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Beyond Efforts, Beyond Results, Beyond Recognition

The Greater the time difference between performance and reward, the less is its value Abstract:

The system of rewarding the performances has been inherited from long back in days of

Mahabharata when the greatest soldiers were rewarded with gold ingots or knick-knacks, or get

an extraordinary place in the kings assembly, when they returned from states of war. The best

performer in the swayamvara gets wedded with the fine-looking princess! The concept is still the

same, only the approach today has become more quantitative. At its nucleus, performance

management is designed to fairly and accurately assess how well people do their work, provide

feedback to help them improve, identify goals and objectives for future performance, and tie the

overall evaluation to some valued consequence, such as a pay increase, bonus, promotion, or

some other form of recognition. People perform well and are motivated by both fundamental and

extrinsic rewards. To be successful, the reward structure must make out both sources of

motivation. Almost all reward systems target the three essentials of any business attracting,

retaining and motivating the best talent available on board.

If you pick the right people and give them the opportunity to spread their wings and put

recognition as a carrier behind it you almost dont have to manage them Jack Welch

Not Just Money: An Introduction to

Performance Rewards

For a country like India, out of all, financial

rewards have always been a vital constituent

of the reward system, but there are other

factors that encourage employees and

influence the ir level of performance. In fact,

quite a lot of studies have set up that among

employees surveyed, money was NOT the

most central motivator, and in several

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instances managers have found money to

have a DEMOTIVATING or negative effect

on employees.

To make certain that the reward system is

in- line with the business goals and motivates

the preferred behaviors in employees, it is

essential to consider carefully the rewards

and strategies utilized and ensure the

rewards are linked to or based on

performance. To be effective, any

performance measurement system must be

attached to the monthly compensation or

some genus of reward. Rewarding

performance must be a continuing

managerial activity, not just an annual pay-

linked ritual.

Strategies for rewarding employees

performance and contributions to the

business objectives include non- monetary

and monetary mechanisms. We have tried to

put in few strategies in this write-up. The

listing is not very comprehensive, and

individual units/departments possibly will

have to make out further mechanisms that

are appropriate for and sustain their culture

and goals.

Satisfaction Surveys identify lack of

recognition

In a client employee satisfaction survey, the

question about whether the company cared

about the welfare and happiness of its

employees drew divergent views. Some

people agreed; others disagreed.

So, the Culture and Communications team

put out a second survey asking what would

make the employees feel as if the company

cared about them. We developed several

answers employees could check and

supplied room for their comments and

additional thoughts.

Fifty-five percent of the respondents said

that praise and attention from their

supervisor would make them feel as if the

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company cared about them and their well-

being. As you might also expect, money,

benefits, and events such as company

lunches ranked high, too. But recognition

from the supervisor ranked above all other

choices.

I have sponsored similar surveys in different

organizations. The findings are always

similar. Employees want to know that they

have done a good job and that you noticed.

Employees want to be thanked and

appreciated.

Performance Management linked to

business goals

Just visualize this: you join the Indian

cricket team, and have a grand year. Your

team wins the title match, and you are in the

running for Man of the Match. But, the

judges summon and award the Man of the

Match to a bighead and ball-hog on the

worst team in the league. The justification:

the ball-hog has fine long hair and dimply

smile, resembling the dude in the leading

motorbike TV commercial.

Couldn't believe, right? Well, this is the

familiar story in corporations all the time.

This is what happens when the performance

appraisal process is not in line with the

business goals and mission. Employees are

evaluated based on subjective and pointless

standards because nobody has defined the

proper benchmarks. Marketing guys are

acknowledged by marketing managers for

bells and whistles and are praised for

creativity, not articulacy or internal

customer satisfaction. HR employees get de-

rated if company attrition is skyrocketing, as

if the HR chaps are liable to make people

from production or quality departments to

go away. Quality Systems people are

rewarded for the big binder of strategic

recommendations for business, not the

accomplishment of the projects. When

performance appraisal fails to make the

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organization efficient, that entire physical,

mental, and emotional attempt drains

employees and generates a negative feeling

in general.

We need to further analyze that in a

developing country like India, why does

performance management so much stand to

other side from organizational line of attack?

Performance management systems are by

now in position in more or less entire

corporate world. They may be unproductive,

but employment statutes mandate them. Fear

of union grievance fills many personnel

records with worthless formalities and

paperwork. Even if the organizations have

evidently defined mission, time and again

they don't communicate this to their

employees nor do they believe on those

missions

You must be surprised to know, but strategic

vision is illustrious for in no way getting

implemented! We have seen companies

putting further exertion into new names and

new logos than into actual change. The

system that bogs down change most

frequently is performance management, by

limiting discussion and deliberation to the

past and present, and ignoring the future. It's

easy to talk about what you needed to do

yesterday. It's much harder to guess what

you'll need to do tomorrow.

Thrust Employee appreciation up a mile

Employee recognition is not being

considered as vital in most organizations.

Employees grumble about the lack of

recognition repeatedly. Senior management

is so engaged in daily work that they often

ask, Why should I recognize or thank him?

Hes just doing his KRA. Such incidental

factors combine to create work places that

fail to provide recognition for employees

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and this goes on to build up dis-grunted

mindsets and finally the separation.

Senior managers who prioritize employee

recognition understand the power of

recognition. They know that employee

recognition is not just a pleasant thing to do

for people. Employee recognition is a

communication tool that reinforces and

rewards the most important outcomes people

create for your business.

When you recognize people efficiently, you

strengthen, with your selected means of

recognition, the actions and behaviors you

most want to see people go over.

An effective employee recognition system is

simple, immediate, and powerfully

reinforcing. Employees feel cared about and

appreciated. It may seem simplistic, but

people who feel recognized and cared about

produce more and better work.

A person in charge of employees makes

other people feel imperative and

appreciated. The leader excels at creating

opportunities to endow with rewards,

recognition and thanks to his team. A leader

creates a work atmosphere in which people

feel important and appreciated.

Dont just go adopting best practices: The

saga of 360 degree performance

monitoring

Formalized performance assessments are

important for several reasons. Performance

reviews are one way of establishing

benchmarks for employees work area. In

the era of chaotic work environments, these

reviews provide for a prearranged time to

pause, plan goals, and set concrete

guidelines that the employee will be judged

against in terms of deciding grade hikes,

salary hikes, and his or her yearly training

needs. Organisation can accomplish this

without including the employee in the

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process, but that is to close the eyes to the

employee side of the equation, and thus

performance reviews make time for

employee participation. This is NOT the

time for the employer not to tell the

employee what he/she did right or wrong,

rather, it is time to discuss with them various

aspects of his/her key responsibilities.

Employees like to be heard by management

and this is the guarantee that, no issue how

hectic or practical the organization might be,

there must be specific time allotted for their

input.

Now actually what is this 360 degree

review? The concept is to improve team

functionality from diversified perspectives -

supervisor, subordinate, associate, in-house

contact, outside contact, and of course, the

customer. It is best, on the other hand, to

gradually put such systems into operation.

Begin with two or three reviewers and work

your gradient to a number that you are at

ease with and that works for your

organization. Ensure that the administrator

gathering the data from the various

reviewers is sensitive to the concerns of the

employee being reviewed and treats all

information accordingly and with the

quantitative weightage (anchored with

mutual discussions between the reviewer

and reviewee, personal issues, etc.).

For corporations with long-established top-

down structures, implementing 360 degree

systems can be somewhat thornier. The

employees in such cultures with their set

inertia are inherently going to be rougher

with the proposal of co-workers, rather than

their direct supervisor, conducting a

performance review. Moreover, others might

not be in a situation to do a sufficient

assessment because of the narrow

information flow. In these situations, 360

degree systems can be used as an instrument

to open the lines of communication within

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the company. But it is absolutely essential to

start little by little to build the self-

confidence of the employees in the system.

If you decide against a 360 degree system

for this type of setting, definitely stick with

some kind of a formal performance review

process - even if it means the old supervisor-

only review standby.

Its true that for organizations that

emphasize multidirectional and team

environments, 360 degree feedback

performance review systems are great. But if

you go in deep research work, like we did at

SONA Koyo before implementing this

colossal system, you will be shocked! A

recent study about HR practices, the Watson

Wyatt Human Capital Index study, found

that 360 degree feedback can be counter-

productive in some situations. In fact, the

study concluded, the practice might produce

negative returns for shareholders. Even in a

work culture where people are accustomed

to multilevel interfaces, having your

performance judged by all these people,

especially subordinates may cause

discomfort.

Some incidents from companies give

dimension on why 360 degree feedback can

be a negative, even when the basic concept,

getting feedback on managers from all

sources, seems so sound. In one company

most of the managers loathed the practice,

and resisted cooperating. For some

managers meeting with their subordinates

and discussing what the boss needed to

improve was too alien and frightening a

concept. For others, there was insufficient

training in how to use the process, thus

dooming it from the beginning.

One manager in a large Wall Street bank had

nothing but contempt for the process,

particularly the part relating to peer review:

"Once a year we have to go around and ask

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somebody for a peer review. It's either screw

your buddy or kiss up to them. Nobody

picks someone they are not tight with. The

whole process is ridiculous".

That is what Watson Wyatt has to state. But

to us at SONA, the issue we faced was

whether 360 degree feedbacks should be

part of the salary equation. One answer was

to the point: once you've included 360

degree in the review, it's definitely related.

But now we didn't get into specifics on 360

degree systems. There are many out there:

some are out of the box and inexpensive,

some are customized and implemented by

pricey consultants, while some are created

in-house. There is a plethora of choices out

there. Many are good and many are not-so-

good. Evaluate your options and make the

choice that is best for your particular

organization.

Rewards need to be SMART - Specific-

Measurable-Achievable-Time bound-

Realistic

Performance reviews play a critical role in

career development of employees, and it is

in the best interest of the organisation to

understand how performance reviews work,

how to prepare for a review, what to do and

say during the review, and how to follow up

at the salary negotiation and beyond. There

are ranges of ways to measure performance;

the method often depends on your company

and the nature of your job. The two most

common approaches are the weightage scale

method and the Management for objectives

method. The methods use different criteria

to judge performance.

Weightage scale method: This approach

emphasizes competencies, traits, or

behaviors. An employee's performance is

rated on these characteristics and on specific

items such as quality of work; quantity of

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work; communications skills; interpersonal

skills; and decision making.

Management for Objectives method: We

exercise this method at SONA. This

approach measures performance by

comparing the business objectives set by the

employer and the employees with the

results, or what was accomplished. Goals are

set and prioritized by both parties at the

beginning of the period. The review is used

to evaluate and record the results - whether

the employee has met, exceeded, or failed to

meet expectations.

Rewards are no longer static, nor

reactive, but adaptive

To motivate and promote high performance,

it is very important to link efficient rewards

mechanism or system in the organization.

However we should know 3 golden rules of

rewarding.

What to Reward Certain Behaviors and

Achievements that are required by an

organization to be cherished, promoted and

rewarded. These need to be prioritized to be

rewarded; other things which are not in line

with organization and performance

objectives can be given second priority.

When to Reward It is very important to

reward employee instantly when he achieves

the results or at least recognize his efforts;

delivery of rewards may come later. It is not

good to reward the employee after 6 or 12

months in the next appraisal cycle, it gives

no meaning or value to his achievement.

How to Reward Some like it in public,

some in private. Each one has his own

likings about how he should be recognized

and rewarded. Cash, Stock options, Profits,

Promotions, Relocations etc. The list could

be endless

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Write out the recognition, what the

employee did, why it was important, and

how the actions served your

organization. Give a copy of the letter to

the employee and to the department head

or CEO, depending on the size of your

company. Place a copy in the

employees file.

Write a personal note or e-mail to the

employee. Perhaps have your boss sign

it, too. Photocopy the note and place the

recognition in the employees file.

Accompany the verbal recognition with

a spot gift. Engraved plaques,

merchandise that carries the company

logo, even certificates of appreciation

reinforce the employee recognition.

Everyone likes cash or the equivalent in

gift cards, gift certificates, and checks. If

you use a consumable form of employee

recognition, accompany the cash with a

note or letter. When the money has been

spent, you want the employee to

remember the recognition.

Present the recognition publicly, at an

employee meeting, for example. Even if

the employee is uncomfortable with

publicity, it is important for the other

employees to know that employees are

receiving recognition.

Performance Reward is a self-

management tool, not control mechanism

Exigency in job assigned Challenging

and inspiring work assignments are the

best instrument on hand with seniors to

reward good quality performance. Such

assignments can provide employees

opportunities to expand to new skills,

subject knowledge, and boost their

visibility inside the organization. They

as well propel an important message that

employees contributions are recognized

and valued. In allowing for such

assignments, seniors should consult

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employees about the types of

assignments that would be most valued,

and they should also assess whether

workloads will need to be redistributed

to ensure employees have adequate time

to devote to new tasks.

A pat on the back Just a modest smile

or a pat or a little hug (which we at

SONA call Jaadu ki Jhappi!) from

seniors is consistently found to be

among the most effective motivators.

Employees want to be recognized and

feel their contributions are noticed and

valued. It is important that seniors

recognize the value and importance of

sincerely thanking employees verbally

and/or in writing for their specific

contributions.

Employee Development through

adequate trainings Seniors should

offer employees with occasions to take

part in learning programs or other

activities that will enlarge their

competencies. Employees benefit by

developing new skills, and the

organisation benefits from the added

proficiency individuals fetch in to the

job. At a latest survey at SONA we

found 87% of the fresh recruits viewed

individual training as an encouraging

incentive, and it appeared most

meaningful to employees with

postgraduate education in junior

management staff.

Of course Salary hikes too! Grant

your employees an annual merit raise to

recognize consistently meritorious

performance or successful achievement

of a KRA that had a significant impact

on a department or the organisation. The

reward may be in any amount up to

7.5% of the employee's current basic

salary (The figure corresponds to annual

increment for FY-07 at SONA), subject

to the budgetary constraints of your firm.

Budgetary information regarding fiscal

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year merit increases are issued annually

as part of the budget process as soon as

the organisations fiscal position can be

determined. To be eligible for a merit

increase, employees must have been

employed for at least six continuous

months and at least six months must

have elapsed since the employee's last

salary increase, promotion, salary

increase due to progression in the salary

range, or transfer from another

department. Employees may receive

salary increases to recognize the

attainment of new and/or the

enhancement of existing

skills/competencies or for assuming

increased responsibilities within the

scope of the current position.

Grade elevations and lateral moves -

Promotions and sideways movements

are long term rewards that recognize

employees professional growth,

knowledge, and ability to contribute to

the organisation in new roles.

Promotions are typically associated with

a flat increase in salary, and the increase

may be any amount up to 12.5% of an

employees current basic salary.

Non monetary rewards - When

necessary, seniors may choose to give

employees informal rewards for specific

accomplishments/contributions. Some

laws and institutional policies allow

expenditures of state and non-state funds

for employees as informal non-cash

rewards that demonstrate the

organizations positive reception.

Seniors can be creative in identifying

informal rewards that will be appreciated

by the particular individual being

recognized, but, in selecting and

purchasing rewards, seniors must be

sensitive to the organisations cost

constraints.

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Case Example: Performance management

at SONA KOYO Steering Systems Ltd

Performance as seen at SONA

Incentives and Rewards are a waste on

money, unless they are aligned to the

strategic objectives.

The key beliefs are:

Organization needs to be exceptional at

recognizing employees in ways they

value

Recognition is a key driver for optimum

performance

Reward programs have to be proactive,

not reactive

Recognition has to consistently fair

across organizational boundaries,

functions and culture

The greater the time lag between

performance and reward, the less is

its value

Like fine wine, employees get better

with age and performance. Reward such

employees

We believe in Carkhuffs equation for

human productivity, i.e.

Productivity = Responsiveness+ Initiative+

Processing

Excellence is not a skill. Its is an attitude

Efficacy = Efficiency + Effectiveness

capacity or power to produce a desired

effect

the ratio of the output to the input of

any system

Ability to achieve stated goals or

objectives, judged in terms of both

output and impact

SONA sponsored National HRM Summit on Performance Related Rewards Innovative

Approaches at AIMA, Pune

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Performance management as concept

It is Futuristic, i.e. how to plan, strategize,

organize, ensure and extract the desired

performance in the coming year or in near

future. Performance Management consists of

following components.

SONAs performance policy

Right Policy Framework is also a key to

understand SONAs performance

philosophy, performance expectations and

the manner in which performance has to be

delivered. A detailed Performance

Management Policy is defined which

outlines SONAs performance framework,

measurement and assessment

methodologies, rewarding and awarding

mechanisms, and performance improvement

facilities etc.

Performance benchmarking at SONA

It starts from Performance Benchmarking.

SONA has set clear performance goals for

the entire organization starting from Top

Management, to Business Groups level,

Business Unit level, Department level, Team

Level and finally scaling down to Individual

levels. SONAs performance goal is defined

in terms of business strategies i.e. increasing

market share from 15 to 20%, or increasing

revenue limits from 20 crore to 27 crore, or

increasing sales from 7 lacs units to 9.6 lacs

units, increasing current clientele from 33

clients to 47 clients in the next year, or

improving organizational productivity from

x level to y level etc. It can be anything that

goes with organizations business strategies

or goals. These expectations and plans can

be further cascaded to department level,

business unit level, and individual level.

Performance standards can be set in terms

of; this year we need to expand our sales

figures from X level to Z level, our brand

equity in the industry needs to move from A

level to B level, to increase our market

leadership, sustainability in the industry,

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improve our core competencies and increase

our competitiveness etc.

Performance indicators

SONAs PMS Policy defines very clearly

what are the areas, factors that reflect

benchmarked Performance, i.e. what are the

Key Performance Indicators, or Key Result

Areas, which show performance to be

achieved. These indicators are clearly

explained to each department, team and

individual so everybody sees clearly what

needs to be done and finished.

Performance Planning

Once we identify requirements of

performance, SONA plans performance

extraction in terms of the following.

The rating will be done on a total of 100

point scale. Each characteristic will be

allotted certain points. Accordingly the

rating will be further simplified by

converting it into qualitative terms which is

as follows

The combined weightage of Key

Responsibility Areas (Section I) and

Objectives (Section II) equals 80% of the

employees total performance rating.

Weightage of each section depends on the

employee category. Performance Factors

(Section III) is weighed at 30 % for Unit

heads and 20% for all employees.

Weightage criteria:

Category Section I Section II

Section III

Unit Heads 20% 50% 30% Division Head 35% 45% 20% Department Heads

40% 40% 20%

Section Heads 45% 35% 20% Seniors 50% 30% 20% Rating schedule

Use the following scale to rate the results

achieved in Key Responsibilities (Section I),

Objectives (Section II) and Performance

Factors (Section III).

Ratings definitions

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3 = Exceeds Expectations - Consistently and

significantly above all expectations.

Demonstrated extra mastery of Key

Responsibilities, objective and / or

performance factors, even when faced with

(most) significant challenges.

2 = Meets Expectations - Fully met, and

occasionally exceeded expectations (set for

Managing Points, objective and / or

performance factors).

1 = Below Expectations - Did not meet basic

expectations, lacked requirements for

achieving Key Responsibilities, objective

and / or performance factors.

Overall rating criteria

A Outstanding 280 300

B Good 250 279

C Adequate 249 and below

Identify and understand if current job

profiles, roles are consistent to extract

desired performance. If there is any role

conflict or need to realign or redefine certain

job profiles or positions, do the rework and

structure each job profile in each function

(technical, frontline, operational, support

functions) that enables the job holder to give

expected results as per KRAs. Further

clarify transparently division of labor where

each employee has enough workload (avoid

overloading or under loading) so that

performance doesnt get stressed and

stretched. High level of employee

engagement is required.

Also performance extraction can be phased

out to simplify the delivery of results where

say in a first quarter we should be able to

achieve X, in second quarter Y and in the

last two quarters Z,A,B,C etc.

Conclusion

A simple thank you counts as employee

recognition. But, you can also make

employee recognition as elaborate as your

imagination can conceive. Recognition is

not a scarce resource. You cant use it up or

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run out of it. No budget is too small to

afford employee recognition. For increased

employee satisfaction, bring on lots of

employee recognition.

References

Web site www.haripassionhr.com, www.watsonwyatt.com

The HR Scorecard: Linking People, Strategy, and Performance by Brian E. Becker, Mark A. Huselid, Dave Ulrich

A Critical Look at Performance Management Systems - Why Don't They Work by Robert Bacal

Performance Management: Key Strategies and Practical Guidelines by Michael Armstrong 2000

Performance Management: A Business Process Benchmarking Approach by Asbjorn Rolstadas 1995

Powering up Performance Management: An integrated approach to getting best out of your people by Richard Hale, Peter Whitlam 2000

Abolishing Performance Appraisals: Why They Backfire and What to Do Instead by Tom Coens, Mary Jenkins, Peter Block

The Performance Appraisal Question and Answer Book: A Survival Guide for Managers by Richard C. Grote, Dick Grote

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The Author

MR. HARI NAIR, a young Masters in Public, Personnel Management & Industrial Relations from Osmania University, did his Graduation in Commerce and has a Degree in Education Psychology & a Diploma in Journalism. Currently he is at the helm of affairs at Sona Koyo Steering Systems Ltd, Gurgaon as its Vice President Human Resources, and can be reached by e-mail hari.nair@sonagroup.com or hari.nair69@gmail.com and on his Mobile No. +91-98-102-89047