Subjective ratings of skills and non-homogeneous regional cultures are some of the reasons why performance evaluations aren’t as effective today.
Akankasha Dewan speaks with Arthur Lam, director of organisation development for SEA, HK, TW, ANZ and KR at Sanofi, to find out how the company has streamlined its staff appraisal process.
Performance appraisals today are akin to a rite of passage in the world of work. The policy of holding people accountable for goals and assessing them on their strengths and areas of development has long been practised by organisations all over the world.
Now, however, the credibility of the employee review process is increasingly being questioned.
The consulting firm People IQ, in a 2005 survey, found 87% of employees and managers felt performance reviews were neither useful nor effective.
Additionally, in an article published in The Psychological Bulletin, psychologists completed a meta-analysis of 607 studies of performance evaluations.
They concluded at least 30% of the performance reviews ended up, ironically, decreasing employee performance – the opposite of what they set out to do.
The problem with rating employees across countries, skills and functions
Arthur Lam, director of organisation development for SEA, HK, TW, ANZ and KR at Sanofi, explains this may be because of an increase in the complexities involved in developing and managing talent today – firstly due to companies becoming more global.
“In terms of developing talent, different countries have different cultures and different leadership styles and approach,” he says.
“Some countries tend to be a little more conservative, while others tend to believe in leveraging on experience.”
To create a culture across different countries where everybody has the same level of understanding of practice is not as easy as we think.
He adds the process is made even more complicated when it comes to evaluating soft skills of employees.
“Every appraisal is divided into two parts: the task-oriented section and that of behaviour,” he says.
“When we are talking about measuring tasks, it is very clear. You measure employees’ performance by seeing if they hit targets or not.
“The challenge comes when assessing the competencies of the individual, such as striving for results, customer-orientation, etc.
“Behaviour is quite subjective, and that’s why ratings vary by managers. More has been done in terms of behavioural evaluation because now we’re moving to that stage where people are doing multiple tasks.”
He explains the problem of subjective ratings is exacerbated by the fact that evaluations today are done not just by line managers, but also by various functional managers. This leads to the possibility of inconsistent ratings.
“Everybody rates their own people, but you wouldn’t know if they are rating them correctly.
“To do this, there must be a calibration by an individual, who understands the whole region, challenges the whole process and practices, and the way they analyse the potential of each individual.”
Sanofi’s performance evaluation system
While explaining how a multinational company such as Sanofi performs its appraisal process, Lam reveals it has an employee evaluation system rolled across all countries, with a final review in December.
“Managers and employees communicate objectives, review performance, give feedback, agree on areas of development, and performance review results, with inputs from functional managers. This information is entered and stored in Workday (a web-based HR tool),” he explains.
Now that managers have access to all the information, it is more convenient for them as they don’t have to rely repeatedly on HR personnel to use such data.
He highlights that the system streamlines the process by making information related to employees available to all managers.
He adds that now managers have access to all the information, it is more convenient for them as they don’t have to rely repeatedly on HR personnel to use such data.
“Managers do not need to go to HR like they did in the past to get this information. Now they have access to this information 24/7 on laptops, tablets and mobile,” he says.
Making the process more transparent
Interestingly, employees also have access to this information, albeit, limited in what they can see.
He adds the rationale behind making the system accessible to employees is to ensure the employee evaluation process is conducted fairly.
“To ensure consistency in practice, when we conduct workshops for performance management, we train not only managers, but employees as well. We tell them what we are teaching managers, so they are aware of what managers should be doing,” he says.
“The whole performance management process becomes much more transparent and not something which is behind closed doors. It is like a 360 watch over what the managers do instead of on just the employees.”
But who exactly remains responsible for planning and executing the process? Is it mainly an HR-driven initiative?
“When we launched performance management globally, it felt like an HR initiative, and managers had to do it because it was part of their mid-year and final-year reviews.
“A few years into the programme, the head of the global operations felt that it should be the ownership of the managers and he mandated that all managers in Sanofi would have to complete performance evaluations and development plans for their employees, and that it shouldn’t be driven from HR, but from the business leaders.”
Making the process more frequent and regular
Besides making the process a more business-driven initiative, another change the company has implemented is making mid-year reviews optional.
“Mid-year reviews are no longer compulsory as they should be in continuum and an ongoing discussion rather than being fixed around a certain period of time in the year.
“We included an official performance evaluation at the end of the year because we need it to consolidate the year’s performance and summarise and evaluate performance for compensation and reward decisions.”
When we launched performance management globally, it felt like an HR initiative and managers had to do it because it was part of their reviews.
As various studies have shown, continuous feedback that occurs on a day-to-day basis in such an environment is much more likely to create real-time alterations in employees’ job performance behaviours.
But the question remains if such added face-time between employees and bosses leads to bosses being overburdened.
“It is additional work, but if you incorporate it as a habit, it doesn’t seem to be an added chore,” Lam observes.
“People resist when they suddenly have to do lots of stuff. But if you do it on a regular basis, in fact, it is easier for managers rather than doing it at the year-end evaluation. Then they don’t have to struggle with collecting information and gathering feedback about the individual.”