Performance Appraisal In Uncertain Times

The business world is going through an unprecedented shift due to the Covid-19 pandemic. Businesses have to find a way to manoeuvre in hitherto uncharted waters. On the one hand, companies will have to find a way to resume normal business activities while maintaining all precautions, and on the other, they have to address factors like market demand, employee rewards and stressed profitability as a result of the pandemic. To understand how to address these myriad challenges. In an attempt to make a sense of the situation and show the way forward, Yogi Sriram, Advisor to CEO & MD, Group Human Resources at Larsen & Toubro Limited, addressed a webinar at the NHRDN Learning Fiesta titled ‘Performance Appraisal in Uncertain times’. Corporate Citizen brings you excerpts from the riveting session

"If you are oversimplistic about a process, it makes you blind to the details and it may not allow you to see what might be causing the unexpected. So the process must be simple but not simplistic. What this means is that we must have enough of filters when you take a decision or set a target"

To talk about a subject which I am trying to discover more about-frankly speaking, attimes like this, there is no one who is an expertor Guru. I am not bowing my head in artificial humility, but one of the reasons I am conducting this session is to get a new perspective. I will attempt to paint a picture of what I see as a frame in the life of an HR professional, and also try to articulate as clearly as I can about what should be done with respect to performance management during uncertain times. These are times it is important to use both the left brain and the right brain. These are times when demonstrating digital empathy is always a challenge. These are times when one has to be more accurate with predictions, goal settings and so on. I will try to cover as much as I can but I thought I would try to indulge a little bit in trying to dig out some information on the economic scenario and its impact on business. I was trying to collect this from a number of sources and this will give us a broad brush about the realities as I see it and the uncertainties as they exist today. There are various levels of uncertainties, which are at the macro level, the global level and the country level. They are the centre level and the industry level. They are at a specific organisation level. It will be impossible to cover all of them in detail, but I will try to do as much as I can. If you see two of the largest economies of the world, you see that the issues they are facing are GDP growth, oil demand prices, pressure on logistics and transportation, changes happening in the manufacturing sector and the food and beverages sector. If you look at the global scenario, it is increasingly looking very despondent and desolate. Almost two years of global growth is disapearing due to COVID-19. There is a lot of catch up needed to do. If you look at the next few months, there are big question marks and uncertainty on the horizon with fears of a recession looming. If you look at oil prices, there is a bloodbath. They have declined to a level which is beneficial to the economy in one way, but the oil off take has also drastically reduced due to the lockdown and you have oil tankers in the ocean with no place to offload their cargo. This is definitely also going to adversely affect the economy. Let’s look at the global scenario with respect to transportation. Many European ports are at 20-30% capacity. There is a huge increase in the shipping and air freight rates, container shipments are falling by around 30% by June. The automobile sector is looking at a 25% drop in auto sales in FY 2020-21. Steel is expected to see a price drop by 7-10% and the entire year’s production is expected to decline by 6%. If you look at food and beverages, consumer sentiment surveys indicate that up to 50% people are comfortable with returning to work. But many of them are reluctant to go back because of the fear of infection. Even after they go back, they probably are not going to be socialising or going to malls or dining out that often. Global remittances are expected to drop by 20% in 2020 as the world is getting more polarised and people want to return to their own countries for many reasons including dodging the virus. This is particularly going to impact developing countries a lot more as countries like India will see a lot of expats coming back from all over the world. If you look at China, it looks like they are going to see a huge dip in terms of its economic development. Traffic conditions are getting back to prelockdown states in many cities. In places like Wuhan, people are buying more cars as they feel its the best way to protect themselves from infections that they might be exposed to on public transport. But in India, we see the reverse, with a 16% drop in auto sales. Last month, the sales of autos in India were nil or very close to that. Job losses and pay cuts have to lead to reduced consumption. Even the US, the world’s strongest economy, has been hit really bad.

Now we address the topic of the session, which is Performance Management in uncertain times. There are a lot of things that I learnt during this entire experience of witnessing what is happening in various states in India during our fight against Covid-19. I would like to appreciate Kerala and this is something I want to bring into the Performance Management space because what Kerala did was to learn from its mistakes. They had a Nipah outbreak earlier and they were able to carefully capture the learnings from the epidemic. Besides, having a highly educated population helped in creating awareness and maintaining better social distancing. All this notwithstanding, they did not underestimate the covid threat, and they acted early on during the crisis. During the Nipah outbreak, they learnt that there is no point for people to hide the disease. During the Covid19 outbreak, regular and accurate information was made available through mainstream media and in return, the media ensured that things were not made sensational. The media can have a very powerful effect, it can make the situation positive or it can make it extremely negative. Another important thing is that the psychosocial needs of patients in quarantine and isolation were identified in the Nipah period and necessary support was provided. The same was done during this outbreak. The capacity of the healthcare systems in the state was upgraded, after the Nipah outbreak, meeting international standards in some countries. The lesson that I learnt from all this is that there was good communication, cascading of SOPs through the local bodies like the Panchayats, involvement of NGOs and other such actions. One of the things that we can bring into performance management in times like this is learning from the past. Often in Performance Management, we look at the future, but we forget to look at the learnings from the past when we look at our achievements from the last year and so on. Learning from the past, writing those learnings down and using them from future episodes of what could happen is very important.

I would like to appreciate Kerala and this is something I want to bring into the Performance Management space because what Kerala did was to learn from its mistakes

Why is managing the unexpected hard?

If one is going to talk about risk, failure and doom and all the possibilities that can happen in a conference room, others feel like they are losing control. It is almost like saying “What are you talking about? This cannot happen to us. We are too big, too strong or too agile to be affected”. This feeling of invulnerability is very crucial when thinking of goals and scenarios and possibilities. This is where HR, in today’s context, has a very important role in intervening its offerings with strategies. Humans are physiologically disposed towards having an optimism bias. The optimism bias is extremely important in all wakes of life, particularly in project management. I belong to a company which is majorly into project management and hence for us, this is very important. Optimism bias is the tendency for us to believe that we are less likely to experience negative events than others and to act on that optimistic belief. Very often, even when planning deliveries or goals, the optimism bias does is to make you feel that it can be easily achieved which leads you to overpromise and therefore when things don’t happen, we dent to find any justifications for not delivering, for example, the economy is down or a pandemic. It is a cultural thing, actually. So accurate, or made to accurate predications of individual goals, departmental goals and to the extent, company goals, with a shorter perspective are very important. Maybe we need to learn to break down the one year for which we have done goal setting, into shorter durations of one month, three months, six months and so on. It is very important to be conscious to take optimism bias and start by asking ourselves whether we are being more optimistic about whatever we are promising or whatever we are setting as a goal.

"Optimism bias is the tendency for us to believe that we are less likely to experience negative events than others and to act on that optimistic belief"

Managing the unexpected

The attention to details, the attention to risk management, the fetish for possibility thinking for what can go wrong, and the ability to start calling risks in advance is what kills complacency. On the other side is the fact that one should not be pre-occupied with failure as a self-fulfilling prophecy as it eats at your self-confidence. That’s a very delicate balance when you talk about failure as a self-fulfilling prophecy. Many people are scared before a public speech or they get nervous before a particular event because they prophesies that they are going to fail. It is a bit contradictory, but even when it seems to be contradictory it is complementary because you must strike the right balance in terms of making the right judgement of not being overconfident with respect to stopping all the risks, to not be so fearful that you are paralysed into inaction and don’t do anything at all.

There is a thought which has been occupying my mind, that in the year to come, 2021 is going to be very bleak with respect to the economic environment or business, especially when it comes to the first two quarters. The first quarter is likely to be a washout and the second quarter too is likely to be very weak. So I think what is important is to be sensitive to the fact that people’s reward is likely to be affected primarily because the goals are unlikely to be fulfilled due to something which we cannot predict, something which may happen but the reward linked to it may not be as much as usual. Therefore, creating awareness about the vulnerabilities on one hand, and the sense of purpose on the other is very important. Understanding that you may not get the same rewards as usual, but you owe it to society, to your self to your company and to your profession to still give it your best effort. This going to be a trying time for companies with respect to bonuses, salaries and the reward building linkage is what preoccupies thought process whenever we manage performance. Therefore, it is important to be transparent about why goals are being set during this current phase. We cannot have a sense of lack of direction in spite of the circumstances we are going through. It is important to achieve these, notwithstanding that the rewards may be a little lesser than earlier for obvious reasons.

If you are oversimplistic about a process, it makes you blind to the details and it may not allow you to see what might be causing the unexpected. So the process must be simple but not simplistic. What this means is that we must have enough of filters when you take a decision or set a target. The process must be extremely robust when it comes to the interdependencies of engineering, of manufacturing, of delivery or sales. Healthy scepticism and fostering respect for differences so as to bring out diverse viewpoints is very important. No one can predict what is going to happen in the future and in such circumstances, many voices, many aspects, many perspectives put on the table will be invaluable. Healthy scepticism during the Covid-19 period perhaps would have saved a lot more lives. Many countries lost many lives due to a lack of planning and not debating the issue threadbare and not thinking of every little detail of what could happen. Perhaps, if they had a thorough discussion about how this disease, the crisis could have been averted.

Now learning and development may not just be an outcome of the Performance Management Process, but it may be a feed-in, in the sense that development and learning may itself be a goal in the process. Therefore developing capabilities to detect, to contain, to bounce back from inevitable errors and the elasticity for recovering and the time to recover from a mistake is crucial. In the years to come, there will be an inordinate amount of emphasis on delivery and execution. In most companies, the people most celebrated are usually the sales and marketing personnel or business development executives. I somehow feel that going forward, the emphasis will shift to how companies deliver and execute. We have a great opportunity to take a bite of the exports that a certain other country is expected to lose in the next few months. We have an opportunity to take some of that into our country. The focus on operations and quality is going to be extremely important. I think this focus was being taken for granted in some companies, but now is the time to change that.