Can you really measure people’s performance in your organization?

Can you really measure people’s performance in your organization? If you are people manager, a quick answer would probably be “yes”.

Rethink about it!

If your answer is still “yes”, there are high chances that you are either managing a very small group and most likely working in a start up. In such situations, market measurement of your company or group is quick and high – you either succeed or fail and hence attribution to performance is easy. The second reason being, everyone is constantly performing. Or maybe  you are a sports organization!

If you have worked in large organizations and gone through multiple assessment cycles, you know how difficult the job is. Most managers are not sure if they exactly know both the performance and potential of their employees. It’s no wonder large organizations have huge budget to train their managers on people performance and managing peak performance. There are several tools and techniques that managers use, including 360 reviews and gut feelings. But are employees happy? Are they performing to their peak potential? Is it an issue about manager’s capability or tools/processes that are available to measure performance?

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And the bigger question really is, how does this impact your organization’s performance? Just imagine what a small improvement in employee performance can do for the company.

Now I see few opportunities here – If you can’t measure, you can’t improve. There is a big opportunity in creating tools for performance measurement. Tools that work. Tools that can include the process around the performance measurements.

One of the things, I have noticed is that generally people have good sense on how someone else is performing if they are around that person. Managers can miss “how” part of completed task but peers have a good idea on how someone completed a task. 360 works to some extent but it fails during comparative analysis or depends on reviewer’s personality.

Is there a way to capture this sense and build a tool?

The second opportunity lies with the fact that a small improvement in employees performance can improve organization’s performance. But most managers at best can connect it implicitly. What are those parameters that can be influenced and measured? Remember, can’t measure leads to can’t improve!

Is there a way to associate employee’s performance to company performance in a more direct, action-oriented way?

2 thoughts on “Can you really measure people’s performance in your organization?

  1. Dear Hemant,
    What can be measured, can be improved is the basic premise (which you have already mentioned) on which this needs to be approached. Let me illustrate an example of Product Management & Relationship Development function in an Asset Backed Financing activity for which I had the opportunity to incubate, position, run & then grow the business. We had the regular functions of Sales, Credit (Risk), Collections, Operations (collateral management) and the Product Management & Relationship development. The last two i.e., Operations & Product Management functions were supposedly support functions with not much of quantitative parameters to measure the performance.

    These were viewed as thankless jobs and no real motivation and typically had people who vented their anger on the Sales & Collections functions in such a manner that most of it was seen during month ends.

    Small changes were made to include parameters for performance appraisal and enhancement. For Operations it was then viewed as a control function coupled with Customer interface (without actually seeing them) & customer service (again masked). The parameters were First Throughput (FTP) wherein the documents which had NIL discrepancies were moved on green channel basis and the performance appraised through concurrent audit mechanism. This drastically improved performance of the Sales in terms of proper documentation while making life easy for the Operations team. All motivated. Based on FTP these guys were incentivised. In the same manner the Product Function had to manage relationships among OEMs whose equipments were funded. Initially it was only relationship management and trying to keep everyone happy. Slowly this was moved towards P&L management for the function. They looked at building revenues from these relationships by working on schemes wherein discounts were offered, Credit period for making disbursement of loan was provided, Relationships were managed to cater to higher levels of Funding directly to OEMs, opening bank accounts with them, addressing each and every transaction as revenue items etc., The number of tie-ups and the continuity of such tie-ups etc., were seen as revenue enhancers. This motivated the individuals handling such functions.

    Over and above, the performance were aligned to the their respective functions as Profit Centers (macro level) and further managed at Branch levels by rating branches w.r.t Sales, Credit Risk quality, Operations control & through put, Audit observations & respective preparedness, Fraud control success ratios, Collection efficiency, loss ratios and Customer service.

    I believe that simple measures addressing the content of the Job is required. Further, apart from revenue mapping of each of the function one should also do the expenditure/cost efficiency of each of the function which may include even small things such as energy & telephone bills (typically in branches). Even the person who deposits cheques can be measured with respect to the accuracy and time taken for doing his job. I believe all these things can be measured by quality systems.

    Finally, unless you quantify performance requirements, you will not be able to really measure. Every function should necessarily have an objective method of mapping performance with resultant effect. One may tend to argue that if trivial things are quantified, you will end up in Micromanagement and more chances of creating Zombies. However, one should be better served if there is a logic properly explained and addressed objectively rather than subjectively appraising and increasing heart burns and hence attrition/dissatisfaction.

    We can discuss this quantification whenever we meet next 🙂

  2. Hey RK,

    Thanks for great insights and valuable inputs. One of the lined that I like most from your feedback is

    “I believe that simple measures addressing the content of the Job is required.”

    This approach is very valuable and simplify lot of things.

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