
commensurate with their productivity in relation to others in the group, their
psychological reaction affects their level of engagement.
Employees may perceive that the performance management system is unfair in
distributing rewards to better performers. It doesn't matter whether or not this is actually
the case -- for employees, "feelings are facts." And unfortunately for the company,
employees may deal with this perceived imbalance between effort and reward by
altering their performance. They accept the lack of reward as a grim reality and decide
to put in less effort.
This feeling of inequality may be aggravated if employees compare themselves to
another point of reference and think that they deserved better. Interestingly, research
shows that the relatively unskilled population tends to suffer from "illusory superiority,"
which makes them rate their ability higher than it actually is.
What companies can do
If companies want employees to put their trust in a performance management system,
they must do more than merely ensure that workers understand how their performance
will be appraised. People are motivated by emotion as much or more than by reason,
research has shown. And Gallup has found that performance increases when
employees' emotional needs are met, including their needs for care, recognition,
development, and the opportunity to do what they do best.
By recognizing some of the underlying emotions associated with performance
management systems, managers and executives can begin to address the rational and
emotional concerns that employees have with a system. For example, rational
concerns, such as a gap in communication or alignment issues, are easier to remedy

when a team is engaged.
Companies must acknowledge emotional responses when analyzing employee
reactions to a performance management system. Further, to preempt and prepare,
companies should not only be explicit -- on the date of hire -- in communicating how
performance bonuses or other variable pay will be awarded, they should strive to
remove any vagueness associated with the criteria for calculation and payout. Even if
some element of the performance bonus is dependent on factors that are outside the
employees' control (such as organization-wide performance bonuses), it is imperative
that these conditions are explicitly noted on the date of hire.
Such forethought can alleviate emotional distress for both the employee and the
company. And considering the impact of emotion on engagement, employees who are
not distressed may be much more receptive to the very unemotional nature of
performance management systems

India's Performance Management Problem: by Pooja Luthra and Mala Jain

Uploaded by

Document Informationclick to expand document information

Copyright:

Available Formats

India's Performance Management Problem: by Pooja Luthra and Mala Jain

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

India's Performance Management Problem: by Pooja Luthra and Mala Jain

Uploaded by

Copyright:

Available Formats

India's Performance

When evaluating their company's performance management system, managers and

Perceptions of performance management systems

concerns, such as a gap in communication or alignment issues, are easier to remedy

You might also like