Performance management is a continuous phenomenon of evaluating and improving the performance of the employees both at the individual and team level to achieve the strategic goal of the organisation. Performance management not only plays a vital role in an employee’s wellbeing, but it also helps in achieving the strategic and operational goals of an organisation, hence drives the success of the organisation. During the process of performance evaluation line manager also comes up with the individual growth plan and it triggers an action plan for learning and development based on gap analysis of team performance. The performance appraisal is one of the tools of performance management that is widely used in major organisations across the globe. It is a set system for managers to review their team members’ performance and also identify key areas of improvement and then draft an action plan for the future.
There are several instruments available for measuring the knowledge skill of employees, as skills is an important asset for the organisation, and this is the reason why most of the organisation is now focusing on the employees learning and development needs, that can produce commercial benefits by improving performance, enhance employee’s engagement and develop human capital. The strategic plan of learning and development is critical nowadays to meet the current and future corporate objectives (Wolff, 2007b; Gibb, 2008). Learning and Development can be a prime opportunity to expand the knowledge base of all employees in the organisation. Employee learning and development is often treated as a corporate luxury and can be one of the first budget items to be taken out in a recession. The training plan is set by the management based on Organisation’s goals, and to compete with its global competitor. Instead of resources restrict their job profile, organisation needs to think out of the box, to be skilled and develop continuously. Performance management can be effective when employees have the freedom to act and work (Egan,1995). The whole process of performance appraisal and performance as a whole should be team or individual-centric and not boss-centric. Line manager or goal setter appraiser should be involved in coaching, counseling giving feedback from time to time to encourage good performance and growth.
The essay is more focused on the performance management and learning & development processes of the company HCL. HCL Great Britain Limited, founded in 1976, is an $8.6 billion IT Company listed in India. HCL’s range of offerings includes product engineering, software applications, Business processing outsourcing Services, Infrastructure and Cloud services, Data Analytics, IoT, IT hardware. The HCL team consists of over 1.4 million professionals globally across 48 countries.
Employees are the strength of the organisation and thus HCL is more focused on Human Capital as a Strength. The resource-based view of the firm (Barney, 1991) has prompted attempts to create the resource-based model of Strategic HRM. Furthermore, Barney states that for a resource to result in sustained competitive advantage it must meet fundamental criteria, and (Wright et al.,1994) demonstrate how human resources meet these criteria in an Organisation. The first key criteria in an Organisation is that resources must be valuable and empowered to perform the work. HCL management encourages employees to take full ownership of the work assigned so that, the place where frontline employees interact with customers can create real value for them. However, the downside is that appointed employees are overburdened with the responsibilities and thus face stress. The second criterion assumes that the most important competence for employees is reasoning ability due to future needs for adaptability and flexibility, and HCL competes it by focusing on learning and development processes in the organisation. On the contrary, some training proves to be worthless as they commonly value in practical use hence it is waste of time and money. The third criteria are, resources need to be inimitable. This quality applies to human resources as competitors will find it difficult to identify the exact source of competitive advantage within the firm’s HR Pool. HCL Technologies embarked on the “Employees First, Customer Second” journey in 2005 when the shifts in the IT services market had left the company struggling to compete with its global competitors. After a series of successful experiments that turned the management structure upside down and transformed the company, HCL is now one of the fastest-growing IT service partners in the world.
The main issues addressed in this paper are the Implications of the rating system on Employees’ motivation and the dilemma of managers while rating team members and identifying the training plan based on the rating provided to resources. The first half of this essay covers performance management, performance appraisal system, and how it works in HCL. HCL’s appraisal rating is done on a scale of 1 to 5: outstanding to under-performer and once a rating is done, the scores are converted into a forced distribution. In contrast to defects of the forced distribution system, Armstrong and Baron (2004) supported this distribution by saying this brings consistency in the system though, both managers and staff dislike this system.
The second half of this essay covers the learning and development issues observed in the organisation to deliver full potential toward training and how it is important to move from the traditional way of learning in which organisation used to employ dedicated people to work efficiently to Strategic L& D with emphasis to meet Organisation objectives (Gold et al 2013b; Colin 2010). Moreover, the essay focuses on how the training plan for both Outstanding and under-performers should be planned, and what all learning mechanisms can be used for both outstanding performers and under-performers, and how this can be applied.
Case Study 1 – Beyond the hard work, Resource Performance Management
Performance Management system involves a series of interrelated activities. All the activities are designed by keeping organisation strategic goal in mind. Performance appraisal is one of the tools of the performance management system (De Nisi, 2000) and it is a systemic cycle whereby the appraiser assigns a grader score to the appraisee to indicate the performance. Furthermore, Fletcher (2001:473) explained appraisal as activities an organisation conducts, to assess employees evaluate their competencies speed up the performance, and offer rewards.
There are various approaches to performance appraisal mainly: Free Test, Critical Incident Technique, Checklist approach, Goal Setting and 360-degree feedback. Among these approaches, this piece of work would mainly focus on Goal Setting as HCL follows Goal setting.
Numerous theories have been developed with regard to performance management. Goal theory proposed by Latham and Locke (2007) focused on setting goals or objectives to be achieved in alignment with organisation’s goal. This theory is further supported by the idea of Strebler et al. (2001) which is to make goals or objectives work effectively, the objective should be cleared to both goal setter and appraisee, it should be easy to understand, should be a part of organisations strategic goal. HCL follows the goal theory of the performance.
During the performance measurement of the employees, each resource in HCL highlights their specific activities, measurable attainable, relevant and time-bound (SMART) objectives, and agreed by the line manager. These parameters are also called KPI (key performance indicator) for the team members, these KPIs are evaluated twice a year. The team performs self-assessment with the justification of work done throughout the period, and then the line manager provides the rating between 1 to 5, where rating-1 represents Outstanding performers, once a rating is done, the scores are converted into a forced distribution. Line Manager & HR are bound with the management policy to maintain the bell curve diagram. According to the organisation policy, only a fixed number of team members can be rated R1(Outstanding) in this scenario appraiser finds himself/herself in a dilemma. The positive side of this ranking is, it helps in increasing productivity and motivation of the top-level employees and as (Pfeffer and Sutton, 2006) supported that the best performance comes in organisation when few are treated as a top. However, the downside is also discussed by Latham et al. (2007) that it is tough to motivate those labeled as a bottom, damages team spirit and leads to a competitive environment rather than co-operative.
A further benefit of forced ranking is that it controls the annual budget of the organisation which is not possible while using absolute performance. On the contrary linking pay with appraisal (Roy, 1952) and (Bowery and Thorpe, 1986) supported that linking monetary rewards with performance measures can actually hold down performance. The resources hesitate to discuss the performance problems, and which resulted to overlook the development needs of the employees. A similar survey was performed by IRS (Attwood, 2005, p.30) and noticed 30% of pay awards are linked with performance either wholly or partly, however another similar survey was performed by (Houldsworth, 2007) and found the percentage to 69.
The CIPD survey in 2005 indicated that only 8 percent of organisations used forced ranking with rating systems, but another survey performed in a year (Houldsworth, 2007) and found that 45 percent of organisations applied the ranking system during the appraisal. Researchers attempted to evaluate the impact of performance management on the overall performance of an organisation. Latham and Locke (1979) proved that organizations that had set specific production goals achieved the highest results.
In contrast to this Institute of personnel managers in 1992 performed research and according to the formal performance management programmers were not associated with the performance of the firm. This can be seen in the case of Accenture, Deloitte, Adobe, Google, and Netflix are some of the well-known organisation which has scrapped the performance rating system several years ago and believe in timely feedback from the managers on a regular ongoing basis.
Ethical dilemma for line managers comes into the picture here, wherein a team of 20 members, as per line manager 5 of the team members are a perfect match for grade 1, however, the manager has the pressure to select just 2 as per management to align with the Bell curve. However, during the project delivery, the project manager has separate KPIs to maximize the potential of each team member and all team members equally contribute to the success of the project. But not all team members get the same rating and during the appraisal, the line manager has to follow the bell curve diagram. This implies even though all the team members have equally contributed to the delivery of the project, line managers are forced by management to provide an un-equal rating to them during the appraisal. This can lead talented employees to be demotivated and leave the organisation.
This has been noticed that employees have different expectations towards their career goals from those of two decades ago. While performing the SWOT analysis of the current appraisal system in the HCL, it has been noticed that Continuous discussion between line managers and employees during the appraisal can be considered as a strength however this happens only once or twice a year. There should be regular formal and informal discussions throughout the year. Regular formal/informal feedback discussion in regular intervals can help line managers to measure the performance and output of the employee and on the other side, it also helps employees to know early feedback to act on improvement. The line managers can follow the situational leadership style based on employee performance toward the goal.
A non-positive value on any of the factors like motivation, career direction, intensity and duration of willingness to furnish task efforts, role knowledge, and skills, technologies, support from supervisors and peers can result in a negative performance outcome. The line manager should thoroughly discuss each resource and understand the area of interest. Based on the discussion, next year’s goal is to be set and moreover, included in the training plan. The formal review meeting process should be distributed more evenly throughout. Performance management systems can play an important role in the growth of organisation, if it considers as part of mainstream business issues and not just HR challenges (McDonald and Smith, 1991).
This essay has discussed the appraisal system in HCL and its implications. The second aim of this study was to investigate the effects of the rating system on learning and development in HCL. In today’s competitive environment the focus should be on management growth, leadership and succession planning. The concept of continuous improvement given by Kaizen should be employed at each level from top management to threshold level workers. According to Laurie et al. success of a manager lies in understanding the needs and expectations of team members, their ability to work with other people. Managers are evaluated not just on their own performance but also on results achieved by other staff.
Case Study 2 –How can Resource Performance relates to Training Planning
Learning and development is a division of HR that involves improving performance at both group and individual levels by upgrading skills and knowledge. One of its vital responsibility is to manage people’s development. As per CIDP, L&D focuses on creating the culture of on-going learning and growth to achieve organisation goal. Technology is moving forward very rapidly, and to sustain in the market keeping the organisation up to date with the latest technology, is the only way to keep ahead (Beardwell et al., 2014), especially for IT-oriented companies as HCL. As presented in case 1 about the performance management system in HCL, this part of the essay will highlight post-performance L&D measures taken in HCL.
Performance management review gives an idea of the gap that exists in between what is expected and what is achieved, this gap then leads to learning and development programs. Argyris (1992) explained that organisational learning can occur when an organisation achieves what is intended and corrective action has been taken on the mismatch between intentions and outcomes.
HCL follows the practical and professional level of the training plan as defined by Beardwell (2017, p.231). The practical level of training includes e-learning, coaching and mentoring. Coaching is an informal way of developing individuals most commonly immediate managers play the role of coaches and it can be effective when the proper support, clear goals, regular direction from coaches to the team, and timely evaluation are taken measured. CIDP (2012a) discovered that coaching has been used by 43 percent of organisation to improve poor performance, and 47 percentage used it to enhance good performance.
In addition to practical learning, professional learning involves a pre-defined set of courses with internal certifications based on organisation strategic goals. These courses are assigned to each employee based on designation regardless of the employee’s current area of works, and employees are forced to complete those courses. The positive aspect of this learning is the company provides equal learning opportunities to all employees irrespective of their posts, the downside is these courses may or may not be practically used by some of the members due to different job profiles or not an area of interest and, for them its utter waste of time.
In contrast to the internal training explained above, HCL also focuses on external training programs based on project needs, however, the project manager has an option to pick and choose trainees for such straining. The line manager gives priority to the highly performed employees reflected on the Bell curve. A survey of employers in 2015 found that 54% adopted a whole workforce approach to talent management whereas 35 percentage focused only on high potential staff (CIDP, 2015b:20). In support to the above (Dreyfus et al.,1986) introduced the five-stage model to explain the acquisition of skills to the resources based on effective performance from lower to higher-order skills. On the other hand, the disadvantage of providing training to talented resources, Powell and Lubitsh (2007) proposed that handling talented people can sometimes be challenging for managers because they very well know their worth to organisation, hence may resist being controlled and may often fail to respond to traditional approaches. In support of the above Goffee and Jones (2009) also agreed on the fact that though outstanding people add value to the organisation and require extra care in terms of pay and incentives and are toughest to manage in order to make them sustain in the organisation. In addition to the above argument as per the 70/20/10 model, only 10 percent of learning takes place through formal training programs hence rather than providing training to high-performing individuals more focus should be given to workplace-based learning to all the team members.
Moreover, HCL follows the apprenticeship levy program defined by the UK government. This level of the programme helps to fill the intermediate skills gap of the young generation as well as under-performers to skilled up in HCL. Ryan et al. (2006) point out that organisations make their own decision regarding apprenticeship training as needed. where their needs align with government, formal apprenticeship training is provided. On the other hand, where their interests are not met alternative steps are taken without government funding.
This essay, it has been focused on the importance of having a systematic and well-organised structure for managing learning and development. Regardless of models and approaches used by HCL, it should be covered under the learning needs of the employees toward organisation goals and should be designed and plan accordingly to the project delivery, and requirement and well evaluated by the HR and line manager (Marchington et al., 2016). The training plan should also focus on under-performers along with outstanding-performers. There is also some evidence that combining performance feedback and reward discussions may serve to reinforce the developmental messages, at least where low performers are involved (Prince & Lawler 1986). According to Laurie et al, the quality of management of how they are taking care of resources and applying the processes and commitment of the resource are central to the success of the organisation.
Line Manager and HR practitioners need to be able to choose the approach that is most appropriate for specific circumstances. Coaching, e-learning, continuous professional development continues to attract attention and action is being taken to ensure better efficacy. Apprenticeships and management development are currently high profile with the latter having become increasable international and global in nature. Overall, this study strengthens the idea that people learn best when they are motivated to do it and performance appraisal plays an important factor in motivation.
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