Since Arthan’s inception in 2016, we have worked closely with more than a 100+ social impact organisations across sectors and geographies. Last year, we worked with various impact organisations, which included leading social sector organisations as well as young, upcoming social enterprises, to help them build their performance management systems. We found that while the concept of performance management is the norm in the corporate world, the social sector still has a long way to go to establish the basic foundation of this rather important aspect of work.
We see this as a tremendous opportunity for Arthan to support the creation of a culture of performance management systems for the entire ecosystem.
But first, let’s decode what we mean by performance management?
Performance management is defined as an ongoing process of communication between a supervisor and an employee that occurs throughout the year, in support of accomplishing the strategic objectives of the organization. The communication process includes clarifying expectations, setting objectives, identifying goals, providing feedback, and reviewing results.
Developing a performance-driven culture in a non-profit denotes a management style that looks at creating a balance between focusing on impact metrics, and using leading performance indicators, to drive better impact outcomes and hence, achieve the mission of the organization.
Efficient leaders seek to create a performance-driven culture, where the organizational strategies adapt to changes in the environment the organisation operates in, from time to time. This in turn will then drive changes in the operational behaviors of the employees.
It is not surprising that at the core of each successful social organization you will find a culture that strives for better performance every day, keeping up with dynamic changes. Organizations that excel in their domain are often the result of their leaders’ painstaking efforts to inculcate a performance driven culture.
A performance driven culture is deep rooted at all levels in the organization:
- Employees are rewarded purely on their performance. Their performance goals and targets are clearly defined and communicated to them formally at the beginning of the calendar/financial year based on the organisation’s planning cycle.
- Employees feel motivated and accountable for their performance and strive to achieve /exceed the targets set for them.
Performance management is not only the responsibility of the CEO/Founder but all departments and managers who ought to take ownership of the performance management system.
Is it easy to implement performance driven culture in a non-profit?
The short answer is “NO”. The road to success in a performance driven culture is not smooth and easy. Dasra’s Talent Management report 2019 found that while 90% of non-profits they surveyed had a formal long-term organization strategy in place, only 34% of them had created a talent management plan i.e. a plan for hiring, developing and retaining talent linked to the organizational strategy and goals.
In the next section we will highlight some challenges that social organizations face while creating and sustaining a performance driven culture.:
Challenge 1: Defining key performance metrics
The first challenge that organizations face is in clearly defining the performance metrics, also called goals, tasks and measures. The challenge often lies in finding the quantifiable parameters for many tasks.
The best way to identify these can be through discussions among the top leadership and managers to decide what parameters/ guidelines should be set at all employee levels. Key employees should ideally be consulted before setting targets for them and their peers. Once the guidelines are set, a goal setting exercise engaging all employees must be conducted to ensure mutual consent of employees and their managers to set and define performance metrics.
Managers should also ensure that a balance between quality of program delivery and the quantity of program delivery is maintained. For example: Giving x number of mid day meals to students doesn’t translate into a meal full of nutrition.
Challenge 2: Collection, reporting and analysis of performance evaluation data
The second challenge for a performance driven culture is managing the massive quantum of employee performance data that employees and managers feed into the system. There needs to be a simple, easy to use mechanism to provide feedback and rate employee performance.
The data must be well organized and should be able to report various different pieces of information such as employee achievements, how far they are from their targets, which vertical/unit is performing better, which ones need improvement and so on. This input would be most valuable to managers and leadership as it becomes the basis of measuring and improving performance.
If you are a small NGO of less than 20 employees, it is possible to manage this data through a paper based (or spreadsheet) system. Many large social organizations use a SaaS based software provided by leading vendors for Performance Management Systems.
Challenge 3: Identifying ‘Leaders’ among Performers
The third challenge of driving a performance based culture in the organization is finding the top performers among the many close matches. Based on the normal reports you can easily categorize your employees into broad categories like Outstanding, Excellent, Good and Average. However, for promotions or in certain cases, succession planning, you need to find the leader among the performers.
This is a task that begets detailed analysis. Here is where you need to refer to past performances, co-relating various metrics, and looking for consistency as well as the values that are best suited for the leaders in the organisation and the social sector at large. This may require you to have the previous evaluation history at hand.
Challenge 4: Appropriate Reward System
Once identified, you should take immediate steps to reward the performers. Rewards should be appropriate and matching the performance, and to the extent feasible, as per the expectations of performers. It can be in terms of financial incentives, promotions, learning and development opportunities, opportunity to represent the organization in events etc. Such performers can also be asked to give their preference among a band of chosen awards..
Amongst different systems that an organization can build to attract, evaluate and support employees is creating opportunities for employees to learn and grow on the job. Investing in the training and development pays off in improved employee retention and more importantly in greater engagement and performance.
Incentives can be non-monetary as well, such as publicly recognizing and giving positive feedback to individuals that are doing good work, which can provide a model of success for everyone. (Why investing in Human Capital matters, 2018, Philanthropy University).
A poor reward system can create indifference within employees towards your performance management system, and in turn the performance.
Challenge 5: Dilemma with non-performers
One of the significant reasons why some employees and managers do not welcome performance management systems is the fear of exposure of non-performing team members and challenges that woulld then come id dealing with them. Unfortunately, in a performance driven culture non-performers have only two options: Improve to a minimum threshold or Exit. Non performers can set the wrong examples for others and bring down the average performance of the organization.
Based on the performance evaluation data, one can easily identify the gray areas where non-performers are lacking. A training and development plan should be chalked out to improve their performance.. They should be given special attention and time by their immediate supervisors in order to improve. Relevant and well thought out trainings can improve the performance of many of your non-performers within 90 days. Unfortunately, those who are unable to show improvement despite all possible efforts by the organization as well as the individuals , should be moved to other departments or be graciously asked to look for opportunities outside.