'We have also attempted a performance lab'

Updated: Feb 1 2009, 05:19am hrs
Arvind N Agrawal holds a diversified portfolio at the RPG group, looking after corporate development, human resources, information technology and total quality management. He is also closely involved with the National HRD (NHRD) for decades now. Agarwal, who won the NHRD Award in 1992, was the national president of NHRD Network from 2000 to 2002. He talked to FEs Smita Joshi Saha about performance management and the challenges involved, especially in the current environment. Excerpts:

Are performance ratings losing their significance given that many companies have cancelled bonuses and other rewards to their employees

The current economic scenario has made the job of ensuring high performance challenging. Its easy to motivate people by paying money. Since companies have become cost-conscious, bonuses or increments would become modest. We will take a call on increments on July 1, 2009 depending on how the businesses perform in the current fiscal year. Needless to say it is going to be modest in comparison to last year or the year before that.

What are RPG groups hiring plans

Mission critical positions are definitely getting filled. The position should be a must have and not a nice to have. We are hiring management graduates from Tier-1 campuses such as the IIMs, MDI, XLRI, TISS and ISB.

Are you not downsizing employees

We have not slowed down our pace of building organiasation capabilities for future business. But we have stopped immediate hiring in businesses like retail. In retail, last year we hired nearly 150 management graduates because the business was growing. This year our focus in retail is consolidation, which means we want to ensure our approximately 400 stores become profitable. Hence hiring of management graduates from B-schools, for this year, in retail will not happen.

How many employees does RPG have What role does corporate HR play in conceptualising and designing the performance appraisal and how is it then disseminated within the company

We have nearly 50,000 people across the 20 companies comprising the RPG group. These employees are engaged in a variety of different businesses and the group is very de-centralised. Performance appraisals are done at company levels. Group HR conceptualises the performance appraisal process for the management staff, about 3,000 out of the total 50,000 employees. In terms of process, we follow certain fundamentals. One is that appraisals must be objective and goal-driven. Every manager in the beginning of the year has a goal sheet, or a balanced business score card that marks deliverables and targets. Second, we ensure its a transparent system, whatever rating a manager gives is visible to the subordinate. And thirdly, it must differentiate people based on performance levels.

How do you ensure consistency and objectivity in ratings across businesses at the group

We get involved in every company to look at the rating distribution and if there is a need for moderation then we ensure that moderation is done. For senior management, which includes the top-300 people like presidents, vice-presidents and general mangers, the process is centralised. CEOs of each of the businesses conduct the appraisals of their top management managers and then review it with the chairman. So the chairman becomes the moderator to ensure that there is no imbalance across the group.

How often have you seen a turnaround among average performers What do you think have been the key facilitators in the change

We constantly hope for a turnaround in performance in our employees. I think the whole process of sharing the ratings with the employees gives him/her knowledge of where an improvement is needed. This is a great enabler, leading to performance turnaround. Sometimes when there is an issue of chemistry between the employee and boss, we transfer people. We have also attempted a performance lab. This is a workshop in which we invite people to reflect upon own performance, giving them the reflection of their own inner drive by discussing with an expert facilitator. This helps the individual recognise own strength and consequences of non-performance. We have seen individuals improve their performance once they have gone through such reflective sessions.

How much leverage do you give to poor performers

Our philosophy is that any individual gets one chance to correct himself/herself. If you get the lowest rating in a particular year, then you have one more year to improve yourself, and if the next year again you have the lowest rating, then its a bad news for the employee.

What are the criteria for evaluating middle and senior management

Evaluation is totally based on actual achievement vis--vis the balanced business scorecard. Scorecards comprise specific targets in terms of finance, customer, process and also include people dimensions. These are all fully aligned to long-term strategy and annual business goals.