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August - 2011 - issue > In My Opinion
Managing Superior Performance Your CEO can make the difference!
Ajith Kumar B
Tuesday, August 2, 2011
What keeps your business leaders up in the mid night? - Performance, Productivity, Profitability! An organization cannot sustain in this highly dynamic and competitive market by compromising on any of these three attributes. While the organizations are striving to develop extraordinarily outstanding performing teams, they need to think about one important aspect of bringing up and sustaining performance – Is your CEO committed for “managing performance”? This fundamental question will help the organization to understand the level of importance given to performance management in the organization. Needless to say, if you haven’t found an answer to this question, the other two attributes like productivity and profitability will definitely have a significant negative impact.

Why do we think CEO’s commitment and involvement are an absolute necessity in managing performance? It all starts from setting the goals at the organizational level cascading it to all levels in the organization, periodic reviews necessary modifications, and frequent feedback mechanisms. It’s assumed that, line managers and human resources department will definitely be focusing on these performance management areas because they don’t have an option. And doing it because they don’t have an option, it will be for the “sake of doing it” which is ultimately not going to help the business. Mostly, this system is being considered as a yearly routine to provide feedback and appraisal ratings to the employees and also use this information for decisions on promotions, salary hikes, and more. The question here is how can you guarantee that the Line managers are committed to do or has the drive to do a proper performance management evaluation for their teams? It clearly points to the need of your CEO driving from the front to put pressure on his/her direct reports to manage performance by showing linkage of performance to productivity and profitability.

Organizations definitely realize the fact that they’ve got to stay top on competition by periodic improvement of performance and efficiency. Also, they do understand how performance will influence productivity and profitability. Most of the organizations have got performance management system either internally developed or done with consulting help from outside. But do you think our managers realize that they have people responsibility of performance management which normally cannot be delegated? And therefore the question is can the CEO help in this transformation? Though we talk about it day in and day out, in reality, I don’t think our Managers are keen on people management especially as it relates to performance management and it’s viewed as “HR imposed people program” that bears little relationship to a company’s strategic and operational imperatives. Today, the system is viewed as a place to do only the appraisals during the year end and therefore has come to be seen as an HR activity. Ideally, it should be a tool which should be used to effectively manage performance. Managers should spend quality time in setting goals, monitor and review their team performance and giving performance feedback. Here, in many cases, they don’t even set the Goals and feedbacks are not given even at the year end. Also, most of the organizations and their CEO’s are not keen in asking or reviewing people on “performance management” as the focus on reviews are mostly on numbers or delivery. As a result, people don’t realize the importance of performance management. Ideally the business leadership should be reviewing their team about how effectively they manage the performance. We need to bring in the mindset change in people to ensure effective utilization of performance management system for delivering business results. I definitely think that the CEO can help bring in a massive change in mindset. CEO should continuously reiterate the message to his/her business leaders on their role in people management. We need to bring in the realization among each leader and manger that “they have HR responsibility as part of their job which can’t be delegated”. This transformation can succeed only by the CEO getting personally involved in timely communication on its significance, helping his/her direct reports to realize their HR responsibility and make them committed to manage performance. The role of the CEO does not stop there. The maximum impact is created when the CEO role-models paying attention to the performance management system and process himself or herself.

Any world class system which is not effectively used in its true sense will not help the business. And, it will remain as just “another system” for employees to spend time during year end for the sake of doing. As an HR professional with 20 plus years of standing, I have come to believe that most of the modern organizations have a fairly good performance management system in place and what we need is the commitment from top management, which in turn cascades to all other levels of management. HR has a critical role to play in ensuring the effective and meaningful utilization on performance management system and also enabling the CEO or business leaders in “managing performance”. As a HR professional, you have got a critical role to play in this context. We have the responsibility to make the CEO and executive management realize how companies can transform themselves to achieve high and sustainable organizational performance. You should clearly articulate and show the clear linkage of performance management with productivity and profitability. You should be highly cautious with the key factors that influence performance – changes in customer behavior, competitors’ moves, government actions, etc – and provide key inputs to the executive management to take timely actions to modify the goals as may be appropriate. Needless to say that this demands HR professionals’ understanding of overall business. Unless and until you are equipped with the necessary understanding of business, you will have no say in enabling and driving CEO to ensure his involvement in “managing performance”.

Another area where HR can partner with CEO or business leaders will be on identifying bottom performers to differentiate the performance. Ensure the bottom 10-15 percent understand that they did not perform to the level of rest of the population. This should bring employees competing for performance as no one would like to be in the bottom. Also, Managers should be happy to replace bottom performers with quality performers as it is going to improve their Business Units’ performance. This needs high level of executive leadership focus and change management which can be accomplished with effective HR partnership.

In any organization, if they insist on “managing performance” in its true meaning, we the HR professionals, will definitely be able to make impact in the following ways –

Increase productivity by at least 20 to 30 percent from the current level.

Identify top performers and effectively manage them to retain and engage

Identify bottom performers - at least 10 to 15 percent in a year and plan for improving their performance or replacing them with more competent and committed employees.

Establish direct correlation with business goals and employee goals whereby to achieve business targets successfully.

The important message is that focusing on “managing performance” – the capability of your organization in goal alignment, effective execution, modification of goals as needed faster than your competitors can – is equally pertinent as focusing on other drivers of business performance. And it’s guaranteed the current productivity can be enhanced at least by another 20-30 percent and there by high profitability. If your CEO is committed to spend time in reviewing his/her leadership teams’ performance on the “performance management”, it will create wonders and I am sure it will automatically percolate down to all levels in the organization.

The author is Director - Global Human Resources, UST Global

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