We want to separate two processes: performance management with a focus on developing people, and merit raises based on an employee’s contributions to our business success. How do I proceed? And what are the benefits of doing so?
—New and Improved, nonprofit, Grand Rapids, Michigan
Like many companies, we have an annual performance review of employees. At the beginning of the financial year, KPAs, goals, targets are mutually agreed. There is quarterly review of performance followed by annual review. Employees are rated on predefined performance criteria on a scale of 1 to 5. Subsequent to rating, we wanted our line management to rank employees against each other in order to have ranking order. Line management is not inclined to ranking, for obvious reasons. Is there any way to know if ranking is the right approach for our performance management?
— Really Clueless, assistant GM, manufacturing, Hyderabad, India