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ATD Blog

The Performance Management Problem in India


Thu May 03 2012


(From Gallup Management Journal) -- When evaluating their company's performance management system, managers and executives must understand this: Any system will fail if employees doubt its credibility.



Indian employees need to establish an emotional connection with their superiors or peers at work.


A system may appear to have all the right elements that encourage employees to perform better in a team or that help a team perform better in the organization -- communication, coaching, development, and recognition. Still, if employees lack faith in the system, it will not achieve its intended purpose.


This is particularly true in India. Studies, such as those of well-known psychologist Geert Hofstede, Ph.D., suggest that Indian employees need to establish an emotional connection with their superiors or peers at work. Workers respect a company's need for processes and procedures, but that respect is influenced by the personal trust among the members of a workgroup.



This poses a challenge to any company with operations in India. Though processes are extremely important in ensuring uniformity of a performance management system, emotions play an equally important role in managing employee perceptions of those systems.


Our analysis of the data shows that companies in India struggle because many employees doubt whether a performance management system can actually identify superior performance; they also question whether these systems effectively reward good performance. These emotional responses affect employees' perceptions of how robust the system is and whether it can distribute rewards fairly and effectively.



**Perceptions of performance management systems


In 2010, Gallup asked employees in several different industries across India for their opinions on various aspects of performance management systems. Gallup found that Indian employees, especially those with three to 10 years of experience with an organization, strongly feel that most performance management systems are not capable of distinguishing superior performance.


Unfortunately for managers and executives, there is a strong relationship between this perception and an employee's level of engagement in his or her workplace. Of employees who strongly disagreed with the statement "The performance appraisal system at \[my company\] clearly distinguishes superior performance," 51% were actively disengaged. On the other hand, of the employees who strongly agreed, 2% were actively disengaged.


Employees tend to have a similarly negative perception of how well performance management systems distribute rewards. When asked to rate their level of agreement with the statement "Good performers in \[my company\] are rewarded significantly better than others," 41% of those who strongly disagreed were actively disengaged. In contrast, 3% of the employees who strongly agreed were actively disengaged.

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