4 Reasons Why Performance Management is Not an HR Exercise but a Critical Business Process

The traditional paradigm around performance management, for most of the 20th century and the first decade of the 21st, has been of an annual or semi-annual process driven by HR. This has largely involved a cursory check-list driven discussion centering primarily around compensation. Whilst it was arguably not even fit for purpose during the industrial era, in the current knowledge economy (where human capital is the most sought after resource) it is downright antiquated!

Performance Management

The prevailing sentiment that drives such thinking is that performance management and employee wellbeing are not critical business processes that need the attention and regular tracking at the executive level on down. But rather another item on a check-list that needs to be ticked off, much like regulatory or compliance requirements. Why bother if it’s not ‘seen’ to affect business top-line growth?

In today’s day and age, this kind of attitude would be considered negligent across a variety of parameters that directly affect business performance. Let’s look at some of the key factors that make performance management a critical business process…

1. There’s an obvious correlation between individual performance and organisational success

The competitive advantage of having employees who are considered to be ‘performing’ is directly related to positive business outcomes. What’s more, processes put in place that measure, track and improve performance for the individual, team, and organisation are a leading indicator of business performance. Making sure that performance is a metric that is being obsessed about regularly (not just episodically) ensures the organisation is well-placed to achieve their desired business outcomes.

2. It’s a business leaders’ responsibility to help individuals perform at their best

It’s widely accepted that the role of a CEO (or any team leader) is to also act as a coach. Someone to help guide teams and individuals to their best performance, aligned to the organisation’s overall vision. This is not something that is purely under the purview of HR, and nor is it a rare event. Instead, an organisation-wide process around performance management is the only way to institutionalise a culture of coaching and mentorship. A regular cadence of check-ins, feedback and communication are the scaffolding around which the structure of active coaching driven performance management gets realised.

3. Failing to nurture and develop talent is the ‘kiss of death’ for a business that relies on its people

Like factories coming to a stand-still when their supply chains are affected, modern organisations, whose raison d’être is innovation and competitive differentiation, will not survive if they cannot attract, retain and nurture a critical mass of talent. As probably the singular key determinant of organisational success, processes put in place across the organisational hierarchy are the only way that employee engagement and productivity are measured and improved. While modern HR departments can be a key stakeholder in this, the entire organisation is responsible for its execution and long-term adherence.

4. Expecting HR to be responsible for aligning employees to the company’s ‘North Star’ is a mistake

A big part of engaging employees and drawing their best work out of them is aligning them around the broader vision of the organisation – the north-star. It is something that starts with a CEO and the executive team, who are responsible for creating the narrative and communicating it clearly. From then on, it becomes the responsibility of managers at different levels of the hierarchy to distill the message for their respective teams and individuals, in a way that is accessible and resonates with their personal aspirations. This does not initiate with HR, clearly, though they can help in its effective implementation. More importantly, a framework put in place around two-way regular communication across the hierarchy, is what ensures that everyone is rowing in the same direction.

In summary

Critical business processes are the ones that are put in place to make sure that organisations are keeping an eye on all the things that are critical to business performance and overall organisational health. In the modern business environment, where talented and engaged employees are the most critical asset, performance management is deserving of every bit of consideration and commitment as a business would put any other critical process.

Souvik Majumdar

Written by , Chief Customer Success at GroSum

Souvik Majumdar is Chief Customer Success of GroSum, a cloud-based performance management software that helps build a goal-oriented and continuous feedback-based work culture. He is passionate about employee engagement and has spent the last decade working with organisations to improve their performance management processes and implement online systems.

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