16 Appraisal Apprehensions

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CASE STUDY

ApPRAISALApPREHENSIO000 SYNOPSIS

"A.f-iLthough I'm new to this company, I will have to make a tough, but important, decision. Should

I continue with the present system of appraisals that my predecessor designed? Or should I rework itcompletely? Either way, there will be crucial ramifications. If! stick to the old system, which revolves aroundthe 360-degree appraisal format, some managers will stay angry. And if I introduce a new system, doingaway with the existing format, many workers will be disappointed. So, how do I find a path that does notcompromis!! on effectiveness and yet is acceptable universally? At present, our company's appraisal systemseems to draw extreme reactions-some in praise, and others vitriolic. I am, myself, steeped in thecommand and control system. But the new competitive environment demands a different method ofappraising. What must I do?" Those were the musings of Sanjana Singh, the vice-president (HRD)at Readymaid Foods, as she perched on the horns of a dilemma. Three leading HRD experts-Philips India's

K Ramachandran, Enron's G. Castelino, and Bombay Dyeing's v.P. Bhide-assess the alternatives atSingh's disposal, and rate her chances of success. A BT Case Study.

SANJANASINGH, THE VICE-PRESIDENTHRD), ATReadymaid Foods (Readymaid), had some toughdecisions to make. Her immediate concern centred

around fundamental issues related to performanceappraisal at Readymaid. She had found it necessarynot only to make course corrections but, more importantly, alsoto re-examine some of her own assumptions. A managementgraduate from the Xavier Labour Relations Institute, Jam-shedpur (Bihar), Singh had about 15years of hardcore humanresources development (HRD)xperience behind her in variouscompanies, including a consumer non-durables transnational.

It was only six months earlier that she had joined Ready-maid-a home-grown company in the business of manufactur-ing and marketing jams, ketchups, and a range ofcanned foods.Readymaid enjoyed high brand equity. Its main competitors

were Special Foods, an aggressive transnational entrant ofrecent vintage, and an Indian company, Homemaker Products.The rest ofthe market comprised smaller players and the unor-ganised sector.

Readymaid, which registered a turnover of Rs250 crore in1996-97,and grossprofits of Rs35 crore, had been set up in theearly 1960swhen canned and processed food technology wasdeveloping in the West. Butwhile European and American con-sumers had taken tocanned foods very readily, the productseg.ment had faced many hurdles in India in the initial years, since

canning technology was expensive and the consumer preferredfresh, home-cooked food. The only segments that gainedacceptance in the Indian markets were ketchups and jams.

Canned foods only consisted of baked beans and soups, whichwere consumed in the premium segment of the market.Since the company was publicly held, the top team at

Readymaid comprised a group of professionals, some ofwhom had been with the organisation forthe past 25years. Theposition of vice-president (HRD)had fallen vacant six monthsearlier at Readymaid due to the departure of Sunil Purohit,who opted for a lucrative assignment in Muscat. However, hehad personally been involved in the recruitment of his succes-sor. [n Singh, he had found traits which reassured him thatshe would continue with the institutional processes initiatedand fostered by him. Singh was rational and forward-looking.

With her competencies having been grown while managingHRDat family-managed organisations, Purohit had expectedher to find ready acceptance from the other vice-presidentsin the company.

Case Study byA NEETAMADHOK,professor(HRD&OD),Narsee Monjee Institute OfManagement Studies. Refereed bythe BUSINESSTODAYPanel of Referees. The names of thecompanies and the persons described in this case study havebeen changed in order toprotecttheiridentities.

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But. owing to the fact that Purohit had toleave at short notice, and Singh was yet to jointhe organisation, he was unable to hand overall his responsibilities personally and ensure asmooth transition. Given this abrupt begin-ning, Singh set her priorities straight. Sheadmired the way Readymaid was managed.Brimming with confidence and full of expec-tations, she started reviewing the prevailingmethods of appraisal at Readymaid.

As far as performance review of the man-agers was concerned, Readymaid had some

history to contend with. The first-everappraisalhad been introduced in the mid-1970s,when !::the company had established itsoperations on 3a fairly large scale in the country. This ~appraisal system was, like many other systems, .s-a trait-based system where the managers were]assessed by their seniors on the basis of intelli- :- '"gence, integrity, communication skills, per-sonality et al. Everymanager's appraisal form was filled incon-fidence by his or her senior.

Bythe mid-1980s,itwas amply clear that the trait-based sys-tem of performance assessment was not going to drive the

organisation's growth. In the 1980s, Management By Objec-tives (MBO)was the order of the day, and many organisationswere switching to a result-based index of performance.Following the trend, Readymaid had introduced a system thatwas designed to articulate KeyResult Areas and KeyTask Areasforeach managerial position. The system called forgoal-settingby the appraiser and the appraisee-together. It requiredappraisal interviews, counselling, and feedback in an interac-tivesession characterised by openness.

In the firsttwoyears, following the introduction of the newsystem, the HRDepartment, then led by Purohit, had faced sev-eral hurdles. Managers were unable to articulate intangibleareas of results. There was no fool-proof way of measuringachievement. Joint goal-setting sessions were not successfulsince employees were, at least initially,hesitant to play an equalrole in negotiations with their bosses. People would negotiateeasy goals and, thus, show impressive achievement at the end ofthe year. On some occasions, climatic conditions were blamedfor non-accomplishment. On others, there was a lack of team-work. Sometimes, goals were used to pressure subordinates intomeeting targets. And, more importantly, the MBOystem did notfindbuyers among line managers.

Butthe system had itssuccesses too. There was a major shiftin the result orientation ofpeople. Managers who had for yearsbeen systems-driven adopted paradigms which were morefocused and directive. Newcomers discovered direction intheir activities, which aided learning and made adjusting to theorganisation a lot easier. However, Readymaid continued toimprove the system inmany ways, and each year came inwithmodifications. A communication exercise throughout the org-anisation disseminated training and information about how towrite specific, measurable, achievable, realistic, and time-bound (SMART)oals.

However, after a period of six years, this system was discon-

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tinued in 1991, and a new performance management systemwas introduced. This time, a complete review of the perfor-mance appraisal system was undertaken by Purohit, and a holis-tic approach to performance management was introduced. The

new system was called the Managerial Review and consisted offour parts: the Performance Review; the SelfReview; the CareerDevelopment Review; and the Counselling &Feedback Session.Usingthe review and analysis of the Managerial Review, an indi-vidual career plan profile was drawn up, providing details of aprobable career path in two-year and five-yearperspectives.

In early 1997,Purohit introduced a new element in this sys-tem. He had visited the USfora two-week training programme atHarvard University.While networking with American managers,he learnt of a new tool called 360-degree appraisal. Essentially,this consisted of a manager being appraised by hissubordinates,peers, and superiors. It made sense to Purohit that managersought to be open in their dealings with their subordinates.To him, the new system embodied a truly networked orga-nisation where each person could feel free to give feedback onhis boss' behaviour. .

How he implemented the idea was quite unique. Purohitfirst took a feedback-based on a questionnaire-from everyemployee at the supervisory and managerial levels at Ready-maid on the extent to which his immediate boss was open andfree in communication; whether the latter was willing to listento the subordinates' point of view; whether he treated themwith respect; and the quality of support he provided. Purohitalso solicited information about the organisationalleadership,which measured the confidence that the employee had in theleadership of the organisation.

These statistics were then fed back to every senior manager.Of course, what each senior manager got was indicative data-and not the names of people who had evaluated him. Purohitcalled it the Subordinate Review, which was incorporated asanother element ofthe Managerial Review. The data thus gener-ated was combined with the manager's perfonnance review.Together, they led to a final rating, which formed the basis forincrement and promotion decisions.

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In the firstcycle, this system evoked a great deal of contro-versy.Managerswere up inarms. Inone instance, Surajit Roy,anarea sales manager and a star performer who had an excellenttrack-record of consistently meeting and exceeding his targets,received feedback that he was not open inhis dealings with sub-ordinates, that he did not givemuch support tothem, and that hewas manipulative and shrewd. Roy had objected strongly totherevised system and wanted to know the names of the subor-dinates who had given him negative feedback. Hestated that inthe next cycle, he did not want to receive the survey feedbackunless itwas in a face-ta-face session with the subordinates.

However, the review system also had its successes. In one

case, a manager had received feedback to the effect that hissubordinates feltthat he did not involve them inthings that con-cerned them. Responding to the feedback, he institutionaliseda departmental meeting every Monday morning. The findings,he claimed, had helped him improve his management style.Others said that they had benefited from the feedback bytakingsteps to improve their relations with subordinates.

Faced with this part of the legacy that she had unwittinglyinherited from her predecessor, Singh reflected upon her ownorientation. For as long as she had been in the HRDprofession,organisations and systems ran on processes that took hierarchy,authority, status, command, and control for granted. Along withthis hierarchy came the necessary boundaries of appropriatehuman behaviour and organisational subsystems that wouldenforce authority at multiple levelsofleadership within the com-pany. But, all that seemed to be a matter ofthe past. Today, thewinds ofchange were blowing inthe opposite direction.

Some companies feltthat authority and status created bar-riers to communication and inhibited the full realisation ofhuman potential. Thus came the need to eliminate hierarchiesaltogether, leading some companies to experiment with sys-tems that made organisation structures flatter and more net-worked. Some companies had done away with designationsand job titles that indicated hierarchy. Others, like Readymaid,had initiated systems of 360-degree appraisal. While the system

at Readymaid wasn't entirely transparent, itstillprovided feed-I --~

HRD SYSTEMS AT READYMAID

000 READINGS. Performance Appraisal And Review, T.V.Rao &Uday Pareek

. Performance Assessment, R.A. Berk

. Psychological Testing And Assessment, L.Aiken

. Assessment And Selection In Organisatlons, P. Heriott

. Increasing Productivity Through PerformanceAppraisal, G.p. Latham

. Mentoring At Work, K.E.Kram

. How To Measure Human Resource Management,1. Fitzenz

. Innovative Human Resources Management,R.L. Desatnick

. Team Building and Organisation Development,DhamiP.Sinha

. Creative Personnel Management, M.s. Wortmann

. Human Resources Management, 5.5. Mirza

. Career Planning And Promotion Policies, 1. Joseph &T.V.Rao

back from the subordinates, albeit anonymously.But Singh had her doubts about such a system. It ques-

tioned the very fundamentals of organisational systems andhow groups are organised, she felt. From time immemorial,people had organised themselves in some form of hierarchy,with its inherent norms of behaviour and standards of perfor-mance. These fundamentals had necessitated performancemanagement systems that were top-driven in their format andnot bottom-up. Singh also feltthat managers like Roy were per-haps justified in the way they felt about 360-degree appraisal.Unless a person knows wher~ the feedback is coming from,there is no reason why he should accept it.Ata different level,she did not want to be seen as Purohit's shadow, following thesame path that he had set for the HRDdepartment. She wantedto carve out a distinct professional identity of her own.Scrapping the existing system would send out a message thatthe organisation did not believe that subordinates can con-tribute to the development of the manager. And continuingwith the system would mean that the organisation was not

acknowledging the things that had gone wrong the first time.Time was running out and Singh had toquickly come tosome conclusion. The apprai-sal cycle had to start within four weeks. Shethought about talking to HRDpros in othercompanies before taking a final decision onher course of action.

MANAGERIALREVIEW. Performance Review. Career Development Review. Feedback Session. SelfReview

, , ,

WHILETHE360-DEGREEAPPRAISALDIDhave itssuccesses at Readymaid, italsohad its share of failures. Should Readymaidcontinue with it? Or should look at itsappraisal system with a fresh perspective? Ifitchooses to continue with the present system,how can Singh make it open and transparent?And how can she ensure that the system doesnot breed resentment? Can Singh use this opp-ortunity to demonstrate her capabilities, whileeasing the burden of ReadymaiQ's HRlegacythat !;he has inherited? 8

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THE READYMAIDCASERAISESFIVE KEYissues: the importance of shared under-standing in a management team; the danger ofHRinstruments becoming an end in themselvesand ceasing to be enablers; the importance ofvalues that need to be reinforced by both HRproceSes as well as managerial action; theneeds of the business that drive HRstrategy; and,finally,the role of the CEOwhile driving change.

The importance of investments in time,energy, and skills in bringing about a sharedunderstanding of complex HRand organisatio-

nal processes cannot be overemphasised. RAMACHANDRANThere isno dearth today OfHRdevelopment and ...~:....................measurement instruments. Indeed, itis easy foran HRprofessional to get carried away by thesophistication of these tools. It is also note-worthy that the top management team as awhole is accountable for articulating the purpose of any organ-isational process, approving its design, and ensuring its reliabil-ity.lndeed, top management's accountability, concerning thesethree areas, cannot be abdicated to anyone department like HR.

The Readymaid situation seems to support the view that thesubordinate review element of the Managerial Review System(MRS)as not been understood and endorsed by the CEOand themanagement. There is much more to the 36o-degree appraisalprocess than the case covers. Singh would do well to study thisprocess thoroughly, understand itsstrengths and pitfalls, and geta feel of the critical success factors. The objective should be toget each member of the management team to drive the processinhisarea. The identification oftwo or three areas ofimplemen-tation, supported by well-designed workshops, is necessary.

Veryoften, techniques gain invincibility and supremacy of

their own. Indeed, the purpose for which theywere originally intended is often forgotten. Inthis case, the purpose of the MRSwas perfor-mance management. The purpose of the sub-systems-performance review, self-review,career development, counselling, and feed-back-was to buttress and enable long-termperformance. The subordinate review systemshould, thus, support and strengthen the coun-selling and feedback session. Itshould play therole ofa development tool.

But that has not happened. Whatwe see isasituation where the system has become thebasis for granting increments and promotions.The MRSequires maturity, judgement, and clar-ity.Besides, subordinate review isonly one partof the process. There are two other dimensionswhich are missing here-peer appraisal and

boss appraisal. Itis important for Singh to assure managers that asubordinate review is not a popularity game. She should, there-fore, bring back the focus on the purpose ofthe instruments andwork towards re-establishing their utility as "enablers." In theshort run, Iwould recommend the following four steps:

. Doour homework: understand the 36D-degree appraisalthoroughly-the benefits, the pitfalls, the critical success fac-tors, and the learning of the firstcycle.. Getthe CEOon your side: seek active support for the processfrom Khanna and his top management team.. Secure a buy-in:convene a meeting ofthe management team,and present a two-year implementation and awareness-buildingprogramme, and obtain the endorsement ofthe team.. Defer the second cycle: conduct a series ofawareness-build-ingworkshops before committing Readymaid to the new system.

CASE STUDY

Solution A

Director (HRD)Philips India

SINGH SHOULD FIRST RESOLVE THE CON-

tradictions in her own mind. While making apersonal impact and carving a niche for herselfat Readymaid, she may have to rock the boat alittle ifthat is going to benefit the organisation.She also needs to interpret the traditional con-cepts of hierarchy and authority at the work-place in a fast-changing competitive businessenvironment, and consider the merits of flatterstructures. Clearly, she should have an openmind on the benefits of 36D-degreeappraisalfeedback in raising performance levels.

Sunil Purohit was on the right track whilegoing in for the 36o-degree appraisal systemwhen the food processing market was becom-ing competitive. Butwhere he failed was in imp-lementing the system. Enough thought had not

...

Solution B

GEORGE CASTELINO.......Director (HRD)

Enron Oil And Gas

gone into the process, and the organisationwasn't ready forchange. The introduction ofthe36o-degree appraisal system at a time when org-anisational performance was under ~train hasunnerved many who were rated high on ability.

The 36o-degree appraisal system is essen-tiallyan employee development tool that seeksto develop the capabilities ofemployees at theirinteraction points with superiors, subordinates,peers, and customers. When thistool islinked torewards, there isa danger that the progression ofa manager becomes dependent upon his popu-larity among the appraisers-in this case, thesubordinates.

It is interesting that a number of managers,including the high performers, have expresseddiscomfort with the new system. Singh is also

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ideologically opposed to the way the system is practised at thecompany. She does not have the conviction to make itwork. Sheshould consider the following action plan:. Define the objectives: the 360-degree appraisal systemshould be positioned as an employee development tool. Singhshould delink this fr,om the performance appraisal and thereward systems. The link between business strategy andemployee development must be stressed here.. Gettingthe organisation ready: given the current level of dis-comfort with the system, Singh should discontinue the 36O-deg-ree appraisal system in the form itexists now. Butshe should, atthe same time, express her commitment to relaunch itas a devel-opment tool sometime later, probably inthe middle ofthe year.. System development: Singh should consider widening the

panel of appraisers to include superiors and peers. Assess-ments often tend to be consistent across a spectrum, and thisgives legitimacy to the system and greater acceptability of thefeedback mechanism. She should also involve managers-thiswill build trust into the system.

If not handled right, the 360-degree appraisal system runsthe riskof politicising the workplace. Hence, Singh should con-sider establishing a moderating mechanism to ensure that "vin-dictive voting" and the "halo effect" do not vitiate the process.Further, until the system is institutionalised, feedback shouldbe communicated in the form of composite scores, averages,and ranges. This course of action willalso establish Singh as aperson with a mind of her own, and yet committed to makingthings work and providing continuity.

T

Solution C

T HE PROGRESSIVE CHANGESINTRO-duced by Sunil Purohit in the perfor-

mance review system at Readymaid are intune with the gradual developments in thefield of HRD.The trait-based system of 1975waschanged to the MBOystem in 1985,and a holis-tic managerial review appraisal, consisting offour parts in 1991,was revised to include a 360-degree appraisal system in 1996.

However, it seems that Purohit was in ahurry to introduce the 360-degree appraisalelement. He did not prepare the organisation;nor did he assess its underlying culture andvalues. He took it for granted that peoplewould not only provide feedback withoutprejudice, but act on the same. And he seemsto have presumed that with his long yearsof experience at Readymaid, he would beable to iron out the initial problems. In such circumstances,Singh should consider the following course ofaction:. Scrapping the system would be detrimental to the credibilityofthe HRDdepartment. Itwill send out a message that subordi-nates cannot contribute to the development of managers.Hence, she should continue with the 360-degree appraisalsystem, but in a modified form.. She should urgently appraise the CEOnd the core team of thestatus and the difficulties faced by the 36O-degreeappraisal sys-tem. She can recommend that Readymaid should change to the

36O-degree feedback system with a focus on developmentinstead ofpromotions and increments.. The 360-degree feedback system should also be delinkedfrom the managerial review appraisal system. This can be bestfacilitated by ensuring that the feedback cycle for develop-ment is different. There should be a six-monthly gap for thenormal appraisal cycle used for promotions and increments.. Singhshould get a quick surveyaudit done on theculture and values prevalent in the organisation-openness,confrontation, trust, authenticity, proaction, autonomy,

collaboration, and experimentation.. During the next few weeks, she should firstget fully acquainted with the 360-degree feed-back system by gathering the experiences ofcompanies which have introduced such a sys-tem, and then examine some of her own para-digms on authority and hierarchy. She mustre-examine her beliefs that the manager isjusti-fied in demanding the identity of the persongiving the feedback before accepting it.. The existing system at Readymaid is notreally a full 360-degree appraisal. To make it afull circle, the appraisee's boss and the

. .~'~'.~':I~~.~ . .. . . . . appraisee himself must choose several subor-dinates, colleagues, and customers-internaland external-from whom feedback can beobtained on an anonymous basis by the HRDdepartment. This will reduce the possibility of

only the subordinates giving positive or negative feedback,and secure a more rounded view of the individual.. Singh should hold interactive workshops at all critical levelsin the organisation with the help of experts. Starting with thetop management, all levels of management at which 360-degree feedback is to be obtained should be covered so thatthey can fullyunderstand, appreciate, and accept the system.Later, the junior levels can also be included. The details of thesystem and the value it can add to the individuals must be exp-lained to make itmore effective.. Based on the business objectives and the organisation'sthrust areas for the future, one or two important dimensions,such as leadership and teamwork-appropriate to the level-should be chosen for the 360-degree structured feedbacks forthe development of managers. The feedback should not bewide open on several dimensions as is the case now.. HRDwill have to provide interpretation and counselling whenmanagers get 36O-degree feedback for development. Suitableaction plans need to be developed by managers forself-improve-ment, which should be part ofthe key result areas ofthe future..

Vice-president (HRD)Bombay Dyeing

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16 Appraisal Apprehensions