All of us wonder as to how do we manage performance in a digital age ? We are not sure of our markets, customers, competitors and even types of employees. How do we measure performance in such a fluid state ?

The basics of a good system :

A good performance management system consists of target setting and performance review, assessment of competencies, rewards and recognition and potential assessment. So, why complicate our lives in a digital age. Let us try to keep it simple.

Target setting :

We could evolve a system of target setting for shorter periods of time. It could be quarterly target setting and review. As of today, we may have clarity from one quarter to another. So, let us set simple measurable targets and review them at the end of every quarter. If the targets themselves become redundant within a quarter, let us review the targets itself.

We possibly need to set dynamic targets, which are reviewed periodically during the course of the year like the moving train in the photo above.

Quality of dialogue & feedback :

The crux of a good performance management system in today’s environment is not about the system but the quality of dialogue we have. The millennials are not worried about targets not being set. They are more concerned about the quality of dialogue and feedback so that they can continually learn and grow.

Competencies :

Now, if we move to assessment of competencies – the first step would be to define the set of competencies relevant to the business and the environment it operates. We need to keep this simple too. A focussed approach on defining one or two functional competencies and one or two leadership competencies would be effective. These could be again reviewed every quarter based on the dynamics of the environment

Core values :

The core values of the organisation should be the bedrock of the system. This will not and should not change with time. Many organisations do not spend enough time and effort to define their core values and beliefs. This is critical for success and sustainability of an organisation. While nothing prevents us from a periodic review of these too but core values have to remain core at all times and should stand the test of time.

Rewards & Recognition :

Now if we move to rewards and recognition, the timing is most critical. The generation of today looks for instant gratification like two minute noodles. Our reward and recognition systems should be designed to recognise instantly. The time gap between a critical incident and reward given for it should be minimum. Empowerment of the first line managers is critical for this process and its effectiveness.

Performance vs Potential :

Last but not the least a good performance management system differentiates performance and potential. We should design the system in such a way that performance is assessed and rewarded every quarter whilst potential can be assessed at the end of every year and recognised through exciting projects and assignments.

Success of a good PMS :

The success of a good PMS in today’s era will lie in a fully automated system which is simple, transparent and empowering. The focus should be on the quality of dialogue and feedback between the employee and the manager and not on the robustness of the system.

Role of people managers :

We need to train and certify people manager on a periodic basis to achieve this goal. We need to remember that even in the digital age AI will not be able to express human emotions like the managers can in person. Hence the success of the system will be skills of the managers in dealing with millennials with human touch in an era where human interactions are likely to diminish otherwise.

S Ramesh Shankar

5th March 2019