Performance management systems across corporate India are in a state of flux, with 67% of companies saying they have reviewed and effected major changes in their performance evaluation systems over the last two to three years, according to a study by Aon Consulting India, a leading HR consulting firm.
Also, while bell curve is being questioned, formal ratings are considered helpful in measuring employee performance, the survey of over 150 companies, shared exclusively with ET, shows. Companies made the following changes to their performance management system: process (76% of firms), system and technology (59%), alignment to strategy (55%), managerial capability and governance (37% each), HR structure and capability (30%), among others.
While most companies are planning further changes in system and technology, governance, and process, only 28% are looking to make changes in managerial capability practices. And this could be a potential problem, according to Anandorup Ghose, partner, Aon Consulting India.
“Process is easier to change, but things that are not changing—like managerial practices—are the ones that can have a bigger impact in enabling business objectives,” Ghose said.
The study titled Performance Pulse of India Inc, reveals that while four out of every 10 companies surveyed said the bell curve did not help in differentiating performance, 58% of those surveyed followed the bell curve based system of performance management. About 19% of the companies had bell curve which they gave up.
“Firms that removed bell curve and registered positive revenue growth rate highlighted managerial accountability and managerial capability to do performance
conversations as top enablers in achieving business objectives,” said Prabhjot Kaur, senior consultant at Aon Consulting India.
About 82% of the companies surveyed said formal rating helps in optimally measuring individual performance. Most HR heads who want to remove the bell curve and retain formal ratings said formal rating helps in optimally measuring individual performance.
About 90% of the companies that have made changes in the performance management system said the way they manage performance helps in enabling business objectives and strategy.