Introduction
Continuing with our series of articles on HRM practices in successful
companies, this article examines the performance management practices
of those companies that have managed to be in the FORTUNE “100 Most
Admired Places to Work in” consistently. To put it in perspective, just
twenty odd companies have remained in this list throughout the last
decade. The research into the HRM practices by the leading business
consultancy, BCG or Boston Consulting Group, has revealed a set of
practices that are followed in these companies with respect to
performance management. The first practice is to link the bonuses and
other incentives for the managers to KPIs or the Key Performance
Indicators to ensure that the managers’ goals and the organizational
goals are aligned together. However, these companies do not stop at this
and actualize a well-constructed and balanced performance management
system that motivates and develops employees. The twin aspects of such
performance management systems are that they institute ac culture of
meritocracy and provide incentives to foster and sustain this culture.
Further, the performance management systems in these companies are fair,
transparent, and reward the employees to promote such a culture.
Establish Clear Norms and Articulate Expectations
Employees need to understand what constitutes superior performance
and what is unacceptable from the organizational perspective. This means
that organizations have to not only not overcomplicate the performance
management systems but also have to articulate what is simply below
average or poor performance that leads to action from the organization.
Further, the research has shown that these companies explain the reward
systems to the employees in a clear and engaging manner so that the
employees are aware of what performance would be rewarded and what
performance would be punished. If these practices are not followed, they
might lead to lack of employee cohesiveness and risk the flight of
valuable talent from the organization.
Follow Global Standards Consistent throughout the Organization
The other aspect of successful performance management is that most of
these organizations follow global corporate HRM practices and
standards. This is done in a manner where the global policies are
articulated clearly and the local units are asked to follow the same
practices to have coherence and consistency throughout the organizations
irrespective of which geographical location the employee is based.
Further, the high performing companies employ state of the art
performance management systems and put in place processes and methods
that conform to global norms and standards throughout the organizations.
Reward Behavior and Promote Openness
The research has also shown that more often than not, these
successful companies reward behavior and not just results, which show
the commitment they have towards actualizing employee fulfillment and at
the same, time inculcating high performance culture throughout the
organizations. Of course, though these companies reward high
performance, they are not overly procedural or bureaucratic in their
approach. Apart from this, successful companies emphasize feedback,
promote a culture of openness, and tend to avoid too much formality and a
culture where cut throat competition kills creativity and
innovativeness.
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