Case Game; Case Solutions

CASE GAME
The Case Of Team Reward
Contd.

How To Reward Performance

THE DISCUSSION

MARCEL PARKER
Director (HR), SAP India

There is no one-size-fits-all model of appraisal and reward. Grappling with the contradictions bet-ween short-term and long-term views of a reward system and the dilemmas of individual reward versus team reward is an ongoing issue at all corporations. The important thing is to look for balance.

One of the first things that Kumar should do is to take a triangular view of the performance system in relation to the organisation, the managers, and the employees. I suggest the following checklist for each.

For the organisation

Can the appraisal system trigger hr processes aimed at employee development?

Can it identify core competencies and skills that are required at Total?

Can it translate and prioritise the company's goals for employees?

For the manager

Does it help me determine the capability of my team members and their individual potential?

Will it enable me link business plans to employee performance?

Will it support me in recognising the achievement of individuals and realising my team's goals?

For the employee

Will I get regular feedback on my individual performance as well as on my competencies and skills?

Will it ensure that my manager and I work together on my development plans?

Will it enhance my performance levels in future?

Will I understand how my individual objectives fit with business goals?

Any performance appraisal system that satisfies at least 90 per cent of the points in this checklist will give Kumar and his team the answers they are looking for.

It is difficult to take a stance on whether individual rewards should be delinked from team rewards. I would recommend team rewards, based on divisional financial performance and softer factors (such as customer and employee satisfaction), as an add-on to individual rewards. It will generate healthy competition among the four business divisions of Total and ensure focus on long-term goals. Apart from rewarding outstanding individuals, it will present a balanced scorecard for evaluation by shareholders.

RAKESH PANDEY
Chief (HRD), Marico

The perspective from which Kumar and his team are examining the performance management systems (PMS) at Total suffers from two shortcomings.

PMS is being looked upon as a stand-alone activity independent of both the hr strategy and the larger business strategy of Total. This is a serious risk. In fact, herein lies the reason Kumar is struggling with a number of issues. It is important to achieve an alignment of hr objectives with business goals. This will not only provide a focus to HRD, but highlight several hr processes that must be addressed upfront.

Once you know what the business needs are and how hr initiatives can be aligned to those needs, it becomes easier to build an enduring PMS. Identifying performance measures, monitoring them, and linking them to a system of rewards would all automatically fall into place.

The second shortcoming is the either-or approach that seems to characterise the thinking on individual and team rewards. It is this, which, in my view, is limiting the ability of Total to leverage the benefits of several processes that it has already deployed, like the 360-degree appraisal and the Double high-performance inventory.

Individual performance matters. lt is important not to lose sight of this fact. And a high performer must be suitably rewarded. Recognising outstanding individual performance has a demonstrative, not a demoralising, effect on the rest of the organisation. In fact, once Total aligns its hr objectives with business goals, it would readily recognise several areas where results are being driven by individual excellence. Commodity buying, for example, would be a specialised individual skill in the soaps and oils division.

In any case, the Pareto principle, which says that 80 per cent of value addition in a business comes from 20 per cent of resources, has universal appeal. This is particularly true of a diversified company like Total with disparate business portfolios. So the individual must be central to any appraisal initiative.

As far as the team appraisal system is concerned, I would make three recommendations. There should be clarity not only on the composition of a team, but on what the team is expected to do and in what time-frame. Secondly, team appraisal should be linked in large part to behavioural traits. Attributes that recognise a well-rounded persona should be part of the process.

And, finally, the reward need not be fully monetary. Non-monetary incentives should be an integral part of the team-reward.

In sum, I think Total should look at its appraisal system through a multiple window-multiple output approach instead of the one window-multiple output approach that it is now pursuing.

DR. T. PRASAD
Professor, NITIE

Collective excellence, cross-functional integration, collaboration, teamwork, and a flatter, empowered organisation are becoming the new corporate values. The question is whether hr processes like individual performance reward can impact positively on the changed working style. The answer is No. When companies change, the work moves from being structure-driven (organised around individual roles and functions) to being process-driven (organised around teams). HR systems must change to support the new dynamics.

The purpose of the team rewards can be three-fold:

To deliver the message that Total values effective team work

To help clarify what teams are expected to achieve

To encourage team effort and co-operation by providing incentives and means of recognising contributions

The issue is whether the team reward systems should replace the existing individual reward system and, if so, whether such a change can continue to recognise star performers' drive and initiative to outperform others. In a hurry to develop teamwork, the existing system of individual rewards cannot be replaced altogether. The new team compensation should become an add-on to the existing system of individual rewards. And it must be formalised. An informal approach to team rewards is unlikely to provide the much-needed thrust that a new corporate value like teamwork deserves in the context of Total.

A fundamental, and often unresolved, problem with team pay is the extent to which it should replace individual, performance-related pay. The other contentious issue is a model team pay system. There are so many different varieties of teams, levels at which they perform, and types of incentive schemes, that it is impossible to prescribe a standard model of team compensation at Total. But teamwork should become part of performance measure of organisational heroes. This can be the first step towards introducing teamwork as a component for appraising employees at Total.

A team reward system has its own problems. High performers in low-performing teams may be dissatisfied. The other problem is that it is difficult to develop performance measures and methods of rating team performance, which are seen to be 'fair'. I would suggest that before shifting to a team performance-reward system, Kumar should ascertain the 'readiness' of its employees to accept the new proposal.

An improvement in team performance is not dependent solely on formal reward processes. For example, while selecting candidates for employment, team-orientation should be evaluated. Similarly training programs should be conducted for team building. If employees have access to regular feedback and interaction, teams can indeed be motivated to deliver outstanding results.